- Industrial Revolution Similarities
- How Digital Revolutionizes Business
This chapter is from the book
This chapter is from the book
This chapter is from the book
How Digital Revolutionizes Business
Digital Is Core to Business
Digital today provides immediacy. It’s about listening to what your markets want and need, and then creating business models and strategies that address those needs and wants quickly. Your markets demand responses now. What often “makes sense” to someone thinking logically doesn’t apply to someone thinking viscerally. Transformation is all about being responsive versus reactive. All markets are constantly morphing—evolving through consumer-driven wants. Innovation most often starts in the field, not in a focus group.
Digital Breaks Down Business Silos
Digital is not a silo. It transcends the typical business models and profit and loss (P&L). It also transcends the traditional channel mix. Digital transformation impacts experiences, technology, and people. It may incorporate the usual, but it also transcends the usual business models and units. That’s why it’s so complex and hard for companies to get good at it.
People have to be involved in it on a day-to-day basis. When people say, “What is digital?” they don’t know because the term is so broad, so generic, so all encompassing. We could be talking about marketing channels and digital business strategy and somebody else is talking about the design of the website. Digital is all of those things and so much more. Even though many people mistake it for a faster record keeping or tracking system (two-dimensional) that’s not what the Internet of Things (IoT) or digital is. It’s more than that.
What Sir Richard Arkwright saw in the 1700s was what today’s digital transformers are seeing as well—the third and fourth dimensional potential of technology. The ability to digitally transform a company means going beyond just collecting big data. It means interpreting it, understanding what it’s telling us, and seeing new ways to help end users interact with and engage with your company, products, and services as a result.
Digital Gives Customers (A Loud) Voice
Business is very different today. Release your products as soon as possible, or else you will start to lose customers rapidly away. For example, in the gaming industry, if you are piloting a new game in beta but are consistently delaying release, your customers will react negatively unless you are adequately responsive to them.
Customers are in control today because they can talk to each other about your brand through digital channels, where it’s publicly visible to everybody. They can even be louder than the marketing division of that brand. They’re the ones who are going to choose who they follow, what they buy, and what their experience will be. If you don’t understand their pain and know how to give them what they want with the great customer experience they expect, they’re going to find someone who will. Pre-digital, it was easy for a giant company to just drown out any of that negative noise with marketing. Because there wasn’t a forum or social network for consumers to voice concerns, or a way for people to come together and really get their opinions out, a bad customer experience wasn’t a big deal unless the person managed to get the attention of the media.
Even then, the screams died pretty quickly. With the Internet, those screams and issues are preserved for eternity—along with your responses even down to the letters you write and actions you take, or don’t take.
What happens in times of disruptive change is that traditional metrics like quality, durability, and longevity are either challenged or thrown out, and values like speed, low cost, efficiency, and immediacy become the bar by which all challengers are measured.
New innovative companies initially come into the competition in a small way, and traditional businesses may not see them as a threat because they don’t have the established brand awareness. Traditional businesses may feel safe and underestimate the new company’s potential by comparing their offering to what’s already there. Then the new company expands their initial business model and leveraging their technology platform, or combines technologies and quickly become a clear threat.
What we see are many companies although successful, mistakenly value the things their customers don’t particularly care about, instead of focusing on the things their customers really want. When the gap between what a company values and what their customers value gets too big, that’s when competition move in. That’s why digital leaders put their customers in more control. That’s not a bad thing.
Digital Enables Big Bang Disruption
They call them “Big Bang Disruptors” because you don’t see them coming as they may not even be coming from areas you consider your industry. Remember Sir Richard Arkwright combined different technologies from different industries to kick-start an entire revolution. To say that someone who doesn’t even compete with you can be one of your biggest threats is not an exaggeration.
Remember the almost dominance of stand-alone GPS systems like Garmin, Magellan, and TomTom? They thought they were the only game in town and were just competing with each other—until every smartphone on the market came with GPS and free map apps like Google Maps. In an article, they wrote for the Harvard Business Review, Larry Downes and Paul F. Nunes, consultants at the Accenture Institute for High Performance, wrote: “But now entire product lines—whole markets—are being created or destroyed overnight. Disruptors can come out of nowhere and instantly be everywhere. Once launched, such disruption is hard to fight.”
Digital technologies level the playing field and accelerate the pace of delivery of large scale innovations. Gordon Crovitz, writing for the Wall Street Journal, agrees. Crovitz said, “Powerful new technologies like cloud computing and big data allow entrepreneurs to develop products and services that are ‘simultaneously better, cheaper, and more customized,’ ‘This isn’t disruptive innovation. It’s devastating innovation.’”
Few industries, if any, are immune to disruption. If your business is going to survive, you need to accept this reality. Twenty years ago who could have predicted that something as simple as a mobile phone would turn industries like home phones, pinball and arcade games, GPS devices, casinos, cameras and video, flashlights, travel agents, restaurant guides, and newspapers upside down?
Customer demand is also going to force changes in heavily regulated industries like pharmaceuticals, transportation, and energy. We’ve already seen regulated services like education, medicine, and law face change.
Innovation changes not only the way people do business but the rules about how we do business. It always has and it always will. Just about the time we learn the new rules, they change again. In 1995 Joseph L. Bower and Clayton M. Christensen’s wrote an article for the Harvard Business Review, “Disruptive Technologies: Catching the Wave.” The article taught us what we know about how to spot disruptors before they cripple or kill our business.
Bower and Christensen told businesses to “be on the lookout for upstarts that offer cheap substitutes to their products, capture new, low-end customers, and then gradually move upmarket to pick off higher-end customers.” When disrupters do appear, like a few lone ants strolling across a kitchen counter, it’s time to act quickly—either by acquiring them ASAP, or embracing similar technology and business models.