That most businesses in Nigeria and other parts of the world are facing challenges is not news. A number of businesses are experiencing declining revenue. Increasing cost of doing business, lack of access to funding, stiff competition amongst others seem to be at the core of these challenges. What is not in the public domain is the way out of these challenges, but certainly there is a way forward and that is digital transformation.
Digital transformation is the process of integrating digital technologies like mobile, social, cloud, analytics, big data etc. into how businesses work and provide value to customers.
It involves adopting a culture of creativity and calculated risk taking where an organisation continuously seeks for new frontiers of competitive advantage leveraging advances in technology. It requires business leaders who can proactively apply new technologies to their business model before their businesses are disrupted by these new technologies. According to John Chambers, Cisco’s CEO “By the time it’s obvious you need to change, it’s usually too late,” hence business executives need to understand the digital trend especially as it affects the industry where the play.
The Imperatives of Digital Transformation
Obviously the future of business is digital, and digital transformation holds the key to surviving and succeeding in today’s rapidly changing and challenging business environment. Advances in technology have changed the way business is conducted, it has impacted various aspects of business from production to operations to marketing to customer services and the chances are that new technologies will further disrupt how business is done in the near future.
In today’s world of business which is technologically driven, business owners and executives must transform their businesses in line with the digital realities, those who do so successfully will gain business advantage and become victors, those who fail to do so will have their businesses suffer and become victims of digital disruption. “To win in this new world, e-Business leaders must reinvent their businesses as fundamentally digital. Do this, and you can become a digital predator; fail, and your business will become digital prey” Says Forester’s Martin Gill
Digital Disruption of Business
This happens when a technological innovation affects the value proposition of exiting products or businesses e.g. advent of digital photography eroded the value offering of photographic films, computers/word processing eroded the value of typewriting, e-mail services disrupted the value proposition of postal services.
Digital disruption provides both opportunities and threats. Its effect on a business can be positive or negative depending on how the business owners/executives respond to it.
In the digital economy, there is no king of the jungle. A start-up can become a giant and a giant can suddenly become a dwarf.
Yahoo the pioneer Internet giant that was once worth over 120 billion dollars is being acquired for 4.8 billion dollars after struggling unsuccessful for many years to regain her earlier relevance. The company failed to innovate and transform in line with new technologies. It remained largely the same way it was a decade ago when it was at it's peak.
Kodak, an American company founded in 1888 made its fortunes in imaging products and had a dominance in the photographic film industry. It was a very success company and a house hold name up till the late 1990s. If you owned a camera in the 70s, 8s or early 90s it would very likely be a Kodak camera or you would have used a Kodak film.
In the late 90s digital photography entered the market and started taking away Kodak’s customers. Kodak fought back by investing aggressively in marketing but the more they did, the more their sales declined as more customers embraced digital photography. Kodak’s business was simply disrupted by a new technology with better value proposition to the customers.
The market is value driven so when advances in technology introduces a product with better offerings customers don't hesitate to abandon their previous love.
Understanding the Digital Business Landscape.
In this digital era, customers are highly empowered. They are quite informed and they embrace new value propositions speedily. To be a leader in the digital landscape you must enhance your customers’ digital experience while driving efficiency through digital operational excellence.
The economy is evolving from flow of commodity to flow of service and information, some years back the economy was based on flow of commodity, in today’s digital economy it is about the flow of information/service. In the pre-digital age, people or nations that had commodities like gold, diamond, crude oil etc. had strong economies, in the digital age people/nations that control the information control the economy.
A number of countries that their economies depend on trading of commodities are presently facing economic challenges especially those who have not developed their information system. This is because the global economy is transiting to a digital economy which is based on flow of information instead of flow of commodity.
The digital business landscape is global. If you want your business to thrive in the digital age, you must think global. You can start locally but you must think globally. It offers you the opportunity to reach out across geographical boundaries, however as the market is global, the completion is also global.
The digital business environment is very dynamic and competitive; changes happen in quick succession, entry barriers to most industries have been lowered by technology and new products and services enter the market regularly. The resources to create new things is more readily available and people are exploiting this hence maintaining a leadership position in any industry requires continuous reinvention.
The digital age is here for real, and technology is taking a central position in most businesses. The way businesses make money is changing as new and innovative business models are coming on board e.g. the largest taxi company, Uber, owns no taxis; most popular media company, Facebook, creates no content. The way business engage their customers is changing, today the customers are actually in control.
In addition to the traditional business models, the digital economy presents more transformative business models which some companies have leveraged to grow their business, these include;
Transform to Succeed.
It is true that many businesses are facing challenges, it is true that some businesses are closing shop. It is also true that some businesses have remained in business and are thriving.
Those who are facing challenges are mostly those who failed to transform in line with digital realities or who did not do so on time; the digital economy rewards innovation not imitation.
IBM has been in business for over 100 years and have remained very relevant and successful, this is principally because the company have successfully transformed severally in line with the digital trend; from IBM typewriters to personal computers and now to cloud and analytics, IBM has always reinvented to remain a business leader.
Business owners and executives need to critically review their business models and operating models by asking questions like;
Digital transformation is not necessarily a big bang change. It’s a gradual iterative process. It is about continuously applying changes that improve our business processes and customers’ experience. The focus of digital transformation is on creating value for our customers. It is more about strategy than technology.
The answers to the above questions will provide the ingredients for a successful transformation. Gradually and appropriately integrating new technologies like mobile, social, analytics, cloud to how your business works will surely transform it into a thriving business even in the face of today's challenging economy.
Article by Jude Ayoka.
A Techpreneur in the Financial Service Sector, he can be reached via email@example.com.