Digital Disruption Is Here. Are You Ready to Transform?
While we’ve been busy conversing with our virtual assistants, streaming music, and depositing checks from our mobile devices, we probably didn’t even notice that everything changed. These commonplace things that we take for granted—cars reminding us that service is due and offering to set up an appointment, our phones helping us remember where we parked our car and watches nagging us to complete our daily activity goals—are not only emblematic of a digital disruption: they are evidence that it has already happened.
Sure, we may think nothing has really changed as we order the MP3 version of Sgt Pepper’s Lonely Hearts Club Band. But it has, because while the music may sound the same, it—like just about everything else—has changed from the physical world we once counted on, to a world without form—an incorporeal, digital one, that is nevertheless our new reality. The physical world has been replaced by the hyper-connected one, the Internet of Things (IoT) where connections are more important than physical addresses.
While some businesses have missed the train, others rapidly hitched a ride. They have introduced new business models, transformed their products by blending the physical and digital, reinvented the customer experience and upended industries. Etsy started in a Brooklyn apartment as a way for people who made things to sell their products. The idea was both quaint—and earth-shattering—bringing traditional crafts to the world through the web. It exemplifies one of the hallmarks of disruption: unveiling a need no one even realized existed, in this case, the need for crafters to sell their items worldwide. It also captures another critical aspect of disrupted business: the value-add for customers. Etsy gives us handmade crafts—from artists and craftspeople we can read about and meet—virtually. Etsy turned folk arts into big business.
A Digital Transformation is Coming
Yet less than two years ago, a 2014 survey released by the Altimeter Group found that only a quarter of the companies surveyed understood the new or undeveloped digital possibilities before them, and yet 88 of those same businesses reported they were undergoing digital transformations of some kind. In other words, they knew they were changing—but they were unaware of how they should go about it, and which aspects of their business needed upheaval. They know change is coming, but they don’t know what it is—or how to stay on the train.
Digital transformation—whether it reaches us as consumers ordering online, or communicating with our doctor via email or text, or bringing new products to life via social media—can mean radically increasing performance, improving access, and initiating exchanges in ways that were impossible even 10 years ago. Yet for the 75% of businesses still struggling to figure it out, their world is standing still—while the rest of the planet passes them by at light speed.
Surviving this digital disruption requires transformation. To become a truly digital enterprise, people-to-people interactions need to be digital. Organization-to-organization interactions need to be digital. A true digital enterprise must be a digital workplace and operate within a digital ecosystem. When a company embraces information technology—to support new business models, enable radically new engagements with the digital customer, and ultimately capture share of the digital customer’s wallet—it has reached the digital enterprise nirvana.
Evolving From Analog to Digital
Becoming a digital enterprise requires a reimagining of the business through a digital lens—both in the workplace and in customer engagement. As companies undergo the evolution from analog processes (often physical or paper-based) to 100% digital processes, they position themselves to be more competitive, agile, and innovative. Maybe one of the most difficult aspects of transformation is the ability to maintain a digital mindset.
As MIT Sloan Management Review indicated in “The Nine Elements of Digital Transformation”, “Digital transformation requires strong leadership to drive change. But it also requires a vision for what parts of the company you want to transform. Companies in all industries and regions are experimenting with—and benefiting from —digital transformation. Whether it is in the way individuals work and collaborate, the way business processes are executed within and across organizational boundaries, or in the way a company understands and serves customers, digital technology provides a wealth of opportunity.”
One company that has run with this idea is Starbucks. Following declining store sales and a sharp drop in stock price in 2008, the company made a strategic decision to employ digital technologies as a way to engage customers in new ways. “Everything we are doing in digital is about enhancing and strengthening those connections [with our customers] in only the way that digital can,” says Adam Brotman, Chief Digital Officer at Starbucks. Baristas will continue to be vital to the in-store experience, but the company is relying on digital to spur growth in innovative ways. According to Brotman, Starbuck’s digital transformation is now as essential to the company’s success as its coffee.