This content originally was published at https://www.liveworx.com/blog/digital-disruption-decoded
Digital disruption is highly misunderstood. While disruption has a negative connotation, digital disruption is considered a ‘positive’ factor. In his book titled “The Digital Transformation Playbook: Rethink Your Business for the Digital Age”, author David L. Rogers rightly says that digital disruption is not just about companies upgrading their technology stack, but more importantly, “elevating their strategic thinking”. Managing innovation is essential in building a sustainable response that recognizes the inherent strengths in streamlining transformational initiatives to drive ‘value’ for customers, partners, and stakeholders. Of course, there is no universal ‘mantra’ to help companies define this journey. This blog summarizes some key tenets for demystifying digital transformation initiatives.
Managing innovation is essential in building a sustainable response that recognizes the inherent strengths in streamlining transformational initiatives to drive “value” for customers, partners, and stakeholders
When and where does the digital tornado hit?
In 2015, in an article titled “Digital Vortex – How Digital Disruption is Redefining Industries”, the Global Center for Digital Business Transformation prophesied that technology and consumer-centric industries like M&E, Hospitality, Travel, Retail-CPG would have higher impact and immediacy from digital disruption when compared to high-asset industries like O&G, Utilities or regulated industries like Healthcare and Pharmaceuticals would be more long-term. In 2019, however, the immediate impact of digital transformation is high across the board. Even regulated and asset-intensive industries are accelerating the adoption of digital technologies to drive innovation in their businesses. For an airliner, digital interaction begins the moment they onboard a customer. For a utility company, understanding prosumer dynamics and demand-supply patterns create differentiation.
David Yockelson, a researcher at Gartner, says, digital disruptors are organizations that have leveraged digital technologies to drive fundamental shifts – intentional or otherwise – in their markets. It is not necessarily a technological overhaul, but a combination of technological changes and the adoption of new business models. Every business will have its ‘Kodak’ moment – a tipping point for transformation or extinction.
The digital impact is not necessarily disruptive in nature. Scores of companies have adopted digital technologies to not only drive internal innovations, but also changes across the ecosystem. Manufacturing companies are taking a leaf out of Amazon’s supply chain to drive their efficiencies. O&G companies are collaborating with automotive with automotive majors to drive synergies across the consumer journey. In the medical field, cognitive computing is changing the way patients are diagnosed, treated, and monitored.
In summary, enterprises should neither wait for the tornado nor pray for it to move away. The entry barrier to exploring new digital technologies is diminishing given the maturity and quantum of platforms and services via the cloud. It’s possible for corporates to respond to the forces of digital disruption by following four simple tenets:
- Challenge the status-quo
- In order to become a digital business, start at the very top. Redefine your company mission to suit the digital era. Apple is not a computer company, but one that seeks “to make a contribution to the world by making tools for the mind that advance humankind.” The mission underlined the decision-makers’ foresight to expand beyond its original roots into consumer electronics.
- Identifying your competitive differentiation is key. Many believe digital transformation creates competitive differentiation. Maybe this is true. However, every enterprise has a set of unique differentiators which allow it to distinguish itself from its peers and competitors. Porsche and BMW both claim leadership in the luxury and performance automotive segments. For Porsche, the focus is on amassing driver data for real-time driver segmentation and offering customers what they want in these segments. BMW, on the other hand, is concerned with learning every detail about car-performance based on the vehicle identification number (VIN), dealer information, and web and social media activity to provide customized services for customers.
- Creating a culture of innovation is important. Reframe your collective mindset to succeed with digital disruption. Successful disruptors like Amazon Web Services (AWS) have created a culture of innovation that can be felt in an employee’s day-to-day activities. Paradoxically, studies have shown that IT has not been an active part of innovation discussions in many enterprises. The advent of big data and analytics in the center of digital transformation in recent months has forced executives to rethink IT function. The three levers for developing an innovative digital culture include rethinking business strategies, adopting entrepreneurial processes, and focusing on talent management.
- Most importantly, break functional silos. The significance of digital adoption is centered around the power of data. An equipment manufacturer struggled for years because product data was not available to service engineers and vice-versa, costing the company millions in servicing their customers. With the breaking of the silos, the service teams were able to provide value-added and informed services, while the product team got insights to continuously improve product features.
- Time-box innovation based on ‘Value’ and ‘Outcome’
Scores of enterprises have lost time, money, and effort initiating numerous proofs-of-concept (PoCs) only to find a lack of business support and funding to scale. This is because they failed to engage the right stakeholders, and set the right outcome and value expectations. As companies mature in their journey, they are seeking defined and measurable outcomes. Also in vogue is an outcome-based model to drive proof-of-value (PoV) instead of the traditional PoCs. Experts recommend selecting an area that gives you a competitive advantage, focusing on ideas that leapfrog ahead, because traditional, incremental thinking runs the risk of irrelevance and being agile – in experimenting, evaluating, iterating, improves your advantage.
- Listen to your customers
In today’s connected world, the success of products and services of digital businesses is a function of ‘innovative features’ at relative ‘pricepoints’. The gap-to-market between leaders and followers is fast diminishing. Hence, it’s imperative for firms to stay connected with their customers. The customer experience at Panera Bread was suffering due to long order and wait times. They studied the problem using customer data and launched an ‘order-ahead’ mobile app, greatly decreasing order and wait times.
- Understand that it’s all about the data
Forbes calls ‘data’ the currency of tomorrow. Enterprises have no dearth of data (especially operational technology data). Today, it’s more about how one understands and uses it. Recent surveys show 85% of businesses seek to be data-driven, but only 37% of them have been successful.
Bottom line – for impactful digital disruption, change your perspective of data from an ‘output product’ to being a ‘strategic enabler’.
- Leading through Digital Disruption – Edited by Janelle B Hill, Gartner Research
- Navigating Digital Disruption - How to thrive through Innovation Management –by Pragna Kolli and Saikat Chaudhari
- Decoding Digital Disruption – A Business World article published on 15th May 2019