A prescription for organizations taking on digital transformation
We are in the midst of the era of digital disruption. If you’ve scanned the covers of any tech business journals published in the last couple of years, you’ve undoubtedly seen “Digital Transformation” become a recurring theme. As expected, this nebulous term has a hundred different meanings from a hundred different sources, but they all converge on the same uncontroversial trends: Societies worldwide are hyper-connected, data is growing exponentially, and technology is changing the way we work, live and play. Digital transformation, as it turns out, is as much a market dynamic – something that is happening all around us – as it is something organizations need to undertake, and this second lens is what I’ll focus on for the rest of this blog.
First, the ground rules. What is digital transformation? Simply put, digital transformation is the greater use of technology within a company’s products, services, and processes to increase speed of execution, deliver competitive differentiation, and ultimately improve the user experience of its customers.
Easier said than done, unfortunately. In a recent survey of our customers, although 92% agree that digital business initiatives are critical to their success and 53% say they’ve experienced significant disruption in their industry due to digital technologies, 48% have no idea where their industry will be in the next three years.
Across all the businesses – new and old – that we’ve helped transform for the digital era, it has become clear that there are three distinct muscles that organizations will need to develop in order to achieve the goals of digital transformation.
These three competencies are:
1. Establish a software-development culture: In the digital world, staying ahead of the competition comes down to who has the best product/service. If your product’s smarts come from software, you can continue to improve and iterate on it even after it’s in the customers’ hands. This means that in the constant race to lead the market, your advantage comes down to who has the best capability to develop and deploy software. This capability spans every industry – from manufactured goods like cell phones to automobiles, to online retailers and service providers.
2. IoT and instrumentation: Digital transformation relies on the ability for businesses to measure and quantify how their products interact with their customers and the environment. Getting information about product status, health and its usage can help organizations improve their products over time, identify problems sooner, and even deliver innovative business models on how products are paid for.
3. Derive real-time insights using data analytics: In the digital era, businesses need to maniacally focus on getting actionable data-driven insights. For this, they need the ability to store, manipulate, and analyze the data from a variety of existing and new, structured and unstructured data sources. Only then can businesses make in-time decisions that help them cater to the specific needs of their customers.
Here’s the fun part. The three competencies aren’t just picked at random. Each helps the other work better and do more over time. The software that powers your products and services helps you create smarter applications and devices. These in turn make use of the sensors and instrumentation to generate data, which you then aggregate and analyze to derive insights. And the way you act on those insights is by using software to deliver new and improved functionality to your customers through your apps and smart products. And this happens over, and over again in a cycle of continuous innovation.
An organization’s ability to execute this cycle faster than its competitors is what will set it apart for its customers. In other words, the faster you iterate in this cycle, the farther ahead of the pack you will remain.
Digital transformation is no longer a choice.
