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How To Survive Digital Transformation – A Post-Covid Guide

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If there is one key business lesson to be learned from the past eighteen months, it’s the need for organisations to embrace digital transformation.

In the years leading up to the Covid-19 pandemic, whilst technology was revolutionizing how organizations could work, not everyone had taken advantage of the opportunities on offer. In 2018 McKinsey reported that, across the US, Europe and China only 25 per cent of the total potential value of digital transformation had been realised. The following year, an investigation by Deloitte found that while 87 percent of organizations knew digital technologies would transform their sector, only 44 per cent felt they were doing enough to utilize that potential. 

The pandemic would radically change that statistic. As the virus took hold, businesses around the world faced a challenging reality; either reduce products and services dramatically so that fewer numbers of socially distanced staff could manage the workload, shut down operations entirely, or get to grips with the digital world—investing in new technologies to not only engage a remote workforce but to improve their business processes. Unsurprisingly, the latter option was the preferred route for most organizations. McKinsey has since reported that the pandemic has accelerated the pace of digital transformation by seven years.

It’s the intelligent solution to the problem, sure. But it’s certainly not the simplest one. And whilst companies have certainly been eager to invest in new digital technologies, not all of them have been able to reap the rewards of doing so.

Effective digital transformation goes further than footing the bill for new software and employing some savvy tech professionals to help you make the transition. It requires a cultural change at every level. Businesses must be willing to push beyond their comfort zones, embrace the unfamiliar, learn from intelligent risk-taking and commit to delivering ongoing innovation—all things that aren’t easy to come to terms with at the best of times, never mind during a pandemic.

There’s no doubt that the potential pay-off is huge. A further McKinsey report in 2019 went as far as to estimate that $13 trillion could be added to global GDP through digitalization, automation and artificial intelligence by the year 2030. But with so much to be gained and considerable losses to be considered, how can a company successfully transition into the digital world, and keep hold of their identities whilst doing so?

Baby steps

Despite sounding intimidating for those organizations who’ve not yet ventured into the digital world, “Digital Transformation” at its very base is highly accessible. Taking simple steps such as ensuring you have a customer-facing website that is clear and easy to navigate, an active social media presence or some basic in-house digital systems are all foundations that can be built upon for developing a wider digital strategy.

From there, greater strides can be made, such as exploring the possibilities of digital supply-chain management and customer relationship management systems, opening the door to automation and predictive capabilities. These first steps are the “table stakes”, the minimum a business must be able to show to sit at the table with their key competitors and stay in the game.

Whilst basic set-ups are relatively simple, the next steps can pose a slightly more complex set of challenges, as they concern securing buy-in from all stakeholders (not just employees but customers, investors and all those who hold any role in whether your business sinks or soars) of the value to be gained by investing in future-focused digital technologies. Such investments are not just financial— they will take significant time and will almost certainly involve building new competencies or knowledge to support the technologies you choose to use. The challenge is to build consensus around digital tools whose value may not yet be proven, or which restructures how certain business practices are conducted.

There is an argument to be made to those on the fence about such investments that digital tools put businesses in a proactive, rather than reactive, position. Such a tactical move can enable an organization to gain a competitive advantage and edge over other organizations, and to be seen as remaining at the forefront of change and development in the market—which in itself can be attractive to future investors, employees and customers alike. The pandemic has provided industry with an excellent case study for what’s on the line for those organizations who must scramble to keep up with industry or market changes.

Avoiding your own “Kodak Moment”

Some of the most well-known names in the business world have built their reputations and successes by being proactive and innovative in nature, whilst others, like Kodak, have become the cautionary tale for the repercussions of missing the boat.

Netflix is a key example of a company that has effectively harnessed digital technology and cultivated a company-wide mindset to embrace innovation and stay ahead of the curve. From renting DVDs and games to customers via mail in the early noughties, the company swiftly changed tack to make streaming its go-to service for customers. Whilst this move was first met with widespread criticism from customers (and investors), the risk more than paid off.

Today Netflix is a behemoth of the media landscape—not only is it responsible for 12.6 per cent of global downstream internet traffic, the company now creates its own TV and film content. In contrast, it’s arguably better-established and more longstanding competitor Blockbuster, quickly fell into irrelevance when it failed to keep pace with digital industry change.

And, of course, you cannot discuss companies that have made their fortunes from effective digital transformation without mentioning Amazon, a company that has pursued a continual process of digital transformation since its inception, and isn’t afraid to explore imaginative new ventures, such as drone delivery systems even when they risk failure.

Retaining your legacy 

Once organizations do decide to take the plunge and commit to digital developments and investments it can be difficult to judge exactly how much influence you allow such technologies to have over your business. Innovation is vital for progress and longevity, but too much change too quickly can often spell disaster as companies quickly lose their identities, their consumer base and their way forward. When this happens, even the most robust organizations can quickly begin to crumble. Businesses need to be able to strike an effective balance between digital and legacy skills, to keep their workforces engaged and business practices effective. They must also keep their company ethos, their raison d’être, to avoid alienating stakeholders who are vital for their success.

These high stakes are exactly why Imperial College Business School has recently founded the Centre for Digital Transformation. Responding to the need for a deeper understanding of the transformative potential of digital technologies, particularly in a post-pandemic landscape, the Centre will exist as a nexus for studying how the digital revolution influences organizations of all types. It will bring together the expertise of academia and industry and build this intellect into teaching at all levels; from a pre-experience MSc Innovation, Entrepreneurship & Management and an online Executive Education course that explores new game-changing digital technologies and the ways to incorporate them effectively into an organization.

Keep on learning

The key to survival in such changing and turbulent times is intrinsically linked to the Centre’s, and indeed the Imperial’s core purpose—to keep learning, and to keep investing in learning. Whether at the Masters level at the beginning of your career or embarking on an Executive Education course, such as our Leadership in a Technology Driven World programme, at a later stage. These education programmes aim to show participants how to anticipate what could happen next, and to develop the new technologies, products, services and business models to succeed in the future. In that way, digital transformation isn’t all that different from how innovation has always been done. Which perhaps explains why it’s so important. 

The fourth industrial revolution is happening all around us, and those companies that cannot keep up will surely be left behind. It has never been more vital for organizations to reassess how they operate and enhance their understanding of the changing world around them. To support this educational shift, I will be hosting the Imperial DigiTalks webinar series. Starting this month, my colleague Dr Myrna Flores and I will be joined by key global speakers from industry and academia to discuss what digital transformation is, how their organizations have risen to the challenge, and how research centres such as the Centre for Digital Transformation at Imperial play a key role in helping organizations understand how they can harness the digital economy.

In the post-pandemic landscape, this understanding will be essential not just for driving innovation and competitive advantage, but for the very survival of businesses.

This article was authored by Professor Christopher Tucci, Professor of Digital Strategy and Innovation and Director of the Centre for Digital Transformation at Imperial College Business School.

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