Digital has already transformed daily living; the Internet of Things will broaden that transformation – and it’s crazy not to be scrambling for a foothold in the evolving landscape.
But as CIO Development’s Peter Thornton recounted to Computer Weekly, businesses are bizarrely complacent: “Everyone knows the stories about HMV and Amazon; Blockbuster and Netflix; Thomas Cook and Expedia – but many assume it only happens to other organizations.”
Dangerous thinking there. As software continues to “eat the world,” to borrow from Marc Andreessen, disruption will become more the rule than the exception. Businesses need to either disrupt – or be disrupted, perhaps right out of the game.
This isn’t alarmism – it’s happening. So why aren’t more industries pushing to evolve further, faster? “Most companies know they need to change, but they’re not sure how,” says innovation expert and Brightidea CEO, Matt Greeley. “They know they need a governing structure for innovation, but they don’t know what that looks like or how it works.” And Greeley should know, he’s spent the past 17 years helping industry leaders understand how to create that structure, and why they need to.
The “why” offers greater clarity when looked at through the lens of industries that have already benefitted from, or suffered through, radical change as a result of digital transformation. If you think yours is disruption-proof, this list should give you pause:
1. Transportation/Taxis. Uber and its competitors (Lyft, GrabCar) have changed the playing field – and not just for taxi companies. Car dealers stand to be impacted as well. A recent survey noted, “22 percent of Uber users aged 18 to 64, who have used the service in the past 6 months, said they were delaying or holding off buying a new car for that very reason.”
Aside from failing to see a way to use digital to their advantage, taxi companies didn’t consider what commuters might want. In places like Malaysia, for example, 80 percent of them prefer services like Uber and GrabCar over conventional taxis.
For cab companies, the recovery window is closing. Says Greeley, “If you’re a taxi company your whole business could go away in five years, if you’re not careful.”
And it’s why innovation must be a constant part of your daily business. You might think you can’t afford to spend resources on creating an innovation culture, but it will cost more to play catch-up if you fall behind.
2. Telecom. Most people seem to share comedian Gary Gulman’s opinion that “the phone is this seldom-used app on my phone.” But having the option, along with texting capabilities, is enough to have rendered house phones virtually nonexistent. And pagers are entirely gone – a reminder that digital transformation doesn’t end with simply accepting digital technology. Innovation is a constant process.
And here’s something else to keep in mind: Humans are experiencing digital transformation too. Memorization has been ousted by Google. And cyber-anthropologist Amber Case says smartphones “have become more than just a device in our pockets but something closer to a digital extension of ourselves.”
3. Education/Training. Digital technology has revolutionized the way workplace training is done, decreasing the need for classroom instructors and printed materials. The iPad and other tablets have made education and training available anytime, anywhere – not to mention more effective, and less expensive over time. And VR technology will change this industry yet again. Are you ready?
4. Retail. The online marketplace, aka Amazon, displaced retailers who were slow to embrace ecommerce, or didn’t offer everything. And it’s not just smaller businesses that suffer at the hands of competitor innovation.
But while it may sound surprising that major retailers like Borders, Tower Records, and Circuit City couldn’t weather the Amazon storm, Greeley has an explanation. “The bigger the company, the harder to make changes quickly. You need 50 legal approvals to make a move – it’s challenging.”
Because of that, disruptive shifts happening at the societal level are often driven by small and mid-sized businesses. “In San Francisco there’s a dry cleaner service offering pickup and delivery,” Greeley shares, “And they’re coming in over the top of other dry cleaners because you can order online and get notifications via a mobile app. Meanwhile, there are billion-dollar businesses struggling to stay relevant.”
The triumphant disruptors
Obviously there are two sides to the digital transformation coin – and some are winning the toss quite well, with disruption enhancing entrepreneurial spirit and potential. Here are some industries who’ve smartly lassoed the power of digital transformation for their own good:
Electronics/Photography. With the latest smartphone models sporting cameras on par with all but the priciest pro-grade DSLRs, digital camera sales have declined. You’d think camera manufacturers might have learned from companies like Polaroid – who arguably should have been at the front of the digital photography pack, since it doesn’t get more “instant” than digital. This is the danger of thinking you are “too big to fail.”
Smartphone cameras continue to improve with each new iPhone/Android model, and there are now lens kits that allow users to switch out for telephoto and macro options right on their smartphones. Who needs a bulky, expensive “old school” digital camera? Not many people anymore.
Consulting/Freelancers. Digital has given freelancers expanded options for promoting themselves, and acquiring work. From writers to tech professionals, the transition to digital continues to offer exceptional and expanding potential daily. However, for old pros/PR firms doing things “traditional” ways, things aren’t so rosy. They need to adapt, and soon.
Marketing Technology. Thanks to social media, and new and better ways to analyze social data, marketers leveraging digital have an endless, real-time stream of consumer information at their disposal. Not to mention channels for engagement. Greeley notes, “In the early days a lot of CMOs were driving the digital transformation initiative, because they’d just been transformed.” The trick now is to let that change spread company-wide.
Entertainment. Netflix, Pandora, Spotify, iTunes – these are just some of the companies who’ve taken advantage of the digital trend, to the detriment of established brands that failed to see the coming future. Innovation continues with livestreaming apps making it possible to broadcast directly to people’s devices. Whether to balance against too few people turning up for live events, or to extend past “sold out” physical capacity, livestreaming services like Concert Window, and even Facebook Live, are changing the way we consume entertainment yet again.
It’s not too late to start
These industries prove embracing digital transformation is beneficial – and not embracing it can end you. So what should businesses making the leap now do?
What matters most, according to Greeley, is that innovation be an intentional, carefully thought-out process – not an ad-hoc affair. Innovation labs are what should drive advances toward digital transformation now.
One reason is the separation and structure this approach offers. An innovation lab becomes a ready-made vehicle to do projects that don’t fit anywhere else, are cross-functional, or can’t be lumped in with an operating budget. “If you have a busy call center,” says Greeley, “You can’t just pull three people off the desk to work on a project. So companies are setting up innovation labs to create space to do this work in an intentional way.”
That intention comes down to structure and discipline. Instead of viewing innovation as an ethereal process of exploration with no concrete expectations, there’s a very definite approach to the work within an innovation lab. And while failure is still part of the process, there’s a greater discipline around putting a stop to what’s not working and cutting ties, versus keeping what Greeley calls “zombie projects” on the books indefinitely, when there’s nothing worth going back to.
Innovators should focus efforts on projects that break new ground, assessing risks, deal-breakers, and whether it’s even possible to do what they want to do. Experimentation is inherent, and outcomes are never guaranteed – but the potential at least must be there.
Every idea you have may not work, but all industries must try to find new ways to embrace the digital market for their own long-term survival. Consumers have accepted digital technology as the norm, and are quick to pass judgment on any company that appears out of touch. If you don’t want your company to be in that group, you’ve got to embrace digital transformation – now.