What is your company’s digital offering? No, seriously, what is it?
In today’s business climate, people expect instantaneous results and are often willing to pay a premium for them. Looking for a specific car? In the past, we visited our local dealership hoping it was selling what we wanted. Today, we search Autotrader to find out which dealership has the car we want.
Digital offerings have transformed the business landscape. Companies that transformed digitally to make their services more accessible to broader customer bases have stayed competitive. Conversely, those companies that haven’t embraced digital transformation have gone the way of the dinosaur.
This phenomenon is happening in so many industries. For example, in the hotel space, Expedia, Trip Advisor, and Booking.com have forced travel agents to think differently and shuttered those who clung to an analog business model. Want to pay for a ride? Uber and Lyft have decimated old-school taxi and limousine services, and Turo, Getaround, and Zipcar even empower consumers to drive themselves.
That being said, we live and work in an incredible time. Only a few years ago, the best of digital transformation was a cool-looking website or app, slick eCommerce funnels, and faster shipping. Today, bleeding-edge technologies like AI, machine learning, and blockchain have unlocked all new possibilities for personalization, convenience, value, and trust.
It’s worth clarifying: by “digital transformation,” I mean creating a digital product offering and reconfiguring your core business model to support it. For instance, Microsoft is leveraging ChatGPT to make their Bing search engine more humanlike. And, honestly, if Google’s Bard chatbot doesn’t even the playing field, Microsoft just might seize a chunk of the search engine market share.
Then again, let’s look at digital transformation from the opposite angle. What may be the consequence if you don’t embrace it? What is the cost of doing nothing? Let’s go back to the year 2000, a time when companies were barely scratching the surface of how the internet could help them scale and better access their customer base. Forward-thinking retail stores were learning how to sell their wares online. However, the world’s leading toy retailer, Toys R Us, chose to go in the complete opposite direction. After all, what could be the chances that customers wouldn’t want to go to a toy store?
Instead of adding an e-commerce option in addition to their brick-and-mortar stores, Toys R Us chose to outsource online retail to a fledgling company out of Seattle that had recently decided to expand out of the book retail business. You might have heard of it: Amazon.
Fast forward about a decade and a half. In 2017, Toys R Us filed for bankruptcy — the same year Amazon’s market cap passed half a TRILLION dollars.
By the way, Amazon adopted a digital business design to reinvent its fulfillment and shipping infrastructure.
So, how do you envision digital transformation helping your customers?
The reality is companies that want to grow, scale, and remain competitive absolutely need to capitalize on digital technology. In fact, the entire business model should be designed for digital transformation. MIT researchers Jeanne W. Ross, Cynthia M. Beath, and Martin Mocker use the term “digital business design”.
While digital transformation is a long journey, it starts with five building blocks: (1) A coherent set of systems, processes, and data, (2) A clear understanding of your customer needs and values, (3) a Repository of business, data, and infrastructure components, (4) Distribution of responsibilities for digital offerings, and (5) A developer platform open to external parties.
Digital transformation through a digital business design may sound daunting because it is. Transforming an existing business to a digital is harder than starting a new digital business. However, the competitive benefits far outweigh the costs. I work with companies to blaze a path forward by empowering people to embrace change throughout the digital transformation journey. But ultimately it’s up to company leaders to determine whether they’re ready to commit and invest in a digital strategy (or fall to extinction).