We keep hearing about digital transformation — and, quite frankly, it’s confusing. It’s yet another buzzword that’s hard to conceptualize, and even harder to get out in front of.
For one thing, it’s more complex than rolling out a few new technologies. It’s a fundamental shift in how we run our business, drive revenue and deliver value to customers. It’s about reinvention — but if you’re not an Uber or an Instagram, how do you build a digital business from a pre-existing one, and how do you get everyone on board?
Digital businesses focus on customer outcomes, but they also use business models that generate revenue from digital products, services and platforms, with technology at their core, according to a ‘Digital Rewrites the Rules of Business’ webinar from Forrester Research.
Uber (a digital marketplace) or Instagram (a digital platform) may be what comes to mind when we think of a digital business, but they aren’t the only examples of disruptors. Forrester points to HBO Now as an example of direct-to-consumer engagement, while Nest and Tesla are creating digital products, and Prospera and Wealthfront are creating digital services.
Digital transformation requires an overhaul of your entire business, according to the webinar, from culture to skills and business models — with technology at the core.
Liz Herbert, vice-president and principal analyst with Forrester Research, says in a blog that a “common challenge is that individuals feel that one’s own business is safe even though one recognizes that digital disruption is generally happening.” She points to an example in the book ‘Who Moved My Cheese’ by Spencer Johnson, where a mouse keeps going back to the same spot where he previously found a piece of cheese, even though the cheese is long gone.
So how do you find the cheese? Say, for example, you’re using public cloud, just like everyone else. How can you be a disruptor? Herbert stresses the 80/20 rule: “SaaS is an excellent way to get access to an evergreen solution based on best practices for a specific function or process,” she writes, “but real differentiation and competitive advantage is generally enabled by using cloud platforms to develop custom elements unique to your business.”
Firms are being disrupted because they plan for change linearly, says Brian Hopkins, vice-president and principal with Forrester, in another blog post. And therein lies the problem.
“You plan, budget, execute, and measure. … You never move faster than your organization can keep up,” he writes. “On and on you plod; meanwhile, disrupters who don’t have your baggage are building next generation experiences in the cloud using emerging technologies. What they are doing is riding the wave of exponential change, and pulling further and further ahead.”
Hopkins recommends focusing on what makes your business more customer-led, more insights-driven and more connected. After all, customers will always move faster than you, so “understand customers through insights and then use those insights in every part of your business.” He also points to Forrester’s emerging technology framework to help you get ahead of where the next “exponential explosions” are likely to happen.
To do that, though, you need technology. But only 19 per cent of businesses have the right tech, according to Forrester’s ‘The State of Digital Business, 2015 to 2020’ report.
Forrester recommends putting three categories of emerging tech on your watch-list: systems of engagement technologies (like IoT, intelligent agents and augmented/virtual reality); systems of insight technologies (like IoT analytics, artificial intelligence and insight platforms); and supporting technologies (like containers, edge computing, security automation, cloud native application platforms and hybrid wireless).
Keep in mind, though, that technology is simply the enabler, not the be-all-end-all. Ultimately, it means thinking differently — in a non-linear fashion — about your business. In other words, stop looking in the same place for that same piece of cheese.