While many companies do not realise it or think of themselves as such, most companies are becoming “technology companies”. That is to say, the majority of companies now cannot function without reliable, stable and high performing IT systems. Furthermore, the way that technology is deployed is very visible to the customer and can very quickly become a true differentiator in the marketplace.
This has in reality been true for some time. Most organisations have long been dependent on technology. Which leads many of my clients to ask the question: “Why is digital such a hot topic now?”
Let’s consider what is happening in the banking sector. We all interact with banks on a regular basis. Using the website, and in many cases today mobile banking applications, has become central to the way the bank engages with the majority of its customers. In fact, for many, these technology interfaces have become the face of the organisation. Whilst many of these organisations may look increasingly digital from the outside, they are often far from digital on the inside. The channels through which we communicate have changed, but the underlying operations have not.
It is however no longer good enough to simply look digital. Organisations need to behave in a digital way if they are going to continue to compete in the new age. It should not just be about how we communicate with the bank. The competitive landscape is increasingly about differentiation of products. This can be as simple as the bank’s ability to make quick decisions. I am now looking for a bank that can approve my mortgage application in a matter of minutes, or at most hours, not weeks or months, as is sometimes the case for many traditional banks today. When I interact with the bank, I do not expect to be asked basic questions by the bank when I know that they already have access to this information, just because this information is on another system.
These issues are not unique the banking sector. The same sort of issues are apparent in in many established businesses, across all industry segments.
I have recently been leading a team that has been analyzing the attributes that make an organisation a “digital leader”. What are the characteristics, competencies and capabilities that they exhibit that enable them to take such a dominant position so quickly?
Digital businesses are customer centric, integrated and most importantly, built digital from the inside out. They are not constrained by the inefficiencies of people doing tasks that can be automated. Furthermore, this reduced dependence on expensive human resource enables them to scale quickly, respond quicker to customer demands, an in many cases provide a better customer experience. To compound the issue, they can often do this at much lower cost than many traditional businesses operate at today. This is therefore putting pressure on both the top line and the bottom line.
The pace of change is unprecedented. A significant number of relatively new technologies are reaching the point of being ready for mass adoption. Organisations designed for the digital age are learning how to use these technologies in ever more creative ways, sparking a wave of disruptive innovation. This is exciting for some and scary for others. We are, however, just at the start of this digital revolution that is going to radically change the world we live in, in ways that we cannot conceive today.
So what are these technologies that I refer to? Social Networks; Mobile Technologies; Robotic Automation and Artificial Intelligence; Data Analytics Platforms; Cloud Technologies; Internet of Things; Biometric Devices; Voice Recognition; Drones; Blockchains and Virtual Currencies, to name but a few. When combined successfully, adopting a customer centric mindset, the opportunities are enormous.
Businesses that were born digital are able to do this today. Traditional organisations are going to have to learn quickly and to adapt if they want to remain competitive. That is not to say that Digital Organisations have not also got a lot to learn. It is however much easier for them to pull talent from a traditional business into this exciting new world to fill in the gaps in their capabilities than it is to pull digital leaders into a traditional business.
Responding to the challenge
The good news is that most executive teams are very much aware of the threat of disruptive innovation. Unfortunately this is not always translating into the right actions. The focus is often exclusively on the immediate customer experience, the website and the new mobile app. Some businesses are taking this a few steps further, experimenting with biometrics to replace passwords, exploring robotics, drones and AI. These digital ventures are important, but taking these steps alone will not be enough in the medium to longer term. The real question is whether the business can we reinvent itself to compete with a truly digital business.
A good place to start is to understand how well your business benchmarks when compared to a digital leader. What is it that makes organisations like Google, Apple, Amazon, Netflix and AirBnB different? To date our research has identified between 30 and 40 attributes that we believe digital leaders excel at. We are now increasingly being asked to perform reviews against these attributes to help organisations understand how they compare. Only then are we in a position to assess whether the digital strategy is the right for the business.
It is interesting to note that one of the things that digital leaders excel at is being inquisitive and they do not take their position for granted. They recognise the need to reinvent themselves continuously and as a result are often the first to perform these types of reviews, to ensure that they are remaining best in class. Many traditional businesses would do well to step back and take stock.