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Digital Transformation Part 1 – What is it?

Friday, May 26, 2017

Digital transformation is about transforming an organisation so that it can succeed in today’s digital age. The mistake many make is in thinking it is about just one thing like building digital products, or adopting Agile, or making use of digital channels. In truth it is about all these things and more. Digital transformation is about transforming the whole business, including how the company thinks, acts, operates and competes. 

Why Digital transformation is not just consulting BS

In the last 10 years technology has become pervasive and disruptive to a level not seen since the advent of the industrial revolution. It is changing everything about how we live, work and play. Yes, technology has always been evolving and impacting our lives, but never at the speed we are now witnessing.  We are witnessing the digital revolution.

The digital revolution is impacting how businesses operate and survive. Many businesses have tried to ignore the impact of technology on our lives and have suffered for it. The examples are endless:

  • Blockbuster Video wanted to believe that people would continue to want a local video/dvd store – they purposefully ignored the impact of digital downloads.
  • Taxi firms wanted to stick to their old model. Uber used technology and a different business model to disrupt them
  • Music giants fought the threat of digitally available music, but they lost as the likes of Apple and Spotify changed their world
  • The hotel chains ignored the private rental market. Airbnb saw that technology could make this market accessible like never before
  • Marketing firms and newspaper companies thought they had the market tied up. Now it’s all about Google and Facebook
  • Brick and mortar retailers saw online as a distraction, but the likes of Amazon and ASOS have shown that a digital first mentality was the right answer
  • Television companies have focused on providing programming through conventional channels (literally), whilst the likes of Netflix and Amazon Prime are using new channels and thinking about programming to pull viewers aware from the traditional players

It’s all about the op model

It is easy to think that companies who have done well out of the digital revolution have managed this by simply seeing how technology and digital channels could disrupt the market. However, there are countless examples of companies who had the foresight but couldn’t execute. The true successes came from companies who were quick enough to act and adapt, who embraced technology in every department, and who recruited and empowered the best people to get their business to perform. This required a different type of operating model. 

Consider examples like Spotify and Netflix. Both companies have had fierce competition yet both have done well because their operating models have allowed them to anticipate and react to the market. Spotify have been constantly evolving their model to fight off the threat from the likes of Apple and Amazon. Netflix quickly adapted from being a mail order dvd company to a digital streaming company, and only recently reinvented themselves again as they choose to buck the trend and focus on developing their own content.

In summary

Digital transformation is about transforming a business so that it can succeed in today’s digitally impacted market. No business or sector is safe. It is truly a case of evolve to survive.