The rapid adoption of digital technologies by customers and competitors is disrupting every industry and creating value at an accelerated pace. Advances in technology and marketing science have armed businesses with an expanded pallet of powerful digital platforms and tools with the potential to create new value, disrupt the competition, and delight customers.
These highly scalable technology platforms are changing the way businesses connect with and create value for customers. They have catalyzed a wave of digital innovation by both new digital “natives” start-ups like Waze and Blue Apron and legacy businesses like GE and Hilton who are using them to adapt their products, channels, and business models. These digital innovators are creating hundreds of millions of dollars of value in a matter of months with product, channel, and business model innovations that exploit the rapid adoption of these digital technology platforms and changes in customer behavior.
The pace of digital innovation is accelerating. CEOs no longer have the luxury of time to manage secular decline of their core business, develop strategic plans, or pursue late adopter strategies. As a result, 90% of global businesses have initiated a formal digital transformation initiative of some form according to a survey of 573 global business leaders by Forbes Insights entitled How to Win at Digital Transformation.
There is a significant amount of skepticism in board rooms about the impact of digital transformation will on legacy businesses as well as the nature and speed of digital threats. Many executives feel “unicorn” business models like Uber that are not realistic for their businesses. Others are gun shy about undertaking major transformation programs without the skills, financial support, investment model, incentives, patience, and culture to succeed.
But despite these justifiable concerns, responsible CEOs need to be aware of and vested in digital innovation in their capacity as stewards of their enterprise. The demonstrated success of digital business models and a growing body of research about changing customer behavior provide three legitimate reasons CEOs need to focus energy, leadership and capital on these efforts.
As a direct result of these pressures, digital innovation has emerged as a top strategic priority according to the Forbes Insights survey. The vast majority of business leaders are trying to incorporate digital platforms into their business model to stay relevant to their customers, stave off digital competitors, and grow the equity value of their businesses. These programs vary in scope and purpose. But according to Futurum Research they are generally accompanied by a significant investment in a growing array of digital platforms, including but not limited to: Big Data, Cloud Computing, Cognitive Computing (Artificial Intelligence),Mobility, the Internet of Things (IoT), and Virtualization.
While almost every company is pursuing digital transformation to some degree, The Forbes survey found that most still do not have CEO engagement in the initiative or an organization-wide strategy and execution plan in place. Less than a third have significant executive level sponsorship. And in most those cases that leadership comes from the Chief Technology Officer. As a direct consequence, recent estimates from Forbes indicate that the majority (84%) of these programs have failed to generate the desired results so far.
According to Malcolm Frank, Chief Strategy Officer, Cognizant “digital transformation does not work when it’s technology-led, when companies try to blindly emulate what they see out there among the FANG gang (Facebook, Amazon, Netflix, Google), saying ‘let’s be the Amazon of our space, let’s be the Uber of our space,’ while not knowing how it’s applicable to their business.