By Simon Turner, CTO at Altius
The role of digital technology is shifting. The proliferation of technologies such as mobile, cloud, artificial intelligence, sensors and analytics, amongst others, is resulting in the collision of our digital and physical worlds.
Today’s business leaders need to realise that digital technology is no longer just being used to drive marginal efficiencies across business operations – it has become a catalyst for game changing innovation and competitive advantage. Digital technology is changing and disrupting every industry and it’s not a fad or the next dotcom bubble. It’s a train that has already left the station and is on one long and very exciting journey.
Let’s take a look at why digital is accelerating at such a speed and some of the success stories of organisations that are already on board.
Who’s driving this train?
Whilst the advancement of digital technology is fundamentally crucial to the digital revolution, it’s actually consumers who are in the driver’s seat.
Over recent years, digital technologies have become ubiquitous and accessible to the wider population and this has completely changed the way we buy and use products and services. It has also had a profound impact on the expectations of consumers across the globe – who now have an insatiable appetite for speed, convenience and non-stop connectivity.
In the business-to-consumer (B2C) world, that’s causing a shift in power as consumers make companies work harder for their money. A lot of this shift can be attributed to the expectations of millennials or ‘generation Y’ who demand that companies keep up with the pace of change or lose relevance.
Digital channels and platforms are changing everything. New technologies are impacting the value of existing products and services offered and changing business models beyond recognition. But don’t be fooled by the term ‘digital disruption’. It’s not a negative term – unless you choose to ignore it or try to fight it. For businesses that embrace it, it can have hugely positive implications and results.
Digital technologies provide greater access to information and the means for improved communication with customers. They are also lowering barriers of entry to new markets, allowing innovative organisations to diversify their product or service offering, and blurring the lines between industries.
Take supermarkets for example. They are now competing with insurance providers. Energy companies are offering credit cards and retailers are providing energy discounts. Giants of technology have long recognised the need to shift and adapt business models. Microsoft, for example, has launched the cloud version of Microsoft Office in Office365 to stave off completion from Google Drive and similar applications.
The real imperative in a world where ‘everything’ is digitised is that businesses need to pursue innovation, not just focus on growing their existing model or beating the competition. Without innovation strategies, companies will lose their competitive advantage.
Let’s take a look at some successful examples of digital innovators and disruptors:
The Post Office
When you consider that letter writing has been replaced by email and text, bill paying has moved online and the catalogues and junk mail that used to weigh down our trusty postmen and women now arrive in our inboxes, the future for the Post Office looked bleak. That is until they implemented an agenda for change designed “to make the Post Office as relevant tomorrow as it is today.” This involved focusing on how people want to consume services, as opposed to how they used to consume services.
One of the Post Office’s biggest success stories is its expansion into financial services. These days the Post Office has more branches than all of the UK’s banks and building societies put together and has an agreement with almost every bank to provide their customers with over-the-counter services. In 2017 the then-business minister, Margot James, called the January 2017 deal “the biggest expansion in branch banking services in a generation”
To stay relevant and address digital trends, the Post Office has established a digital factory in which multi-disciplinary agile development teams develop ideas into new products, such as the Post Office Travel app, which customers can use to manage their Travel Money cards, find their nearest ATM, and access their travel insurance policy.
Consumer industries, like retail, have had to be the fasted to act and although many are still dragging their heels, plenty are using digital technology to innovate. Fashion retailer AllSaints has taken elements of the channels that their customers value and combined them to deliver a more valuable experience. For example, they have integrated the convenience of web browsing in their physical stores by adding internet enabled kiosks on-site. Customers can browse and check availability on-line, and then try the item on in-store. Apple stores are another example. They use mobile Point of Sale terminals to add the convenience of ‘click to pay’ to their physical shopping experience.
The large retail banks have been heavily disrupted by fintech and smaller challenger banks, as well as pressure from customers, which has forced them to adapt by using digital technology. Today it’s all about the convenience of doing your banking on your smartphone and as a result a new breed of digital-first, mobile-only ‘challenger banks’, such as Atom Bank, Monzo and Revolut in the UK; BankMobile and Simple in the US and UBank in Australia, have emerged. These new banks have capitalised on frustration with existing models and are operating digital-only offerings to give their customers a full range of banking services.
Airbnb has totally disrupted the hospitality landscape with a really simple business model that maps homeowners with space to rent to travelers seeking somewhere to stay. It’s created a physical connection between people and incorporated it into their software platform. It’s a pure digital channel with no booking agents or front desk receptionists. You simply find and make reservations and/or manage listings and experiences via the app and online.
In the words of Elon Musk, Tesla has created a “sophisticated computer on wheels”. Its cars are connected to the company’s software labs, enabling Tesla to push fixes and add new features to their cars without the user having to go anywhere to get the changes physically applied. Where conventional cars depreciate in value, Tesla vehicles, which are getting new features pumped into them regularly, could, in theory, increase in value. Now there’s a thought!
It would be remiss of us not to give Uber a nod here. Uber has revolutionised the taxi industry across the world. Uber’s business model has capitalised on the era of technological innovation which creates a two-sided market place by cutting out third parties. Uber has simply created a platform which provides a great user experience for someone looking for a ride, and connects them to someone immediately available to offer that ride.
Transforming the employee experience
The pace of change is also being felt in the workplace. The use of the Internet and mobile devices have blurred the lines between the physical office and the place where work actually happens. Employees now communicate, collaborate and work using digital technology and organisations are increasingly turning to technology to provide employees with the skillsets and tools to do their job more efficiently and effectively.
Digital technology can keep employees connected and provide anywhere, anytime access to tools and corporate information. Providing the right tools at the right time, with personalised user experiences can empower employees and improve productivity. These days digital onboarding, shift and rota scheduling, training and online tools are all part of the progressive and innovative work environments that employees now expect.
This train has left the station
Many companies have woken up to the fact they must use digital technology and channels to engage with their employees and customers, deliver what they want and stay relevant. What they don’t realise is quite how fast they need to make the changes. It might have taken more than 70 years for telephones to reach 50% of households, but it only took 28 years for radio to reach the same number, and it was just 10 years for the Internet to become a basic and essential part of daily life.
Another reason to sit up and take action is the fact that Generation Z are about to step on board. If you thought the millennials were shaking things up, just wait for generation Z to take the driving seat. You need to prepare for your future customers, and whilst millennials pioneered Internet living, Gen Z will be its innovator.
Where to start?
To succeed in the digital world, organisations must embrace innovation and decide whether they can use digital technology to enhance and transform their existing business model, or whether they need to identify new business models.
They must develop digital transformation strategies that address how they transform externally to meet customer needs and demands, as well as how they transform internally in order to drive that digital transformation.
Get in touch today to start work on your digital transformation strategy.