Digital: are you the one in four?

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There is certainly no shortage of research, studies and predictions about digital at the moment; it seems that almost every day a new report about digital trends, priorities or technologies is published. Of course many of these have a particular angle or perspective that aligns with whatever consultancy/vendor/research firm has commissioned or sponsored the study.

But there is one finding that keeps cropping up in different reports and regardless of the sponsors’ agenda or line of business: only one in four organisations are changing their organisations for digital, have a plan in place to transform for digital or feel confident about their digital plans. Here is a sample of such results:

  • 25% of organisations are actively responding to digital by disrupting their own business – Global Centre for Digital Business Transformation;
  • 22% of companies are creating advanced digital transformation initiatives – IDC;
  • 27% of businesses have a coherent digital strategy – Forrester;
  • 25% of organisations consider themselves as extremely confident with digital – Fujitsu.

That is not say that only a quarter of companies are active in the digital space – many businesses are using technology to enable new revenue streams, enhance the customer experience and to generate insights about customer behaviour and preferences. However, in my experience, these initiatives are often tactical or reactive and hence not part of an overarching strategy for the digital world. And they are also being bolted on to the organisation’s existing business model and ways of working instead of being used to change how the business operates.

And this is what the four studies quoted above are really saying: whilst there is a lot of digital activity, in most organisations this is not part of a co-ordinated plan or strategy that will result in the business developing the skills and capabilities it will need to compete in digital markets in the long-term. And, even where an organisation does have a plan for digital, the Fujitsu study shows that there is often doubt as to whether that plan is correct.

Yet the threats and opportunities of digital are well known. And we know that digital is inevitable: regardless of where you are in the world, what type of business you are and the markets in which you operate, digital will have an impact. It is a question of when, not if, that impact will happen and also how big it will be. For some, the effect will be significant; there are already plenty of examples of businesses and even whole industries being disrupted by digital. The study by the Global Centre for Digital Business Transformation found that on average business leaders expected four of the top ten players in their industry to be displaced as a result of digital disruption in the next five years.

So, businesses know that digital is going to happen in their industry and they know that, for some players at least, its effects are going to be significant. Yet only one in four are actually preparing their organisation for this or have a plan in place to make the necessary changes to their business. The Fujitsu study gives an indication as to why so few companies are transforming for digital: many boards are confused about what digital really is and hence what they need to be doing to ensure their business is prepared for the threats and opportunities that it brings. As well as finding that only a quarter of businesses felt confident about digital, the research also found that two-thirds of organisations said that it was difficult to know what to do about digital whilst 70% felt that digital projects were a gamble.

But what does transforming for digital actually mean and why is it necessary? This is something I am often asked by boards and executives who are struggling to understand what digital means for their business beyond using social tools and building mobile apps. So much attention is given to the marketing and technology aspects of digital and to disruptive new players such as Uber and AirBnb that it can be hard for executives of traditional businesses to see it as anything more than just another marketing tool, technology initiative or channel to market. While in some cases they just do not see digital as being relevant to their business at all.

My initial task when working with such clients is, therefore, to explain why digital is more than just a technology initiative, an additional channel or an add-on to the existing business. Digital represents a new way of doing business, it means operating in markets that behave differently to traditional markets, and it means facing different challenges to those that the business has faced to-date. The next step is to explain why this new way of doing business needs a different type of organisation with new capabilities and new ways of working; the old style of business is not suitable for the digital age.

This is why much of the disruption happening today is caused by start-ups – they already have the organisational capabilities needed to operate in digital markets; they were born with the skills, attitudes and behaviours required to succeed in the digital age. Very few traditional businesses will already have these capabilities hence if they are to rise to the challenge of digital and avoid becoming the next victim of disruption, they need to build these new capabilities – they need to transform for digital.

Transforming a business for digital is not easy and nor is it something that can be done quickly. But it has to be done. Digital will come to every industry at some stage. If your business is the one in four that is already preparing for digital then you stand a good chance of not just surviving the impact but also exploiting the opportunities that it will bring.

If your organisation wants to develop a vision and strategy for its digital transformation, or needs help developing the capabilities required for digital markets then please contact me or visit my website, axin.co.uk.

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