How to Transform Your Business for the Digital Age
The so-called digital business is fast becoming a mainstream, everyday reality. According to Gartner, half the directors of the world’s largest companies have registered a change in the business model in their industry given the advent of new technologies. A fifth of the digital business already generates new revenue. That is why it is now important to think in bulk and not to delay changes in the corporate structure.
Already for next year, large companies expect to receive nearly 40 percent of revenue from digital resources. That is, from digitized products sold through also digital channels, ideally fully automated, or from physical products enhanced with digital services. And it concerns all industries. For example, Volkswagen expects to earn billions of euros in digital service revenues in 2025, and according to Ford, they even match those of car sales. Nike footwear manufacturer is about to make up one-third of its revenue thanks to its newly introduced direct sales of customized products, including pure digital services. Southern New Hampshire University has successfully moved education to an online platform and has added 90,000 virtual students to 3,000 physical students. And perhaps the mining company Rio Tinto said it needed more data analysts than miners today.
What is crucial is that these are not sub-projects that would account for a few percent of the company’s total turnover. It is a fundamental change, a structural change in income. Businesses are looking for new opportunities that are large enough to come up with a whole new type of product. However, changes in the management and structure of the workforce are necessary to sustain the innovation pace over the long term. According to 46 percent of CEOs, it is the biggest brake on the development of corporate culture settings and 36 percent report a lack of capable people as a problem. Money? It is rarely in first or second place.
Innovation is not an IT thing, but it is for everyone
For any business today, it is difficult to look ahead for more than a few years. After all, just 10 years ago, there were basically no smartphones, nobody paid with a card online, we didn’t have YouTube, Google Maps or Uber. We live in a world of constant change, where no product has a clear start and end, and innovation cannot be stopped. The same becomes irrelevant in time. In-house processes in companies must also respond to this.
Classical centralized IT is an anachronism in such conditions. Today, technology specialists are spread across the entire company. With their help, the Legal Department learns new types of contracts and relationships, HR needs to focus on new specializations, risk faces new threats, and finance learns to work with new revenue sources. However, the concept of decentralized IT is now moving further, to so-called product-oriented IT under the motto “change project engineers for productivity engineers”. While traditional project management has a clear start and end, the customer is waiting for continuous development. The goal of the project is to complete it at a certain time and therefore has a fixed budget and team, while the product’s goal is to satisfy the customer and develop dynamically. Here’s another strong keyword of today: always in beta!
There is also a change in the perception of IT, which should not be just a cost item but a source of profit. Its main measure is not to be the amount of savings or partial efficiency gains, but how much new revenue it generates or accelerates delivery to customers. For wealth cannot be made without prosperity. Innovation teams should devise and create products for other departments.
Fortune favours the prepared
Innovation is almost never disposable, but it happens in waves. Netflix owners may be an example – they first sold DVD movies, then offered to download them in a digital store in response to widespread piracy, and then came streaming when this model was exhausted. In the end, they began to create their own content in bulk and today compete with established film studios. These major milestones were complemented by countless minor changes and experiments. In each sector, it is possible to distinguish maintenance innovations (minor catching-up of competition, keeping on the growth curve), incremental (gaining a partial lead over the competition) and disruptive (fundamental change of business). They all have a meaning.
How to search for such an innovation? It is simply necessary to experiment and test, regardless of failure. And when they do, they have a smart platform ready for scaling. And repeat this all the time. For inspiration, just try to draw a table where you can list the hottest emerging technologies (Internet of Things, AI, Open Banking, etc.) and your own key services and commodities (loans, investments, payments, security, scoring, data…). And think about what can be created by their different combinations. It is essential not to be afraid of improvisation, expansion into neighbouring verticals, or searching for added value in connection with others – through partnership and various ecosystems.
As Gartner says, civilizations are defined by the tools they use. This largely applies to companies as well.