Tuesday, November 15, 2016
What is a "digital business" and why should I care?
A "digital business" is one that leverages technology to collect and analyze internal data sources along with non-traditional, external data sources to create a more responsive organization that can:
1. better anticipate and respond to changing customer demands,
2. provide a better customer experience,
3. increase productivity across all business units, and
4. drive innovation within its organization that enables those things.
It is not just about adopting new technology and goes far beyond building mobile apps, incorporating cloud technologies, or increasing the number of "likes" on social media. Rather it is about using technology to transform the way a company does business.
1. The emergence of the "connected consumer",
2. The proliferation of communications, sales, and distribution channels,
3. The explosion of customer demand/sentiment data,
4. Increasing customer expectations for quality goods and services, consistent and positive experiences, greater choices and personalization, and speed of delivery.
With the proliferation of smart phones, consumers are now connected 24/7, everywhere. This shift in the time and location aspect of customer engagement creates new opportunities as well as new demands. This is true for B2B as well as B2C companies. Not only have they impacted the engagement opportunities, smart phones have changed the expectations of our already-fickle customers around service, availability of information, and speed of transactions.
A quick review of the success of ride-sharing services, such as Uber and Lyft, over the past couple of years shows that their model was not even possible prior to the connected customer coming on the scene. Uber and Lyft disintermediated the relationship between riders and the cab companies: Their respective applications not only "hail" the ride but also provide a real-time view of the driver's location and ETA and then handle the payment automatically, providing a much smoother experience for the rider and the driver alike. How quickly will this impact the traditional cab companies? Recently, Yellow Cab Cooperative, Inc of San Francisco, Uber's birthplace, filed for bankruptcy protection citing "competition from newer app-based ride-sharing services" as one of three primary challenges faced by the cooperative.
In a report on digital banking from McKinsey & Company, the authors state that "being able to take advantage of, or react to, the digital revolution requires [companies] to behave in ways that they are not quite accustomed to. It requires extremely clear and quick cross-functional collaboration." So, an organization's response to the above drivers can have serious long-term impact to its business but the question is not "what technology do we need?" It is, rather, "how are we going to organize our business in such a way that we can incorporate fast-moving digital innovations to respond successfully over time?"
As the digital and physical worlds converge, leadership should search out people with skills and aptitudes to help organizations navigate the opportunities and threats that will arise over the next few years. How business adapt will determine their relevance (and existence) over time.
Posted by Joel T. Hutton at 1:01 PM