If your company disagrees with the 96% majority that view digital transformation as critical, then your chances for survival are declining. Sound a little too cataclysmic for you? How about this statistic: 86% of companies believe they have two years to make significant progress in their digital strategy before suffering financial or competitive consequences.
There isn’t a debate that organizations must have a digital transformation strategy but these initiatives can be time consuming and complex, which is the most common reason for holding back. Should resources be focused on adapting to changes in the market or developing new disruptive business models?
Business agility and efficiency are typically on the checklist for an organization with a digital transformation strategy designed for responding to market changes. The customer experience is a market shift where technology has forever changed expectations. We demand easy to use self-service options and efficient methods of communication such as chat or text. Businesses must adapt by digitizing processes and thinking mobile first when delivering customer facing solutions. The technology we use in our personal lives naturally influences our expectations at work, but so has changes in the workforce. The dominance of millennials in the workforce has forced companies to adapt to attract and retain top talent. Another factor is the rise of the contingent workforce. Temps, contract workers, part-timers and free-lancers make up 40% of the U.S. workforce. Millennials and contingent workers have contributed to teleworking and telecommuting becoming the norm. Businesses must adapt by providing secure, efficient anywhere access to the information and tools employees need to do their job.
An enterprise with a digital transformation strategy geared toward a new disruptive business model forces competitors to adapt or perish. The subscription model is an example of a disruptive business model that most are familiar with. The Netflix streaming and rental service not only eliminated the brick and mortar video rental business, but forced every major media and entertainment business to adapt. The access-over-ownership model capitalized on the sharing economy and allowed Airbnb to leapfrog ahead of the major hospitality companies. Airbnb has only been around since 2008, yet its $30 billion valuation puts it $7 billion ahead of Hilton Worldwide.
There is no right answer
So should resources be focused on adapting to changes in the market or developing new disruptive business models? The answer is “it depends” on your business and your market. If your company doesn’t have a digital strategy and has pen-and-paper based business processes, you’re wasting time and money. It also means you’re not an agile business and will struggle to adapt to customer and employee expectations. If you’re like Netflix, Uber or Airbnb, your digital transformation strategy is continuing to disrupt, forcing others to respond to your business model.
Disrupt or adapt, digital transformation isn’t easy. Organizations need the right people, systems and culture to survive in today’s ever changing, digitally super-charged business world. Digital transformation is not an option; it is a must and has increased the importance of process automation, made mobile-first the mandate for personal and business applications and increased M&A activity. In many cases organizations are buying more digitally advanced companies as a strategy to begin digital transformation.
Market forces and technology innovations will continue to spring new challenges onto companies. The organizations that understand the importance of digital transformation are acting quickly and will flourish. Those that don’t may need to consider an exit strategy while their business still has value.
By BJ Johnson, Sr. Digital Solutions Specialist at Access