Why wasn't I born Digital?
By Steve Cockerill - Head of Technology Consulting, UK&I
In my last post I talked about the disruption that cloud-based services are having upon traditional information technology delivery and the need for businesses to truly understand where the retention of IT services genuinely offers differentiation. However, over the last few months I've been talking to a number of our customers who have highlighted a much broader issue that seems to be emerging: how do they become a digital business in the 21st century?
Over the last ten years we’ve seen a radical shift in the way IT has morphed and changed organisations. Traditional operating models across all business sectors have been challenged as a result of technology advances. Customer experience has been heavily influenced by the rise of social media whilst digital distribution has effectively killed physical product in a number of different markets - just look at the unfortunate effect on businesses like Blockbusters and HMV.
So, unless your business was "born in the digital era", how do you transform to compete and thrive in an increasingly digital world? Evidently this is something that is keeping many of our customers awake at night and is further supported by research: last year McKinsey identified that "Executives expect that new digital technologies will transform their businesses, but many admit their companies are far from prepared in developing capabilities and meeting challenges" - source Minding your digital business: McKinsey Global Survey, May 2012.
I’d argue that digital transformation to date has largely been conducted in an isolated fashion with marketing teams driving social media initiatives, fulfillment teams driving supply chain management etc. Digitising your business in this manner though is analogous to the way many of us grew up: take our toys apart to see how they worked to find that it was only in the rarest of cases we can put them back together again successfully. Consequently now is probably the time to reconsider how your business identifies and adapts to the opportunities and threats caused by digital technology.
But where do you start? Most people I talk to tell me they need a digital strategy. However what is clear is that this means something completely different to everyone. Most people think that digital is about the customer experience, posing questions like “how can we use social media to engage our target customers more successfully?” Others are concerned with how digital technologies are impacting their current products and services, driving down demand until they are no longer an economically viable business. Consequently I see a lot of activity focused on “fixing” one element of a problem when a broader set of business decisions often need to be made.
Identifying a robust digital strategy is an outcome of understanding how digital technologies will impact your fundamental business model. For instance I like to ask the question “What is the relationship between your customers, products and operating model and how will digital technologies impact each of these elements of your business?” You’d be amazed at the responses I get…
Therefore I typically suggest a three-stage process to building a comprehensive and robust digital strategy:
- Think about your products and services: do digital technologies represent a threat, complement or opportunity to them? In any of these scenarios, what interventions can you make to make your products or services more attractive to your target customers?
- Consider your customers: how can digital technologies enhance the experience of finding and consuming your products or services? How will such a strategy help to communicate and deliver the value that your products provide?
- Challenge your operating model: How will digital technologies impact your current organisation, business processes and cost base? What opportunities exist to use digital technology to find greater efficiencies or performance that enhance the way you do business?
At the end of the day, it’s all about building a robust and sustainable business model that works for you; becoming digital is only a mechanism to achieve it. So, unless you’re the next startup that will change the world, isn’t it about time you thought about digital in business terms?