Over the next five years, companies will begin to see digital affect the majority of their revenues. A large number of companies are embracing digital technology to stay in tune with the current trend. However, not many organizational leaders actually understand what it requires for their companies to be able to take advantage of a complete digital transformation.
I recently read a blog of someone who started out in the digital health sector. The blog described in detail the challenges start-ups face in trying to penetrate into the healthcare sector due to lack of funding,Here is a quote from the blog “During 2009 to 2012, many great ideas for healthcare companies received seed funding between $500,000 to $2 million. While this was enough to get a proof of concept or even a working beta with some painfully long sales cycle pilot customers, it often wasn’t enough to overcome the political and technical hurdles of integrating into myriad legacy Electronic Health Record (EHR) systems, Practice Management systems and billing software. For example, there are well over 100 established EHR vendors in the U.S. market alone.”He goes on to describe how they struggle with theinteroperability into the legacy systems of their customers was a deterrent in the growth of the company. The start-up CEO finally caved in and sold out. This is the developers side of the story on how the health-care sector is resistant to adapting to new changes in the digital world (read the whole story here).
Many institutions and firms assume that going digital just means use of technology as an interface. But that is not necessarily true;companies still think and function in the ‘old-way’ without making changes to the digital space.McKinsey explains in their latest post, that ‘Going digital’ is a way of doing things. They describe three attributes for going digital
- Creating value at the new frontiers of the business world – Companies re-examining the process and capitalizing on the value of these new avenues open out. For e.g. the internet of things has significantly helped the automobile industry in creating new value additions. In the Mobile World Conference, one of the highlights was car to car communication, as a safety measure for all cars both driverless and driven.
- Creating value in core business – The fashion industry spends a huge amount of effort and planning in the winter/fall collection releases. Data analytics and big data can be used to forecast demand for each season to plan ahead for estimated numbers for the launch. This could be a big win for the entire supply chain. So, not only can companies benefit from internal regulation, by gaining insights into understanding the customer behavior from the many sources available, but organizations are also able to enhance the overall customer experience.
- Building foundational capabilities that support the entire structure- Companies need to use digital technology to be able to scale, be agile and remain competitive. Consider what happened in the health-care sector. Because huge amount of money had already been invested in outdated systems, many hospitals weren’t and still aren’t able to take advantage of solutions that could create value to them and most importantly to the customer.
The 2015 Digital Business Global Executive Study and Research Project by MIT Sloan Management Review and Deloitte identify strategy and not technology, as the key driver of success in the digital arena. The report summarises that for a digital transformation to occur- clear digital strategy needs to be outlined by the leaders, with a buy in from all employees to support a culture of change and reinvention. Mature digital companies are willing to take more risks to stay competitive and are willing to invest in training their employees to be able to operate within this digital transformation.