Business leaders: what you must do today to be better prepared tomorrow
Industry expert guidance on tackling digital transformation
By Dan Newman, Futurum Research
Dell Technologies’ Digital Transformation Index, developed in partnership with Vanson Bourne, provides a fascinating and useful snapshot of the state of Digital Transformation on the eve of 2017. Tapping into a pool of 4,000 senior business leaders from six major regions around the globe, the report points to key findings about the state of Digital Transformation that can help us shine a light on what milestones have already been reached, and which milestones remain dangerously out of range for a great number of businesses.
Going through the study’s data and findings, we identified a handful of critical themes and strategic insights that we need to dive into and elaborate on.
I’ll be diving further into these and other emerging trends in the coming months.
Key among them, the dangerous gap between planning and action, especially in regards to the very short timeframe that businesses have at their disposal to adapt to the massive technological tectonic shifts currently reshuffling the deck for every industry in every region of the world. Not only that, but do so before the clock runs out. In order to better understand where we are going with this, we need to start at the beginning and work our way toward what we found especially important about the study’s findings.
Many business leaders still think of Digital Transformation as a transformation of their IT department rather than a transformation of their entire business model.
One critical dimension that appears to get lost in this discussion is that although the tools appear to be the building blocks of Digital Transformation, they are not. Digital tools are not the bricks or the beams or the mortar of companies. Tools are the trowels and the saws, the mallets and the hammers. They build and refine and improve. They are the means by which transformation is achieved, not the end result of transformation. In order to deliver value, tools must be wielded daily, and with purpose, skill, and agency.
Businesses today cannot remain competitive without access to pertinent data, from customer behaviors and habits to pricing fluctuations and market forces, and logistics. Without agile cloud solutions, businesses cannot increase their own operational velocity to match their industry’s accelerating speed of business. Without a mobile-first approach and IoT capabilities, businesses are investing in increasingly obsolete marketing, sales, and customer relationship management channels. Without powerful new intelligent analytics tools to guide them, businesses are flying blind. This is today’s reality, and a wait-and-see attitude is no longer an option for any business hoping to still be relevant, let alone competitive or profitable in three to five years. These are the new tools of business.
That is why focusing on buying and deploying tools isn’t enough. The real question should be “what should businesses plan to build with these new tools?” The correct answer is “a new company,” or rather, a new and improved version of yesterday’s company: a stronger, faster, more relevant, more agile, more capable organization. Broken down into specific attributes, here are the characteristics companies should be looking to add to their list of qualities that must be improved and pursued as a result of their Digital Transformation initiative:
- Velocity (speed of execution)
- Creativity (innovation)
- Market leadership
In other words, the focus of Digital Transformation should not be “how do we best leverage these technologies to become a more technologically-savvy company,” but rather, “how can these technologies help us solve problems we didn’t have the tools to solve before, and how will we use them to build a more agile, adaptable, innovative, resilient and disruptive company?”
Digital Transformation is and must be, first and foremost, a discussion about building better businesses. Technology adoption is the vehicle, not the end-result.
We found it interesting that the study confirms insights identified by other research firms, particularly regarding the proportion of businesses reacting quickly and effectively to technological disruption versus businesses that seem either unable or in no hurry to do so.
It is clear from the data that a significant percentage of business leaders and organizations are currently ill-equipped to properly frame, operationalize and deliver Digital Transformation effectively and with adequate velocity. Up to two thirds of businesses worldwide may be at risk of losing significant market share and market value over the next three to five years. In that time, many of these businesses could be made mostly obsolete by more agile and technologically-fluent competitors. Whether this information is an opportunity or a threat depends entirely on how focused on Digital Transformation a company is – or wants to be.
The good news is that for one third of companies, the next three to five years present a formidable opportunity to push slow-moving competitors out of markets they might have dominated for years. Any company with the right mindset, large or small, can take advantage of this window of opportunity to transition with or slightly ahead of the technology waves currently reorganizing every market and industry in the world, and see their Digital Transformation efforts rewarded a hundredfold.
Here are some of the key traits that set Digital Leaders apart from the rest of the field: 73% are operating with the help of a digital profit & loss statement (compared to 15% of digital laggards). 71% have put mobile and social media technologies at the heart of their business (compared to 16% of digital laggards). 67% have an obsessive focus on customer engagement and satisfaction (compared to 29% of digital laggards). 66% are constantly growing their software development teams and capabilities (compared to 30% of digital laggards). There is a model here, and it isn’t particularly difficult to frame.
The bad news is that for two thirds of companies, the next three to five years present a formidable threat from hungry, agile, fast-moving competitors looking to push incumbents out of the way. Decades of hard work, success and tradition will not be enough to insulate incumbent market leaders from this change. If in doubt, look no further than Blockbuster Video, Circuit City, Blackberry, Eastman Kodak, Borders, and Sears: All former market leaders, all dethroned and obsoleted by not only new technologies and business models, but by their failure to adapt (or adapt quickly enough). Every Blockbuster has its Netflix and Hulu. Every Blackberry has its Apple and Samsung. Every Borders and Sears has its Amazon. What is the common thread in every one of these disruption and market upheaval stories? Technologically agile companies out-innovated their less technologically agile competitors.
The numbers always tell the tale, and here is the tale they currently frame: Only 53% of businesses are using digital technologies to accelerate new product and service development. Only 43% of businesses even bother to measure speed to market. Basic automated decision-making technologies are only being deployed by 27% of businesses. Is it any surprise that 72% of businesses still struggle to evolve into agile innovators? Any company that rejects even a single aspect of this transformation, or allows itself to fall behind the technology waves currently reorganizing every market and industry in the world, is at risk of engineering its own extinction.
It is therefore crucial that business leaders not only at the senior executive level but also at the line-of-business and tactical levels take this tectonic shift more seriously. The Index’s data validates the increasingly obvious conclusion that Digital Transformation is not a “next quarter” bullet point or a project that companies can afford to comfortably ease into over time. It is not a “planning for the future” line item. It must be treated a “what must I do today to be better prepared tomorrow” priority at every level of every organization that expects to remain competitive and profitable going into 2020. It is imperative that business leaders and managers, regardless of the size of their business, or what industry or region they fall into, both seek assistance from and build partnerships with technology vendors and specialists, technology users, technology early adopters and digital natives to identify, test and deploy new generations of solutions that will solve a breadth of business problems, address every single reasonable customer want and need they can identify, improve as many business outcomes as they can, and help transform their businesses into the viable, thriving, competitive engines of business innovation and best practices that they will need to become in order to come out of the next few years in one piece.
This article was sponsored by Dell Technologies, but the opinions are my own and don’t necessarily represent Dell’s positions or strategies.