Digital threats and opportunities
Digital technologies are leading to many of the wellentrenched businesses losing their market share rapidly to new and nimble players emerging with innovative business models. The threat from new digital startups will continue to grow as digital technology keeps evolving. Digital technologies also, however, provide the incumbent businesses endless opportunity to expand the scope of their business, come with newer operating models and provides them to leverage existing platform or build a new business platform for themselves, their clients and even their competitors.
Digital strategy
For a leader of successful business from the past it becomes important to assess and sometimes discard the strategies that have been successful in the past; identify new ways of doing business which could be changes to the business model, processes or customer engagement and change from having a portfolio of products or businesses.
Business leaders need to know if their business is influenced or affected by digital technologies already or in the near future. Your business is becoming digital if:
- Data analytics and artificial intelligence is affecting business processes and decision making
- Social media shapes the opinion and consumption pattern of your customers to your offerings
- Mobile apps and cloud are key to delivering your offerings to your individual and enterprise consumers
- Your product is embedded with sensors and software
- Your supply chain is thinking of using robots and drones
- If any of the above applies to your company, then the company is already on the digital path. In the next ten years, you can expect digital to drive every aspect of your business.
Digital framework
The digital technologies have resulted in customer acquiring immense power to take decisions. Even though digital is supposed to make decision-making quicker for the customers, in reality, customers are spending more time online to review the options available to them for their purchases due to plenty of online information available. As business leaders, you must have realized that the digital tools have greatly enabled the power of consumers to make an informed decision. Your organization may have probably started a few digital initiatives and carried out experiments to digitalize the business. For digital to make a transformative impact, you need to have a new framework for reinventing the business which will involve leveraging the existing strengths and developing new capabilities for successfully adopting the digital technologies. The key components of the new framework consist of reimagining the business, reevaluating the value chain, reconnecting with customers and rebuilding the talent pool. Reimagining the business requires looking at the scope of the business, existing business model and customer behavior and preferences
Redefining the scope of the business around customers and not around your product or competencies in the digital age is very important for survival and growth. Amazon has 0leveraged digital to define its business around its customers and build competencies that help it to leverage digital technologies. Redefining your business around customers is just not limited to technology companies. Traditional business in the automobile, hospitality and banking sectors have woken up to the challenge posed by Uber, Airbnb and Paytm respectively and have begun to offer their customers solutions that these companies offered.
Digital shaping customer interaction
Business leaders need to realize that competition is no longer defined by traditional industrial oundaries and digital technologies are blurring the boundaries. Today the customer needs are rapidly changing driven by the advances in digital and incumbent business need to constantly interact with the customers directly and through digital platforms to evolve their business model to meet the shift in customer needs.
The companies that have successfully leveraged digital in the past have mastered a few skills that need to be emulated by the new players planning to transform their business through digital.
- Getting to know more about their customers through data analytics
- Building skills and capability on digital technologies and deploying them
- Building a series of complementary services around the core business thereby redefining the ompetitive advantage
Amazon, Airbnb, Uber, Paytm, Netflix and many other digitally driven businesses have successfully mastered the above skills and built capability around that to successfully challenge the incumbent well-entrenched businesses and radically change the consumer behavior.
The emergence of digital-driven startups in the last decade which have acquired large customer base led by a series of changes in the consumer behavior requires incumbent to radically transform their business model to protect their existing business.
The growth of digital technologies is changing customer behavior to move away from owning the products to experiencing the product. Product companies need to understand this shift in customer preference and evolve their business model accordingly. This shift is very much visible in the shopping malls in the U.S., Europe and the GCC where the malls in their fight against e-commerce players to increase their footfalls are creating experience shopping for their consumers at the malls through restaurants, culinary schools, cultural events targeting different age groups.
Conclusion
Companies need to understand their digital inflection point to realize if the existing business model is becoming ineffective. Leadership needs to mobilize their team for the digital journey. Invest in small digital experiments. Adopt an agile framework to rollout digital initiatives and have a passionate team to drive the digital transformation
