The process of digitalization has caused massive disruptions, presenting major challenges for organizations the world over, but has also opened new exciting avenues for those who can surf the wave. This is a revolution in itself, one that has spurred the creation of new business models and scenarios, challenging longstanding players in every industry. Uber and Airbnb … are just a few outstanding examples of entities that made their way to the top without owning tangible assets (cars and accommodation respectively).
The once acclaimed “blue ocean strategy” is now being questioned as selling high-priced, high-value products - or conversely, cheaper products relying on a limited service - has proved insufficient to stay ahead of the game. Smaller and highly reactive players have gained the upper hand over their competitors by making the most of the digital turn. Think of an idea today, turn to crowd funding tomorrow and smart production communities the day after and there you have it: a product or service ready to be distributed at the global scale through modern e-commerce platforms. Increased choice, shorter delivery times, improved customer experience, better pricing and better profits? It is no longer an impossible equation to balance.
A swift and smart adoption of new tools available, and above all, of a new organizational culture is the price to pay for anyone seeking long-lasting success in a fast-paced environment. In this series of two articles, we tell you how to navigate these turbulent waters.
The real issue with digitalization.
Before going even further, let’s give a bit of background. Since the 90’s, the external environment has been marked by the dynamics of technological change, availability and adoption. Not only do technological innovations flood the market at a higher and dizzying pace, but they are also exponentially more powerful and embraced quicker than ever before. In fact, the only invention that could claim such a fast adoption in the past was … the television (see graph below).
However, this trend appears more prominent in the private sphere, where new tools are tested and made use of almost seamlessly. Large organizations are clearly lagging behind, propelling an ever-growing number of smaller and technologically “upgraded” entities to the forefront of business life.
Besides these external challenges, organizations are internally put to the test. Change saturation makes it more difficult for well-established companies to keep up with the rhythm. Changes pile up and have to be dealt with on top of business-as-usual operations, meaning that teams are usually spread too thin and unable to absorb more of them. Denial and uncertainty are also paralyzing reforms, leaving a lot of companies behind, especially SMEs.
According to a recent survey conducted by McKinsey, only a tiny fraction (8%) of respondents believed that their business model would still be sustainable at the current pace of digitalization. Unfortunately, assuming a constant rhythm is a serious mistake. The current trend heralds only the beginning of the changes that digitalization will bring. At the risk of sounding alarmist, the time of decision is now or never.
If not now, when?
The wait-and-see approach is not an option anymore. Gone are the days when it was a strategically wise position to let others invest heavily in a change and prove its viability. The digital era rewards “first movers” and “superfast followers”. Simply put, they develop a learning advantage by launching pilot projects and working in small increments pulled by real-time demands. Focusing on creating communities and generating information loops allow them to quickly design advanced versions of their product and establish themselves as almost monopolistic leaders … before copycats even enter the market with a first unpolished “me-too” proposal. The numbers put forward by Mc Kinsey leave no room for doubts: benefits on a three-years period for fast “adopters” of digital innovations double those of their more conservative counterparts.
Even though these facts alone prove the urgency to make the move, remember that digitalization is also a long process that is not merely limited to implementing a few technological patches here and there. Nor is it a task confined to the IT and Marketing Department. It spans a variety of domains that goes from a shift in organizational culture, less siloed and risk averse, to what it means to be change-ready and end-customer driven. It is crucial to understand that what drove performance until the present day will not guarantee future growth. Quite the contrary, doing more of the same can stall progress and eventually cause irreparable damage.
If digitalization has leap-frogged to the top of your priority list, the next article tells you how Change Management can create the right conditions for you to make the most of the digital turn. Indeed, getting started and bringing together all the workforce is perhaps the biggest challenge attached to it. Digitalization definitely entails many technical changes, but its success relies above all on the ability of the people to adjust to the new reality. So, stay tuned!
 To give just one example of the change in scale, Apollo 11 was landed on the moon with a computer that has thousands of times less processing power than today’s smartphones.