Welcome to Project Reality’s first-ever blog and the first in a 3-part series on how the events of 2020 have become the catalyst for digital transformation (DX or DT). This blog will also focus on how such events can play a crucial part in adapting to the micro and macro environment, forcing businesses from the retail, manufacturing, and service sector, etc. Amazingly, companies have been called to re-evaluate their business models moving away from the traditional in-person as social settings. Become the norm.

Businesses such as Tesla, have begun to realise the need to incorporate a bigger proportion of their process with innovative contactless delivery methods, as digital transformation becomes the heart of this radical transition. The ability for large corporations and SME’s to adopt the right technology and adapt to changing macro-environments with a robust business and digital strategy, at pace, is key to survival. However, what is paramount in the whole process is having the right digital skills in-house (or externally if required) to select, implement and roll out this technological transformation is fundamental.

AirBnb wanted more team members to use the company’s data platform and understand the data to inform decision-making across the enterprise. Even as a digital-native company, they needed more internal data analytics training to get data usage to the levels they wanted to see. They started an Airbnb “University”. The three-tiered program begins with data awareness, then data collection and visualisation, and finally, data at scale.

Digital Transformation Defined

DX is the adoption of digital technology to transform services or businesses, through replacing non-digital or manual processes with digital processes or replacing older digital technology with newer digital technology. Digital solutions may enable – in addition to efficiency via automation – new types of innovation and creativity, rather than simply enhancing and supporting traditional methods.

One aspect of digital transformation is the concept of ‘going paperless’ or reaching a ‘digital business maturity’ affecting both individual businesses and whole segments of society, such as government, mass communications, art, healthcare, and science.

Digital transformation drives change in three areas: customer experience, operational processes, and business models. The process of digital transformation requires coordination across the entire organization and involves business culture changes.1

The Tipping Point

The Tipping Point: How Little Things Can Make a Big Difference is the debut book by Malcolm Gladwell, in his words: “The tipping point is that magic moment when an idea, trend, or social behaviour crosses a threshold, tips, and spreads like wildfire. . .”.2

Part of the book’s title ‘…How the little things make a big difference…’3 is so applicable to 2020 has gone socially, politically, economically, and environmentally. Who would thought that what started as a relatively little thing would lead to a seismic paradigm shift in terms of how we live, interact, think, and how we do business.

A changing landscape

The landscape has now changed, we are in unprecedented times and the events of 2020 have simply been something that was not part of the script. It has changed forever the way we do business.

Covid-19 has pushed companies over the technology tipping point, it has accelerated the adoption of digital technology by several years. Many of these changes will be long-term and, in some instances, permanent.

According to the Mckinsey Global Survey of executives (2020),4 companies have accelerated the digitisation of customer interaction and their internal operation by 3 to 4 years and the share of digital or digitally enabled products in their portfolios has accelerated by 7 years.5

Funding for digitally led initiatives has increased and will increase further. The requirement to have tech-savvy people and relevant digital roles is now a must if any business is to stay operational, retain/attract new customers and adapt to the macro (and micro) changes to the environment.

Staying competitive in this new paradigm

To stay competitive in the new business and economic environment requires new strategies and practices. Large companies and SME’s now recognise technology’s strategic importance as a critical component of the business not just a source of cost efficiencies.

Companies must now look at hiring third parties who can bridge the gap that they lack in terms of digital capability, look to fill gaps for digital/technology talent, and also review the use of more advanced/emerging technology such as Artificial Intelligence (AI), Virtual Reality (VR) and Augmented Reality (AR) and being agile in terms of speed in experimenting and innovating.

Has digital adoption taken a quantum leap at both the organisational and industry levels?

During 2020, consumers have moved dramatically toward online channels, and companies and industries have responded in turn. There has been a rapid shift towards interacting with customers through digital channels for instance video conferencing tools such as Zoom Technology and Microsoft Teams6 or Lenovo investing sales, operations and research teams, which they called Intelligent Transformation.7 Equally, there has been an obvious rising trend in companies and enterprises creating digital or digitally enhanced product/service offerings.

Changes are relative to the industry, however, for instance in manufacturing (automation) adoption has been slower compared to those industries without physical products between B2B and B2C companies. However, this contrasts with financial and professional services who have had to create a digital offering to their services as clients were in Lockdown.8

There will be a need for having strong leadership in times of change and who are bold enough to drive strategies that take digital into account. These are markers of success during disruptions and transformation.

The extent of technology’s role during this period will push (and has pushed organisations) to implement/experiment with new digital/emerging technology and those companies who invest more capital in digital technology will reap the benefit mid-to-long term as those who refocus some of their entire business model around digital technology will gain a competitive advantage.

What are the 4 key things can we glean from this?

  1. Digital Transformation is here to stay, and the events of 2020 have sped up the process. If companies aren’t open to embracing new technology despite there being some risks, it’s only a matter of time before some competitors become the next Blockbuster or Sears who failed to keep pace with negative global events, market shifts, and changing consumer expectations.
  1. Digital transformation strategy is not merely about adopting new tools with the expectation that they will change your business. It’s also about making sure that you have the right working culture in place to reap the rewards. The right combination of people, skills, process, and technology are fundamental.
  1. Technology has been changing consumer behaviour and consumer behaviour is influencing changes in technology, including technology companies choose to adopt and integrate into their Martech (defined as a blending of marketing and technology) stack.
  1. We are in the 4th Industrial Revolution the age of digital, is in the current and developing environment in which disruptive technology and trends such as the Internet of Things (IoT), Artificial Intelligence (AI), Robotics, Virtual Reality (VR), Augmented Reality (AR), etc are changing the way we live and work, the events of this year have merely sped up the process.9

What is clear is that companies will need to face up to digital disruption and reinvent the core with bold business strategy. A solid, industry-specific digital strategy and cutting-edge execution can set the stage for increased revenue growth and a better return on investment.

In Part 2, we will be looking at the importance of going digital for SME’s and their role in DX . . .

References:

1. O’Donnell, Jim (10 March 2017). “IDC says get on board with the DX economy or be left behind”. techtarget.com.Lankshear, Colin; Knobel, Michele (2008). Digital literacies: concepts, policies and practices. p. 173. ISBN 978-1433101694 – via Google Books. The ultimate stage is that of digital transformation and is achieved when the digital usages which have been developed enable innovation and creativity and stimulate significant change within the professional or knowledge domain.

2. Gladwell, Malcolm (2000). The Tipping Point: How Little Things Can Make a Big Difference. Little Brown pp.1-12

3. McKinsey Global Institute., (2020) What 800 executives envision for the postpandemic workforce. [online]. Susan Lund, Wan-Lae Cheng, André Dua, Aaron De Smet, Olivia Robinson, and Saurabh Sanghvi. [Viewed 30th November 2020] Available from: https://www.mckinsey.com/featured-insights/future-of-work/what-800-executives-envision-for-the-postpandemic-workforce.

4. Market Watch (Published: April 1, 2020 at 1:08 p.m. ET). Zoom, Microsoft Teams usage are rocketing during coronavirus pandemic, new data show [online]. Market Watch [Viewed 27th November 2020]. Available from: https://www.marketwatch.com/story/zoom-microsoft-cloud-usage-are-rocketing-during-coronavirus-pandemic-new-data-show-2020-03-30

5. Digital Bulletin (Published: May 13th, 2019). The intelligent transformation of Lenovo [online]. Medium.com; [Viewed 27th November 2020]. Available from: https://medium.com/digital-bulletin/the-intelligent-transformation-of-lenovo-ad9b53a0beaf.

6. McKinsey Global Institute., (2020) What 800 executives envision for the post-pandemic workforce. [online]. Susan Lund, Wan-Lae Cheng, André Dua, Aaron De Smet, Olivia Robinson, and Saurabh Sanghvi. [Viewed 27th November 2020] Available from: https://www.mckinsey.com/featured-insights/future-of-work/what-800-executives-envision-for-the-postpandemic-workforce.

7. Ericsson (Published: 2020). Unlock the value of Industry 4.0 [online]. Ericsson.com [Viewed 27th November 2020]. Available from here

8. McKinsey Global Institute., (2020) What 800 executives envision for the post-pandemic workforce. [online]. Susan Lund, Wan-Lae Cheng, André Dua, Aaron De Smet, Olivia Robinson, and Saurabh Sanghvi. [Viewed 27th November 2020] Available from: https://www.mckinsey.com/featured-insights/future-of-work/what-800-executives-envision-for-the-postpandemic-workforce.

9. Ericsson (Published: 2020). Unlock the value of Industry 4.0 [online]. Ericsson.com [Viewed 27th November 2020]. Available from: https://www.ericsson.com/en/internet-of-things/industry4-0?gclid=EAIaIQobChMIitDMzofV7QIViNPtCh2JfQX3EAAYAiAAEgIGOvD_BwE&gclsrc=aw.ds