Digital Transformation : The new path to innovation

Technology is the know-how of making valuable things happen. Innovation is the way humans derive value from new technology. Some humans, acting alone or in packs, will accelerate the potential of new technology and others will hold back.

It is so with digital transformation, a very broad set of game-changing technologies available today and evolving, as Bill Gates wrote, at the speed of thought. The accelerators actively engage in digitalization impacting the laggards, whether they like it or not. Consider the progress of some digitalization accelerators. 

Google has turned 20. It moved from the world’s most successful online search engine, to a most successful generator of advertising revenues, emails, online videos, maps of the world and our back yards, analytics and artificial intelligence and ...

Amazon is barely 25 years old. It began as a mail-order bookseller powered by very user-friendly software. Then it sold CDs and DVDs and enabled producers or distributors to sell practically anything to anyone else on their platform. It moved into web-hosting, cloud computing, electronic books and Kindle devices, warehouse robotics, consumer robots (Alexa), TV and film production and physical retailing too.

IBM is over 100 years old. Just in the last 25 years it has evolved from mainly mainframes to PCs, email, cloud computing, super-computing and artificial intelligence and is still the world’s largest registrant of new patents. It leverages its physical global presence in complex business-to-to business projects the world over.
  
And the laggards – Kodak, Nokia, Yahoo, Swissair and Cyprus Airways and oh, so many more!

Clearly digital transformation has allowed new and old companies to significantly diversify their client base and businesses, as they imagine new solutions, products, markets and business models, then make astute action choices (they all count many failures too).

Consider how digitalization is transforming some entire businesses.

In the music business in 2000 revenue from CDs in the US was close to USD 14 billion, concerts about USD 1 billion. In 2017 revenue from CDs was USD 1 billion, streaming and subscription USD 4 billion and concerts USD 4 billion.

As the automobile industry moves relentlessly to autonomous vehicles the marketplace is invaded by app developers (Google, Apple), Telecom operators (Verizon, Vodafone) and new vehicle companies (Tesla, Google) challenging the Toyotas, GMs and BMWs not only on making vehicles but also on how they are used (private or collective ownership, rental, sharing, insurance etc).

In the medical world, a patient together with a trained clinical professional and big data software can obtain a computer-generated diagnosis that is more accurate than that of any single doctor.

For start-up wannabes digitalization can be an opportunity for a low-cost beginning such as a platform bringing together providers of any underutilized asset with potential users (renting rooms, clothes, DIY equipment, cooking skills …). In some cases physically managing and organizing is crucial in others digital prowess may suffice. Scaling up however is no easy ride and neither is financing your venture.

For existing companies the challenges are different. Most important is adopting a new business model which, like Kindle and Amazon, might threaten the existing business. Choosing the new model needs building on the company’s strengths while at the same time broadening its outlook to what “might be” – how much the company can stretch itself outside its traditional way of working. Such transformation involves changing structures and cultures while simultaneously doing day-to-day business.

For all leaders digital opportunities are out there in abundance. Go for them or ignore them at your peril. ​