Digital transformation typically stagnates because it is perceived as too disruptive or expensive. A lesson many organizations have learned is that digital transformation often fails when companies put too much focus purely on the latest technologies. Technology is surely important, but new digital tools or infrastructure are not the goals. Digital business initiatives must not be based on a trend. Instead, you should be focused on how digital business can evolve or create new business models. The pursuit of digital business should be rooted in a culture of continuous innovation and simplification, informed by a single source of truth.
Enabling digital business means gaining deep insights into a company’s customers, processes, market trends, and data. Digital business is a solution set meant to address key customers’ needs and anticipate “where things are going.” Only then can you develop the kind of collaborative culture needed to develop new digital products or businesses to deliver true value to customers and other stakeholders.
Mining for these new business models is where the real magic of digital enablement occurs. Identifying them means taking a practitioner’s approach to understanding your company’s key business functions and following those threads across your organization in search of meaningful data streams, processes, and paths to transformation. It’s a process of purposefully and sequentially shepherding change across business functions without disruption. Trying to transform the entire enterprise will fail, each department is at different levels of digital maturity and starting too soon can be as damaging as starting too late.
Leverage data building blocks to build digital pathways
It cannot be emphasized enough how important it is to gain a deep understanding of data across the enterprise to make connections that inform fast, impactful decisions. Assess the many existing business processes, ecosystems, models, and partnerships and how they are managed. Remember that data is the aggregation of every transaction or touchpoint across internal, partner, and external data sources. This also includes business functions like marketing, human resources, and customer service.
Now that you have all the data in one place, what is the next step to monetize this knowledge? Develop a pathway to create and deliver new insights that become the basis for new business models. Regardless of industry, insights, analysis, and predictive modelling will turbocharge ideation and decision making. Tools like AI and ML will greatly enhance your ability to process and deliver outcomes faster. The value created can range from optimizing cost structure to developing a new process to handle customer relationships, to identifying new product opportunities. These will drive new revenue streams, greater value propositions, lower costs, and higher customer satisfaction.
With a firm grasp on the underlying data ecosystem, it’s now possible to enable digital business in various ways, using:
- New technology (e.g., AI, Blockchain, or IoT) to create new product offerings
- Customer behaviour data that helps to prioritize and improve product features and functionality
- Ecosystem or partnership models that create innovation and value
With an agile approach to achieving digital business, you can conduct small experiments that yield real-time data insights and adjust accordingly. This allows you to fine-tune new business models with greater agility from ideation through launch.
Is the new digital business models working
Digital business is the most direct path to accelerate your company’s revenue, profit, cash, and market share. It also has the power to improve decision-making, time to market for product launches, and organizational collaboration.
The proof of successfully enabled digital business driving results is evident across many companies. For example, a little more than three years ago, Home Depot invested heavily in IT to improve its use of data to better understand customers. The retailer tracked local trends to ensure inventory control and enhanced the online shopping experience on its app. In this time, revenue has increased from $93.3 billion to $110 billion and the company’s stock rose by more than 50%.
Even a technology behemoth like Honeywell needed to undergo a dramatic digital transformation to better leverage its digital solutions in the last few years. It responded by introducing new technologies like data-centric and IoT-connected products and devices. This was only possible by digitalizing and streamlining its internal processes to build new relationships and products. Its stock price has nearly doubled in four years, with operating profit increasing by nearly 50%.
While every digital transformation is different, there are common traits among the most successful ones. Perhaps most significant is the market intelligence necessary for innovative ideas to take shape, permitting rapid experimentation and product launches. This process accelerates time to market for new products and business models through simplified end-to-end workflows.
Deploying new business models powered by an incremental, agile approach is the key to winning the race for market share, talent, and strategic partnerships. It’s more than a competitive advantage — it’s the way forward.
Raj is Chief Executive Officer at Altimetrik. Views are personal.