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, Canada is lagging the rest of the world in companies transforming to take on the challenge.
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 that a regulated taxi). The drivers are regular folks driving their own cars.
It’s no surprise the taxi drivers in cities where Uber has made inroads are unhappy and protesting the service. In Quebec, for example, there has been turmoil, protests and arrests all related to the provincial government’s plan for a pilot project where Uber can operate freely until legislators decide what to do.
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 their respective industries (the most popular media owner creates no content, the world’s most valuable retailer owns no outlets and the world’s largest movie house operates no cinemas).
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 business around the globe believes 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 Leap Ahead, a survey performed for Dell Technologies by independent technology market research company Vanson Bourne.
Vanson Bourne surveyed 4,000 business leaders — from mid-size to large enterprises — across 16 countries (including Canada) and 12 industries.
The bad news for Canada? It ranks among the least digitally mature countries, ahead only of China and Japan.
Why? This country faces less digital disruption compared to others — so far (see the box below for a list of some of the many companies disrupting digitally in Canada). A “perfect storm of slow digital adoption and less disruption finds Canada among the bottom three countries in digital maturity,” according to Dell.
Only 35% of Canadian companies have experienced significant industry disruption over the past three years, compared to 52% of companies globally. Additionally, only 48% of Canadian companies have seen new competitors emerge as a result of digital technologies, compared to 62% globally.
According to the survey, 72% of Canadian businesses admit they haven’t acted on digital intelligence, compared to 64% globally.
Other, global results from the survey are:
The top IT investments planned over the next three years are:
1. Converged infrastructure that attempts to minimise compatibility issues between servers, storage systems and network devices,
2. Ultra-high performance technologies such as Flash,
3. Analytics, big data and data processing such as “data lakes,” which hold vast amounts of raw data, and
4. IoT technologies, which encompass networks of connected objects that can collect and exchange data using embedded sensors (think of thermostats, lights and cars that can all be connected to the Internet).
Additionally, 35% of respondents have created full digital profit-and-loss statements, 35% are partnering with start-ups to adopt an open innovation model, and 28% have spun-off a separate part of the organization or intend to acquire the skills and innovation they need through mergers or acquisitions. 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.
So, digital disruption and transformation is fast becoming the new normal and nothing seems to be 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. One large hotel chain, for example, uses customer data to discover patterns that help their hotels boost customer service. For instance, the company can combine data it has on flight connections with the buying patterns of it top customers. If one of those customers misses a flight connection, the company will know that. They will also know facts such as he or she has bought martinis, shaken not stirred, and the last three times he or she was at a company property. Consequently, when the customer arrives, regardless of the hour, martinis could be delivered to the room.
2. Make analytics your friend. Stop thinking of marketing and sales data as simply marketing and sales data. Develop a strategy to access, analyse 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.
One large North American fashion retailer operating in Calgary, Ottawa, Vancouver and Toronto, invests heavily in big data analytics to figure out what products to promote to which customers, when, and by what channel. Apart from the data from its website or point-of-sale data, the company generates data from its likes on Facebook and its followers on Pinterest and Twitter.
The retailer has implemented a cross-channel inventory project that lets customers see in real-time where a product is available and when they can expect to receive it. This company (as well as other large retailers) have integrated online inventory as well as in-store inventory.
3. Unify your 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 will help if you can name a Chief Digital Officer who can oversee and direct team members across the business.
4. Think visuals. 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 your 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.
In your digital transformation, the main goal is to continuously evolve 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.