Digital Transformation and its effect on industry & humanity

Episode 2: What about my business?

What is digital transformation?

The world as we know it is under great pressure by recent technological developments.

This asks for new truths, new laws, new metaphysics

and a whole new way of doing business.

The paradigm shift from the old ways into the new is what we call Digital Transformation.

Digital transformation is not just about technology, it’s about the way you do business.

Google, Tesla and other non-traditional companies are highly digitized and shaping the future.

It’s not a revolution but an evolution with revolutionary consequences for both business and society.

What not?

First, let’s look at a bit of historyIf you read Episode 1, this part might be a rerun.

The first Industrial Revolution brought us mechanical production by means of water and steam power.

This is the 4th industrial (r)evolution

The second gave us mass production through electrical power.

The third Industrial Revolution was the digital revolution, wherein production was further automated through the use of electronic and IT systems.

Today, we are at the threshold of the fourth Industrial Revolution.

This 4th revolution introduces Industry 4.0 Industry 4.0 is the combination of the Internet of Things (IoT) technology and traditional industry and it has 2 core elements.

That’s why we talk about Industry 4.0

One is the Internet of Things and cyber-physical systems such as sensors that can collect data

that can be useful for you business intelligence.

Two is the evolution in the processing and analytics of big data so that systems can work through huge sets of data and

produce valuable insights.

Digital transformation

Digital transformation came in waves…

First affected was the music industry, photography and video-rental Next up were television, tourism, recruitment, magazines and newspapers

And now it’s time for retail, healthcare, monetary systems, education,… and many others to digitize.

Waves of Transformation

First there were platforms like Napster killing the traditional music industry but they were on the verge of illegality. Now we have Spotify that challenges the whole idea of owning music

and makes most of our old music players obsolete.

Secondly the way we travel and plan our trips changed irreversibly by peer-reviewed platforms like Booking.com, but also Air BnB which taps in on a whole new market of sleeping

accommodations around the globe.

As we enter the third wave our financial and monetary system gets pressured by alternatives such as Bitcoin but also the entry of blockchain technology in general and much more.

Waves of Transformationexample

What about your sector, will you be in the next wave? How will digital technology change the way you do business?

What about you?

Why should you transform?

Well why should you?

Digital transformation is a means to create added value.

It does this for example through enhanced consumer experience, increased operational efficiency and new

business opportunities innovation.

Consumer Experience

Take a look at the evolution in consumer experience:

The growth of digital channels and devices gives consumers greater access to information and the means for better communication and collaboration. With this the consumer can demand radical

shifts in business processes, service and policies.

It is vital that brands use this new consumer power in their advantage and find ways to strengthen the mutual relationship. It

is through differentiation, transparency and consumer involvement that organizations can benefit from this evolution.

And digitization can help to achieve this.

3D printing Philips x Twikit

What is it?You can design your own razor at home

What’s in it for the customer? Customization of your razor increases consumer delight and involvement.

What is the benefit for the company? An efficient way to learn about consumer preferencesand keep sample production and stock costs low

example

Parcify

What is it?Your packages are always delivered to Parcify, they come looking for you wherever you are to hand over the goods on a moment that suits you best. What’s in it for the customer? Your location is not important for the delivery of your online orders, while you go to work or friends your packages just follows wherever you go. What is the benefit for the company? It answers to an existing problem that emerges from the combination between e-commerce and 9-5 mentality, therefore it gets high demand and revenue

example

Higher consumer power also has an impact on business processes:

Users want intuitive interfaces, around-the-clock availability, real-time fulfillment, personalized treatment… standards are higher than ever.

To meet these high consumer expectations, companies can accelerate the digitization of their business processes.

Operational processes

This doesn’t mean simply automating an existing process. Companies can go as far as to reinvent the entire business process. This includes cutting the number of steps to go to market, reduce the number of documents

and policies & develop automated decision-making by algorithms.

In addition, replacing paper and manual processes with software allows businesses to automatically collect data that can be mined to better

understand process performance, cost drivers and causes of risk. Companies can harvest the advantages of Big Data.

Operational processes

Tesla

What is it? The maintenance of your car can be done by (Remote) Software updates.

What’s in it for the customer? No hassle, no expensive maintenance at the local car dealer, always up to date and in sync with Tesla standards

What is the benefit for the company? The company controls all products even after they are sold and keeps a close contact with consumer and product.

example

Beyond the improvement of business processes, digital transformation can go as far as replacing your old business

model with a new one.

We believe it can require no less than the creation of enhanced or new business models, new operating models, new ways of interacting with consumers and new ways of selling to be part

of tomorrow’s business landscape.

Therefore organizations need to decide whether they can enhance or transform their existing business models, or whether

they need to invent new ones.

Creating new business models

Shift to radical convenience: Uber

What is it? Performs better than existing taxi companies due to technology.

What’s in it for the customer? It’s like owning a car without all the sucky, expensive parts.

What is the benefit for the company? They have an enormous client base and impact, the big money still needs to start rolling in.

example

Patients like me

What is it? Data-based peer-to-peer business model/ Online data-sharing platform

What’s in it for the customer? It allows members to input real-world data on their conditions and place their experiences in context and see what treatments have helped other patients like them.

What is the benefit for the company? Thanks to huge visitor reach advertising income is very high. They also sell patient data to pharmaceuticals and research facilities.

example

But don’t think of digital transformation as a goal.Not even connected objects, the Internet of Things or

Big Data are goals.

But information, creating added value and keeping your business viable in the future are goals. If you want to

achieve these goals you might want to digitize.

Digitization generates a lot of wanted side-effects:

Employees in digitally advanced companies report a 50% higher well-being at work.

Mature digital organized companies are characterized by a flexible, less hierarchical culture where employees enjoy a real

autonomy and the possibility to express their creativity. Digitally mature companies grew revenue at 6 times the rate of their less mature counterparts. *

* source: Roland Berger (Google Europe) assessed the digital maturity of companies in France linked with 3 dimensions: equipment, practices and use, organisation and skills.

Wanted side-effects

But how do you go about it then?

Digital technology needs to be at the core of your company, it’s not a ‘nice to have’ or an add-on. It affects

your sales, marketing, communication, service and support, HR, IT, Operations, R&D

And more…

And also

Increase your companies digital iQ, put a Tech-nerd in the board.

And don’t forget…

Adopt a mentality of Digital-first: If a problem occurs, always look for a digital solution first.

Digitization is a change even greater than the internet. Exponential technology advances, greater consumer power and increased

competition mean all industries face the threat of commoditization.

“The winners will act now, and build a strategic advantage that leaves their counterparts wondering what happened.”*

*Ernst & Young; “The digitization of everything” http://www.ey.com/Publication/vwLUAssets/The_digitisation_of_everything_-_How_organisations_must_adapt_to_changing_consumer_behaviour/$FILE/EY_Digitisation_of_everything.pdf

Next up:Episode 3: An introduction into Artificial Intelligence