Avoiding Digital Disruption While Heading Toward the Future

Digital disruption is described as the changes that occur when new technologies and businesses models have a negative effect on existing goods and services. Despite some activity, many companies are lagging when it comes to transforming to take on the challenge.

Technologies Taking Hold

A recent example of digital disruption is Uber, the smartphone ride-hailing app. If you're not familiar with the service, you push an icon on your smartphone to order a driver, and the app tells you when a car has accepted the job, when it will arrive and about how much it's going to cost (generally less than a regulated taxi). The drivers are regular folks driving their own cars.

It's no surprise the taxi drivers in cities where Uber is popular are unhappy and protesting the service.

What Uber is doing to the car industry, Airbnb has done to the hotel industry (people rent out their homes or apartments on a short-term basis at prices lower than hotels charge). Facebook, Amazon and Netflix have also disrupted industries.

Digital Definitions

Technically, digital disruption is when new digital technologies and business models affect the value proposition of existing goods and services. Digital transformation is what happens before the disruption or in response, when businesses alter their activities, processes, competencies and models to take advantage of the changes and opportunities of digital technologies.

And because of digital disruption, 78% of businesses around the globe believe that digital start-ups pose a threat to their organizations and 45% worry that the competition from these up starts may make them obsolete in the next three to five years. These are among the results from Embracing a Digital Future – Transforming to Lead Ahead, a survey performed for Dell Technologies by independent technology market research company Vanson Bourne. A total of 4,000 business leaders — from mid-size to large enterprises — were surveyed across 16 countries.

Looking at the Past and Toward the Future

Fifty-two percent of companies globally have experienced significant industry disruption over the past three years. Additionally, 62% of companies have seen new competitors emerge as a result of digital technologies.

Other, global results from the survey are:

• 48% of businesses don't know what their industry will look like in three years,
• 60% can't meet customers' top demands,
• 73% confess digital transformation could be more widespread in their organizations,
• 66% are planning to invest in IT infrastructure and digital skills leadership,
• 72% are planning to expand their software development capabilities, and
• 52% have experienced significant disruption in their industries over the past three years as a result of digital technologies and the "Internet of Things" (IoT).

The top IT investments planned over the next three years are:

1. Converged infrastructure, 

2. Ultra-high performance computing,

3. Data analytics, and

4. IoT technologies.

Additionally, 35% of respondents have created full digital profit-and-loss statements and 35% are partnering with digital start-ups. Just 17% measure success according to the number of patents they file, but nearly half (46%) are integrating digital goals into all department and staff objectives.

What Can Your Business Do?

So, digital disruption and transformation are part of the new normal and nothing seems able to stop it. If you don't want to be left behind, here are five ways that may help your business create a digital transformation strategy and meet the challenge head on:

1. Focus on customers. Businesses often view the world through the filters of marketing, sales and maximized revenues. Instead of thinking about business success, target the customer experience.

2. Make analytics your friend. Stop thinking of marketing and sales data as simply marketing and sales data. Develop a strategy to access, analyze and use that data. Tap the brains of analysts who can think outside the box of departmental silos in order to combine all types of data, including point of sale, sensors and machines, logs and social streams. Then use that big data to innovate.

integrated online inventory as well as in-store inventory 

3. Unify operations. Best-practice organizations assess digital requirements from across the business and then set objectives. Most organizations have multiple teams and departments involved in digital transformation. It's crucial to ensure that all of your business is aligned and operating toward the digital goals you've defined.

Prepare your team in advance by making it clear that the project will require the business to operate without silos. Every department must be treated as relevant and important to the overall goal. It may help if you can name a Chief Digital Officer who can oversee and direct team members across the business.

4. Think visually. Digital specialists have defined key performance indicators that extend far beyond revenue. This can include diverse factors such as customer lifetime value and employee satisfaction, as well as a funding model. Decide what visualization format is best for you needs. Data visualization is the ability to see various data in a variety of formats such as charts, graphs or other representations. Infographics often play a role in visualization. If your company has a hard time understanding how data can be used to drive digital transformation, consult an advisor who can help you leverage this critical information.

5. Be nimble and quick. By the time a project is completed, market and customer requirements have often changed. To avoid this problem, develop digital agility that will let your business embrace operational changes as a matter of routine by using digital technologies. Digital agility is rooted in the concept of learn, launch, re-learn and relaunch.

This lets you consistently experiment and adjust, refining your approach in manageable iterations. Successful firms in the digital age must be agile, including in the way they manage innovation and change.

Constantly Evolve

In your digital transformation, the main goal is to continuously evolve your digital strategy based on prior outcomes and feedback. The transformation should give your business the ability to sustain its competitive advantage in the face of challenges now and in the future.