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Thriver or survivor: Digital transformation and its role in keeping your firm competitive

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Whether or not your firm is deemed a thriver or survivor, IDC believes you are risking your firm’s survival if you don’t have a digital strategy in place. But the combinations of new technology are driving new business models, forging new partnerships and opening markets in surprising ways. A mattress business, digitally enabled with sensors and apps, becomes “a cloud connected bio monitoring business”; an aviation tyre company sells the data it collects on its airborne test rigs to the concrete manufacturer that supplies airports; a car company offers new services every month based on its intelligent auto platform – this week managing the car’s speed to avoid red lights, next week finding open parking places in a crowded city.

The digital components of the transformation comprise a variety of technologies that are being adopted at different speeds. Some of these, such as cloud, mobile, social, Internet of Things, analytics (Big Data) and 3D printing, are becoming increasingly familiar. Less familiar to most, but not far behind are, human augmentation (wearables) and cognitive machines (AI). What is really fascinating is that when these technologies are combined the possibilities become endless: add sensors to your business, stream and combine the sensor data in the cloud, apply analytics and then sell the output, delivered to mobile devices or a 3D printer…or a robot…

The rapid rise to a dominant market position of companies such as Amazon and Google has in part been based on different economics: the giants own fewer physical assets; are less people intensive and consume less capital. At the same time both firms offer superior products and services that are more frequently updated and which consumers are likely to prefer. Gartner refers to this an “Economic Architecture Advantage”. Clearly, established non-Internet companies cannot become Internet companies but can transform the business digitally, and this is what it needs to do to compete and win – to become a thriver or survivor.

What do you want to be: A thriver or survivor?

Non-Internet companies which have undergone a digital transformation are typically ahead of the increasingly uncompetitive, untransformed legacy business that IDC refers to as “survivors”. Such firms, like newer internet companies, typically need less capital, have a smaller workforce and possess fewer physical assets, allowing them to generate better profit margins, compete more effectively and enjoy higher growth rates.

However, the business impact of digital transformation is dependent on the form it takes. The first, and perhaps the most well-known, is business model transformation. The more radical cases of this type of transformation (such as the much quoted Uber or Airbnb, neither of which own what is sold) may also transform the entire industry sector as well as the company itself. However, transformation does not have to apply to the whole company: an operating model transformation is focused on the transformation of the company’s operations, such as how it is financed or different ways of acquiring customers, whilst business process transformation focuses on a specific process within the business.

In each of these types of transformation the people element is critical as it takes a different kind of thinking to both see the future possibilities technology offers and then to find ways to monetise them. Innovative ideas like risk sharing, crowd sourcing, usage based pricing and gamification are all making a significant contribution to harnessing the potential technology offers. However, though innovation can occur spontaneously, to innovate consistently talent and skills must be nurtured and invested in. Critical endeavours for digital transformation therefore include fostering a culture of innovation and proactively managing skills and talent to deliver the right portfolio of digital competencies. In turn, the creation of the right culture to acquire talent and skills is a function of good leadership, without which digital transformation will undoubtedly flounder.

Digital transformation is therefore the product of both new technology and new thinking. Interestingly, it is often the new technology that gives rise to the new thinking, which is many ways an inversion of the historical origins of computing which focused on automating existing tasks. Business processes, operating models, businesses and entire industries are being reshaped, with the competitive landscape being redefined as a result. At its most disruptive, not only will the innovating companies never be the same again – so think carefully of you want to be a thriver or survivor, or fall down the wayside without a digital plan.

Nigel Williams is senior marketing director, EMEA/office of the CMO at Commvault.

Image: Shutterstock

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