Digital Transformation has become the No. 1 discussion topic amongst organizations and C-Level executives. Let us take a step back and re-visit the factors that led to this phenomenon across industries and geographies.
1. Democratization of Information
In not so distant past, information was like Oil, highly precious and scarce. Which means, very few people/ organizations controlled it.
However, with the advent of Social media (including chat messenger), smart devices (a.k.a. smartphones) and availability of high speed internet, suddenly the power equation changed. Anyone with a smart phone, social media account was consuming and sharing information, freely and at speeds never experienced before.
This meant, information was being shared, across geographies and borders almost instantly.
2. The Data Explosion
Democratization of information meant, organizations and consumers were now bombarded with data, which over whelmed both. Consumers could still mine this data , as they were supported by their “friends and family”. Which product or service is cheap in which shop, which product is good, which product does not work, was shared, whether you wanted it or not.
Things were and are not that simple for organization(s). Historically, organizations were not privy to such large sets of data. Which means, they were not equipped to consume and convert this data into information. Hence, began the journey to embrace and understand this data.
3. Change in Power Equation
Democratization of information and Data explosion meant, the power equation between Consumers and Organizations changed. No longer was a powerful advertisement good enough to entice customers to buy the product. This had to be supported and validated by information/ feedback that was freely available on internet. Friends “like” ,“share” , sharing of their experiences became one of the biggest motivation factor in purchase of the product/service.
4. Barrier to entry
With increased internet penetration and access to smart devices, entrepreneurs across the globe are developing new business models and disrupting industries. All that is needed is a good idea. The cost and fear of failure is diminishing. No longer you must build big physical stores, or manufacturing plants, or need a big marketing team to push your product. You can sell online, do contract manufacturing and do digital marketing, all of which are Opex driven models.
This has increased the competition across all industries and established organizations are challenged far more frequently than in the past.
5. Business Models at the Speed of Thought
With data explosion, lowering of barriers to entry, democratization of information, new business models are being explored everyday. No longer organizations are just manufacturers or retailers or wholesales – they are becoming wellness providers, health and fitness chain and vice versa. This implies that SWOT analysis of your industry becomes so more difficult. How do you identify a threat if you would not know where it can come from?
The five factors above are why digital transformation is imperative for every organization that wants to survive the decade. And each factor illustrates why it is so more important to play a proactive role, rather than react to threats in your industry.
It is no longer about if, but when.