Digital disruption is the threat to existing business players and models that occurs when new digital technologies give rise to new business models, new competitors, breakthrough competitive advantage, and/or new goods and services that dramatically alter the competitive landscape.
Digital transformation demands new and different investments across the enterprise, including in the areas of talent, technology, resource allocations, marketing technologies and programs, outside services, business process improvements, business policies, logistics, etc. Suffice to say, digital transformation isn’t an IT project, it’s the future of your business, and this requires widespread collaboration across all business units in the organization.
Considering millennials are expected to account for 75% of the global workforce by 2020, a big factor driving the need for digital transformation is that organizations need to address human capital and next-generation workforce requirements to fuel business growth. Organizations must re-think their relationship with digitally-literate workers and retool their organizations to attract, connect and empower this next-generation workforce via cloud, mobile, analytics and other enabling technologies.
Organizations also need to cater to the growing legion of millennials in B2B buying roles. Some 73% of 20- to 35-year-olds are involved in product or service purchase decision-making at their companies, according to a study of millennial buyers, with one-third reporting that they are the sole decision-maker for their department. And about half of all B2B product researchers are digital natives, a number that increases every year, according to a Google/Millward Brown digital survey of buyers.
Millennials can and will work from any device (Laptop, iPhone, Tablet, etc.), anywhere (work, home, en route) 24/7/365. If an organization can’t deliver a seamless experience, they will find another employer or supplier.
Most organizations know “business as usual” no longer exists, but the sheer velocity and the invasive nature of digital transformation can be overwhelming. Digital disruption is a major issue in the C-suites of every industry and senior execs are looking over their shoulders and wondering if they will be next to be “Ubered” or “Airbnb’d.”
Thanks to the internet, we now have disintermediation where manufacturers and wholesalers are now getting closer to the end consumer – upping the ante for customer engagement/customer experience. Customers now expect the same type of interaction that they have with any of the other brands they regularly connect with. Also with a heavier reliance on virtual business means, competitive barriers to entry on a global basis have fallen away. Competition is just as likely to come from another country as the next county.
To this end, even a company that has been around for 100 years is no longer guaranteed to stay viable. As proof positive of this, Constellation Research analyst R. Ray Wang says 52% of the Fortune 500 have been merged, acquired, gone bankrupt, or fallen off the list since 2000.
Organizations must retool to support faster response and improved ROI, without sacrificing integration, integrity and/or governance. As organizations look to reinvent your business for the digital age, things that were once nice to have or optional extras are now essential — i.e. eCommerce, business intelligence/data analytics, etc.
In the early days commerce was simple – orders were entered into the business system. But now given all the various commerce channels opened up by digitization, it has never been more important to have a single source of truth to provide a consistent user experience regardless of channel.
As well, the new requirements of today’s digital age go well beyond driving transactions; they require organizations be able to make sense of business data quickly to understand the greatest business opportunities and threats that must be addressed to support growth and profitability – i.e.:
This enables organizations to continue to fine-tune their omnichannel go-to-market strategies, customer management (identify the most profitable and not so profitable customers), and inventory management (change the assortments and weed out items that are not selling), and financial health (better AP/AR management).
What’s more, the use of data and analytics is a powerful force in helping organizations anticipate and embrace new and emerging market opportunities.
Digital disruption is causing organizations to think differently about their business models. For example, Manufacturers are now selling direct to consumers in addition to their distribution network. Distributors are offering new service offerings to their clientele.
A growing number of products today have an increasingly digital component – this “digital tether” can enable organizations the opportunity to go beyond “sell it and forget it,” to establish an ongoing and more personalized customer relationship that can provide opportunities for new business models as well as cross-selling and up-selling.
Organizations should take stock: Unlike digital upstarts looking to make inroads into your industry established organizations have a significant advantage — an established business to build on. However, they cannot sit back and be complacent. As advances in artificial intelligence, software robotics, machine learning, and innovative technology platforms enable businesses to redefine processes, organizations have significant opportunity for performance and efficiency improvements. Yet only a slight majority of companies have yet to succeed in meeting their workplace automation goals, according to a McKinsey Global Survey. Successful workplace automation initiatives – or business transformations — require equal focus on man and machine and specifically. Change in the workplace can be threatening to employees, so it’s important to empower them by thoroughly explaining the benefits of working with technology to ensure its adoption.
As with all business initiatives, start with the end in mind – identify a business problem and quantify its cost to the business. From there identify the right people, process and technology approach and quantify the value this new approach will bring to your business.