The competitive edge in the 3.0 economy

The competitive edge in the 3.0 economy

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Enterprise solutions & Insights

All data gathered by recent studies indicate that the main driver for digital transformation is actually fear. It is generally considered a negative emotion, but in today’s rapidly changing landscape that might not be the case. As new disruptive online organizations enter the market and fundamentally change the way goods and services are delivered and also the way they engage the customers, the established companies feel the need to realign their market strategies to stay in the game. Over two-thirds of the global respondents indicate competitive pressure as the main reason for optimizing business IT infrastructure.

Technology not only has enabled companies to approach new markets, but it has also created a more competitive environment at the same time. This resulted in many companies believing that failure to complete digital transformation projects will result in competitors taking advantage.

While the initial threat is very real to traditional markets, this “tech threat” is also a chance because the digital revolution opens up a range of opportunities for companies willing to rethink how they do business.

If digital transformation projects are being driven by fears of increasing competition, companies across the globe recognize that using technology to get the customer experience right will help them fight off these threats. These organizations believe that customer experience is important to their business growth strategy and cite customer demand as a key driver in using technology to adapt their infrastructure.

Survival vs. Growth

Over time, most of the players within a given market will implement the new technologies and obtain the same efficiency gains. This is why the big question of how can you exploit new technology to stay ahead of the competition arises.

A digital transformation will bring operational efficiency, but strategic uniqueness has to be established, and the means for establishing it is through the evolution of new business models. Eventually, everyone will get the technology, but the recipe for getting ahead of the curve and using technology to improve the customer experience is, to begin with, clear goals that support business objectives at a detailed process level and not at an abstract one.

It’s pretty easy to just recognize innovative technology but to apply it to your existing business model is another ball game. In some cases, this requires breaking the business model and coming up with an entirely new way of doing business. To take full advantage of new technologies for a competitive edge relates more to the people and business processes than to the complexity of the application. Organizations must transform how they do business if they want to do more than just survive. Using the same old approaches with new software can be only a recipe for stagnation at best.

The impact of digital technology on competitive transformation can be broken down into four elements: improved customer experience and efficiency, an increased level of organizational agility, and better risk management.

Operational efficiency is more than just reducing costs. It’s about innovating in the way you manage processes across all areas of the business. This can be challenging for companies that are well established in a traditional line of business. Their basic tenets for doing business must be rethought otherwise they risk giving up market share to more innovative companies.

Getting the edge

Through an advanced collection of data, organizations can better understand how their customers are using their products. This knowledge can raise the level of customer engagement which translates into longer-term business. More data also means better information regarding the state of the products in use. This contributes to better business reliability planning and more precise forecasts of service assignments and storage of spare parts. This synergy can be referred to as collaborative value. It enables the discovery of new or improved products and services that were never expected or fathomed in the non-digitalized world.

For example, retailers are at the forefront of utilizing digital technology to transform their markets. Digital technology enables them to automate more of the customer service processes and provide more self-service options. This automation benefits the relationship with the customer and results in a better customer experience at a much lower cost. A benchmark case study on the biggest European retailer can be explored here.

Improving customer experience is the centerpiece of data analytics also. Organizations use the data to gain new insights into their customers’ behavior and preferences, then offer personalized services and respond in real-time to changes in the marketplace, inventory levels, and purchasing behaviors.

Big data and new customer experience technologies are the game-changers. However, productivity won’t grow by itself and these changes will only serve as distractions without convergent measures. Other important organizational steps must be taken in order to take full advantage of digitalization.

These steps include but are not limited to: aligning IT investments with the business strategy, creating a more agile structure, streamlining and improving processes when deploying new IT systems, and establishing measurement and feedback loops to promptly correct and deploy resources appropriately.

In a conclusion, anticipating the changing needs of the rapidly changing marketplace and implementing new technology will put a company in a good position to gain an edge over the competition.

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Of course, there are challenges to the success of the digital transformation projects, with legacy technology being considered a barrier to success by almost half of businesses trying to digitalize their infrastructure.

The internal culture can also be a challenge, with many companies facing organizational resistance to change. Providing a seamless, contextually relevant, digital experience requires profound changes in the organizational habits and these changes demand a long-term commitment to goals consistent with the organization’s vision.

Many companies think they are changing but in reality, they’re only investing in technology. That’s not really digital transformation. Transformation is not only about how such companies interact with customers but also how they rise to the Digital Transformation challenge via internal reorganization. Only when marketing, customer experience, internal organization, and technology are aligned the big benefits of Digital Transformation can be harvested.

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