Digital disruption is fundamentally changing the roles of products and services. Products are becoming living products. They can get better and improve their behaviours over time as they learn more and are fed more insights, evolving beyond the coder’s initial intended functionality.
Pervasive connectivity, speed and the low cost of everything, from automation assistants handling emails to smart manufacturing driven by industry 4.0 will force expansion in the underlying technologies of: the Internet of Things (IoT), Big Data Analytics, Artificial Intelligence, Advanced Robotics, 3D printing, 5G Cell Processing, Cloud platforms and Edge computing. These technologies are already reshaping the way of business, irrespective of whether an organisation operates in a B2B or B2C sector. Digital Transformation (DT) is used in this article as a short hand for the many converging technologies that are disrupting businesses today. In equal measure, these disruptions are both an opportunity and a threat, and businesses should consider how they can gain innovation business advantage and leverage their ecosystem fully at every touchpoint to solidify opportunities.
The IKE Institute’s experience over the past twelve months whilst benchmarking innovation capability and readiness of different businesses has highlighted the varying levels of sophistication in how DT is being used. Essentially, all enterprises have used DT to achieve productivity and efficiency gains. And, only some have managed to extract additional value from deploying DT initiatives in, for example, the implementation of Smart Factories or changing their business models to deliver higher degrees of automation to avoid outage with the help of Predictive Maintenance.
However, many businesses still experience a strategic blind spot when it comes to Digital Transformation. Adopting new DT initiatives must go beyond just achieving some percentage points of efficiency optimisation. After all, the dictionary definition of transformation is: a marked change in form, nature, or appearance!
DT is about innovating the total business model and reconfiguring its ecosystem to be ready to leverage mega-trends and opportunities. It is about curating the business ambition into growth opportunity profiles and identifying clear differentiation for the enterprise. It should also be about generating the X-factor in revenue and profit, and demonstrating aggressive organic growth. It should also be about rewiring the business to protect customer loyalty, create new customer experience, and deliver new value from existing assets. This means enterprise leadership must challenge limiting assumptions and management self-bias that often cloisters organisational culture. It is an opportunity for brave leaders to press the reset button and set a new ambition!
It’s worth taking note of the automotive sector and their relentless drive for autonomy, and how this is changing in a multidimensional way, the car users’ experience. The idea of mobility as a service, where drivers will become the riders, and where vehicles will become the platforms for meetings, entertainment theatres and morph into other forms of connected media channels, is transforming the whole sector. It is a true game changer! While autonomous cars may take a decade or so to become mainstream, the customer and user experience is being readily sensitised to manage future expectations. Intel and market researcher Strategy Analytics predict that the value of goods and services for the in-car services and experiences-based economy will be close to $7 trillion by 2050, more than double the predicted value of the ‘Sharing Economy’. It is conceivable that the next generation of youths might not even need to obtain a driving licence to drive a car!
So, in this hyper-connected world B2B enterprises will need to have a strategic outward focus on how DT will drive competitive advantage in the modern industrial economy. This requires a genuine evaluation of future capabilities and technology roadmaps. With technology maturing so quickly, it will be less about the physical product and more about the software.
Putting trends and insights aside, one could argue that adopting DT fully forces an enterprise to take a huge leap of faith without having any clear predetermined metrics or ROI measures in place. This is where great visionaries are needed to envision and shape the future of their businesses.
To become a truly authentic Digital Company means embracing an honest and unambiguous vision of how you want your future business to be, matched by an unbiased understanding of the future capabilities that are needed, to ensure that you get the most value out of your products, services and assets.
Transitioning towards a truly digital enterprise can commence by slicing the DT journey into seven manageable chunks as outlined below:
All of the above requires senior leadership to be totally committed to embracing innovative thinking and to fast-tracking innovation efforts to reinvent the business as a digitally-driven intelligent enterprise.