Digital Darwinism - Adapt or Perish

Digital transformation is not simply the additional technology to achieve some level of disruption. It is not a trend nor will it go away. It is an opportunity to realign technology and business together to engage increasingly connected customers and provide an agile, not fragile framework where innovation can flourish.

Once upon a time building a brand and running a competitive organization were reasonably straightforward. For the past 60 years, Information technology was a cost center and sometimes an enabler of efficiencies. No more. Over 40% of companies at the top of the Fortune 500 in 2000 are no longer there. Starting in the 1990s and increasingly since; graduates from leading universities started to join or found tech startups over starting corporate careers. In fact, only 71 companies remain today from the original Fortune 500 list in 1955. The number of new companies in the last 10 years in the Fortune 1000 has increased to more than 60%.

Earlier in my career, I had Blockbuster as a customer and built their first retail data warehouse and analytics platform. We can remember Blockbuster and its 1980s innovation which brought media into every home in America. Today with digital delivery, Netflix and other streaming platforms have sent that former innovator the way of the dinosaur. Blockbuster missed the opportunity to digitize its content early on due to a lack of vision and not a little hubris. Similarly, Walmart used to be the behemoth in retail. Amazon has supplanted it and Walmart is playing catch up game with its own digital transformation labs. The number of familiar brands that have disappeared or been replaced is long and there is no end in sight.

Today’s customers are highly connected and expect the level of customer service, personalization, and frictionless transactions. The same can be said for employees, particularly as newer generations enter the workforce. If your organization does not have an integrated approach to marketing, sales, and service it will miss necessary customer touch points and be unaware of new opportunities to create value. For example, what are the personas of our customers? When, how and where do they enter in contact with your brand and form an opinion of it? or make buying decisions? How do we create a customer journey that is simple, direct and appealing? How are they influenced and by whom?

“Leadership which is adaptable and focused on the customers, employees, partners, and suppliers can prevail.”

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Conclusions one can take away from the myriad examples is this: digital Darwinism is going to accelerate, business-as-usual will lead to extinction, no company has a brand or product which is not vulnerable. The good news is that leadership which is adaptable and focused on the customers, employees, partners, and suppliers can prevail. “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.” This adaptability as stated by Charles Darwin is integrated strategic digital transformation.

“If the first reaction to a perceived weakness is to buy technology you are leading the race to the bottom.”

Many companies today claim to be in bracing digital transformation but for the vast majority, it appears only as semi-focused technology acquisitions. Let’s be clear: if the first reaction to a perceived weakness is to buy technology you are leading the race to the bottom. You are simply piling additional technical debt on existing legacy IT infrastructure. Make no mistake, as companies mature in digital transformation significant investments will be made but the technology roadmaps must be tightly aligned with business models that create value for customers and employees and they're agile enough to compete in a rapidly changing digital economy.

The digitally transformed business must address five enterprise qualities, they are:


* profoundly aligned IT and business strategy,
* unified data and processes, 
* analytical capability, 
* business and technology integration, and
* solution delivery.

They then pull together the business model, operational processes, and customer experience. For example, in the latter customer experience is enhanced by cross-channel integration and predictive marketing. These will build topline growth and customer touch points.

“technical debt is driven by patchwork, legacy architectures or systems, and data stores that are never retired”

The challenges for organizations to transform themselves come from several areas. A culture which has a command-and-control orientation that does not allow customer-facing workers to be autonomous is one. Lack of skills to execute a data-driven strategy from the executive level on down may be fatal. Skills are not enough: predisposition to action and collaboration are equally if not more important. At the same time, technical debt is driven by patchwork, legacy architectures or systems, and data stores that are never retired makes it nearly impossible to create a transformative roadmap. Inefficient decision-making which is further degraded by poor governance hamstrings the ability to share solutions among business units.

As my team rebuilt the Amazon middle tier in 2000 it struck me that there was an opportunity to create personalized offerings presented when you enter the site. To create personalized offerings presented when you enter the site. Amazon had a complete history of your purchases, searches as well as demographic data and could provide a truly data-driven approach. Measurements of the benefit range from a 10% to 40% lift in both revenue and margin. That data can then be shared to make offerings via digital advertisement across the Internet. Needless to say, this approach has served Amazon very well and is my favorite invention. Amazon’s continued focus on the customer and driving digital innovation is the prime driver in their success.

As stated initially, digital transformation is not simply the additional technology to achieve some level of disruption. It is not a trend nor will it go away. It is an opportunity to realign technology and business together to engage increasingly connected customers and provide an agile, not fragile framework where innovation can flourish.