I’ve been meaning to write on this topic for a while, and was prompted by Phil Jordan’s (CIO of Telefonica) quote that ‘digitalization is…the hardest thing you will ever do.’ FYI…Digitalization, according to Gartner, is the use of digital technologies to change a business model and provide new revenue and value-producing opportunities. Digital technology, at its core, is a series of 1s and 0s. Unlike our analog world with infinite gradiations, digital gives us little room to hide. Enough with the techie stuff; the beauty of digitalization lies in the fact that you can easily simulate and manipulate most analog events. These events (business models, products, processes, customer interactions, marketing programs, etc) can be prototyped, tested, developed, launched and revised more quickly, precisely and cost effectively than ever before.
Either you are ON, or you’re OFF. ‘Going digital’ is very exciting, and holds tremendous promise for businesses of all shapes and sizes. Success lies is in converting our analog reality into accurate digital representations… and back. We are increasingly empowered to understand our business metrics, engage directly with our customers and rapidly innovate like never before: If you’re OFF, you can quickly revise and relaunch. If you’re ON, send it to the amplifier and crank it up!
Over the last several years, many organizations have tested innovation initiatives and the potential is undeniable…but change is equally difficult. Based on my personal experience, ranging from Fortune 500 to pre-seed startups, the golden thread lies in a company’s ability to understand (and own) the fact that digital technology will unsettle their entire value chain.
5 things that you need to understand in order to make sure you are on the right side of the unsettling process:
This is not a test! If you are testing digital today, you need to focus on the competition that is already hacking its way into your customer base, your margins and your roadmap. Disruption has already happened in several industries, and is in process in your industry today. There are numerous examples that exist and are growing, including YouTube, Netflix, Wikipedia, App Store, Airbnb, Amazon, Uber…
“Where do we start?” Customers : All of them (B2B, B2C, B2B2C, P2P, O2O, etc.) Know your core customers, the outliers, potential entrants and those that you may have shunned in the past. Put your customers in the front of the process, as they are beginning to dictate how they want to be served. Understand their wants, needs and desires. Customers may not be able to articulate what is actually important to them, and they will rarely utilize your product the way that you expected. Note: Integrating human-centered experience design (deep customer observation), is a great starting point. A deep understanding of your customer may lead you to breakthrough innovations that have fueled companies like Kellogg’s, IKEA and Apple from their inception.
Competition: (Yes, all of them…) I guarantee that you’re underestimating your competition. Agile development and digital platforms are enabling companies to enter new markets and serve new customers at breakneck speeds. You must HONESTLY assess your core competencies, and your weaknesses, in relation to current or potential competition. Note: Your research will also unveil “competitors” that you never imagined. I have added an interesting article on this topic below.
Embrace Change Across Your Organization You can’t outsource innovation. Understand your current business model, and how it will change. Focus on sources of growth for you and your partners. Understand how your products fit the needs of the various market segments. Make sure that you drive innovation; if you don’t, your competition will figure out a way to serve them “better, faster, cheaper.” Note: Don’t expect your agencies or consultants to do this for you. There is a recent trend of companies expecting external partners like agencies and consultants to lead them into digital. Neither is built to do this. They are built to effectively manage your expectations and your retainers.
Identify the Opportunities and Build A Roadmap As you may have realized at this point, understanding your business is the most difficult undertaking in the process of innovating. Put together a small cross-functional team, because change will impact everyone, and one department cannot own change across an organization. Unfortunately, there is no tool or service provider that can do this for you. If you don’t feel that you have the expertise or manpower to take this on, find an internal team that can lead the project and supplement it with external talent that can facilitate the discovery process.
Get started now! I guarantee that this process will scare, energize and empower your company.