WHAT DO REALLY SUCCESSFUL COMPANIES DO TO REALISE THEIR DIGITAL STRATEGIES?
Although it feels like the business world has evolved at great digital pace over the last couple of decades, the reality is that only the tip of the business iceberg has been digitally transformed. What still lies beneath the water can be a daunting prospect, particularly for those responsible for effective business transformation.
When we look back over the last decade in the banking industry for example, the development of online banking has been a complete game-changer for that industry. A shift to rich, on-line and mobile banking services, through heavy investment in digital capabilities, has resulted in increased customer satisfaction but also mass branch closures. The banking world now has a very different landscape compared to a decade or so ago. However, there remains a major portion of legacy technology below the ‘waterline’ still to be addressed to achieve customer service and experience demands.
If you work in a transformation role at any level of a business or in a digital transformation consulting role, this will all be very familiar to you. However, are you prepared for the next wave of digital innovation to required to address these below the waterline challenges? We all know how long it can take to deliver an end-to-end transformation programme at a large company, so the chances are that you are still playing catching up in terms of digital innovation. The banking sector is, as a whole, still light years behind some sectors in terms of digital transformation. Fintechs have actually emerged in this sector as the leaders in implementing the latest technology at a pace.
There is much to be learnt about digital transformation by understanding how the market leading digital businesses approach it.
What is Digital Transformation?
In a nutshell, digital transformation involves the use of digital approaches and technology solutions to execute changes in a business and to tackle or cause disruption.
In 2020, businesses operate in a world where digital services are dramatically disrupting traditional business models within ever reducing periods of time (periods as short as 10 years). Customers are not only thinking, acting and behaving differently but they are also adopting and self-connecting services from an open digital ecosystem where it is their Value Model that matters. Transformation has to incorporate digital approaches to meet these
When we talk about disruption, we are referring to innovations that disrupt the marketplace and are able to give a business a competitive advantage. If we look at companies like Amazon, they have used technology to revolutionise their business model and have dominated their market since their online platform became so popular.
The Importance of Digital Transformation
We hear the word ‘agile’ used with increasing frequency because the stark truth is that without agile business models, businesses are unable to achieve long-term sustainability. We have seen regulatory changes pile additional responsibilities onto the financial sector in recent years. How quickly and easily companies are able to cope with these changes will usually determine the difference between continued success and growth or becoming irrelevant.
Most recently, businesses have had to deal with extreme shocks never seen before in the modern global business environment. The COVID-19 pandemic has decimated or destroyed demand for some business products and services. This has severely challenged business agility and broadly highlighted that rapid strategy changes need to be executed very quickly to survive demand shocks or to repurpose capabilities to deliver revised services aligned to reshaped demand
Examples of Effective Digital Transformation
The biggest hurdle is understanding which digital solutions are able to accelerate effective business transformation. Reviewing successful examples can help you to understand what is involved in developing an effective digital transformation strategy.
How has Amazon risen from humble beginnings as a Seattle based internet bookstore in 1995 to its position today as a propulsive force across major industries including retail, logistics, consumer technology, cloud computing and most recently media and entertainment?
Why did Google come to dominate the search/data services sector seeing off the likes of previously strong players such as Yahoo and grow to become an $800Billion AI behemoth?
A good example is Vitality, the world’ first health insurer to create its own network for wellness solutions. How has it achieved a 39% improvement in its overall financial performance since just 2016, with growth of 127% across its global network of partners in 16 countries, and a 25% ownership of China’s largest comprehensive insurer, Ping An Health ?
Vitality and other successful businesses at the forefront of digital innovation in today’s digital economy leverage these three key digital approaches.
#1. Value Driven – A learning culture across the organization that is focused on delivering more value to stakeholders.
Specific value measures are aligned to customer centricity, service excellence, operating efficiency, profit and asset growth are used. Business strategy and business transformation activities are agile, accountable and actionable to ensure valued added outcomes can be produced.
#2. Customer Co-created – Constant engagement with external customers, using technologies to foster long-term relationships.
Digital technologies are used to foster and build a long term relationships. Digital Value Propositions are co-created with customers, partners and internal stakeholders to fulfil customer/internal goals along their customer and user journeys. The business, throughout all business activities, is constantly engaged with these groups gathering data and information to support the innovation of new and improved value propositions.
#3. Network Connected – The organization leverages digitally enabled networks to foster better connectivity.
A business can take a wider view of the business ecosystem that surrounds and connects it in order to work more cohesively with different stakeholder groups, including customers, users, partners, regulators through new or different relationships. These networks help to support its business strategy, execution capabilities and business transformation activities.The business constantly reviews how it leverages and even partners with digitally enabled networks, supported by the latest digital technologies, to enhance its connectivity, value chain chain or supply chain and its business activities.
We are just scratching the surface of the three digital approaches to business transformation here but you can access a more detailed analysis of businesses which are getting digital transformation right by downloading our Effective Digital Transformation whitepaper.
The paper describes how Vitality and other companies including Tesla have applied their digital approaches to great effect. This is essential reading for anyone looking to develop a deeper understanding of digital transformation.
Find out more about THE STRATEGY JOURNEY Framework and Methodology which provides an end to end approach to business transformation here.