Common characteristics of trailblazing digital companies
4 min read
24 November 2016
In one of his last keynote speeches before his retirement, John Chambers, Cisco’s CEO of 20 years, predicted over a third of firms today will be dead in ten years, stating “the only ones that will survive will be digital companies, and many will fail trying to emulate such firms.”
American research firm Gartner predicted that by 2020 80 per cent of business products or processes will have been reinvented, eliminated or digitised. But this apocalyptic message is cushioned by one truth: we are all capable of operating digital companies, with barriers to entry falling away all the time. Digital transformation is not an end state. It is an ongoing revolution that will help firms create stronger products and services better, and make customers happier.
The world’s organisations that were born into the digital age – Facebook, Uber and Airbnb – all have an advantage, however there are also many lessons that be learned from such firms’ success. To start with, these digital companies are “innately digital” and this is why continued success well into 2020 is a given. The firms don’t have silos or internal hand-offs and operate at near-zero latency, minimising work-in progress, hand-offs and the gridlocking dependency complexity that comes with it.
This is because of a complete commitment to digital advancement allowing for light travel, without baggage. For instance, Facebook creates no content and Airbnb owns no property, while Uber doesn’t own its cars or employ its drivers – all can change direction faster than those competitors lumbered with a variety of infrastructure.
This organisational “leanness” permits a higher ratio of hours clocked to “doing” rather than planning, reporting or communicating around existing silos. One further example is the Apple App Store, which has 2m apps, 130bn downloads and in excess of $20bn in sales in 2015, all run through an algorithm driven system that vets new apps and dictates where they appear in the storefront based on downloads, popularity and keywords. The digital tools render human and manual interference unnecessary in the sale and delivery of products and services, and even in the creation of new ones.
Though rendering human “interference” unnecessary is quite rightly not on the agenda of many companies, with its main commodity being staff, the model on which this new breed of digital companies are based must provide food for thought for those wishing to compete at the top level. Thankfully, much of this can be achieved by an organisation-wide commitment to digital transformation, one that includes all departments and employees at all levels, connecting people, process and technology across an enterprise and empowering them all to operate digitally.
In August 2016, more than 200 c-suite-level business leaders in the US and UK were asked about their digitisation efforts, with 83 per cent stating that digitisation is “very important” or “extremely important” for their organisation to achieve an increased level over the next five years. Further than this, I would say it is absolutely crucial if a company wishes to survive in the current climate. Such a culture shift must be occur so that organisations can respond rapidly to changing requirements, a shift that demands hard work, persistence and patience. Those that engage it in fully, will get to join the 2020 club, surviving the decade and becoming part of the digital future of business.
Ben Grinnell is global head of technology and digital at North Highland