The call to “Go digital” has been echoing in boardrooms across the globe. It’s a herald of momentous and ground shaking change with potentially far-reaching consequences. Disruption and innovation caused by the adoption of digital technologies has propelled some companies to meteoric success while contributing to the demise of others
Organisations have always relied on technology to innovate and improve efficiency. But the rapid advance of cloud computing, IoT, robotics, mobility, social media and big data requires a major change in the mindset of business leaders and their organisations. A digital business not only employs information technology to manage operations and processes, but uses it to develop and deliver new products and services.
The proliferation of structured and unstructured data that is being created by mobile devices, sensors, social media, loyalty card programs and website browsing is creating new business models built upon customer-generated data.The cycles of innovation are occurring faster and faster. The ability of a company to keep up with these changes will determine how business contends with the challenges of tomorrow. \
Enterprises and businesses need to become digital enterprises and businesses. According to Joe McKendrick, writing for Forbes Magazine, “These changes arising out of the digital movement has both memorized and terrorized business leaders of every stripe. I say “terrorized” because the ground is shifting beneath everyone’s feet across a range of industries. Newspapers have felt the blow, retailers are being stung, and insurance companies see a new breed of competitors arising out of the Internet stew”
Customers are demanding greater access to digital channels when interacting with companies. Paul Willmott, a director for McKinsey and Company, comments, “Consumers are increasingly willing to buy goods and services through digital channels. Over 50 percent of air travel is now purchased online, for example”.
“But in addition to that”, adds Willmott, “we’re seeing digital used to automate previously manually intensive activities and tasks that we previously thought a robot couldn’t perform. Perhaps more fundamentally, new competitors are emerging that are offering very differentiated value propositions for customers, or perhaps a radically lower cost structure. So when you put these different trends together, you can see that digital becomes a top agenda item for most executives”.
How does one become digital
There are a number of challenges that large and established enterprises face in transforming themselves in this age of digital disruption. It’s hard for incumbent businesses with legacy systems to move and innovate as quickly as start-ups born in the digital age. They may also lack the digital skills across the enterprise to enable the necessary changes.
According to Paul Willmot, for organisations to make a real difference they need the chief executives to drive the digital agenda and for it not to be left as a departmental responsibility. They also need a culture that fosters innovation.
Many organisations place innovation on their list of corporate values. However, much fewer actually have a culture in place that actively encourages it. Some organisations and industries are particularly risk adverse, preferring to rely on practices and traditions that have produced results in the past than invest in new ideas that might not succeed.
There’s a tendency to think of innovation and digital disruption purely in terms of technical innovation. Though technology is important as an enabler, it is only a part of the picture. Leading strategic thinkers are moving beyond product innovations to innovations in business processes, distribution, value chains, business models and even the functions of management.