The focus of digital started with the customer and is now moving to the operating model. However, its true potential lies in transforming future business models.
Digital disruption is on the agenda of every CEO today. Yet digital initiatives in most organizations continue to be confined to disparate projects that are usually disconnected from the ‘core’ business. While this approach may serve the purpose of taking the first steps, it is a long way from truly embracing digital.
Though there never was an ‘official’ definition of digital, its scope seems to have grown considerably. What started as a new channel to enhance the customer’s experience, improve ease of access, and expand reach, has now come to mean almost anything to do with emerging technology. Several new technologies are maturing at the same time – a few at alarming speeds – and are bringing new capabilities that can transform financial, business and operating models.
Key emerging technologies
3D printing: Process of making three dimensional solid objects from a digital file by laying down successive layers of material.
Artificial intelligence (AI) and machine learning: AI is about machines that can perform tasks that are characteristic of human intelligence. Machine learning, a branch of AI, refers to the ability to learn using practice data instead of pre-programming
Augmented reality (AR) and virtual reality (VR): Augmenting physical environment elements with virtual information / creating virtual environments across multiple sensory modalities
Autonomous vehicles (AVs) and drones: AVs refer to self-navigating vehicles; drones are unmanned aerial vehicles typically used for surveillance and delivery
Cloud: Storing and processing data on online servers hosted by external providers who manage infrastructure and platforms to run the applications.
Distributed ledger technology (e.g. Blockchain): Decentralized databases that are publicly shared and synchronized over multiple locations eliminating the need for ‘trusted’ third parties
Internet of things (IoT): A network of physical devices, vehicles, home appliances, etc. that are embedded with electronics, software and connectivity to exchange data
Mobile: Development of mobile apps to connect with customers, suppliers, employees and other stakeholders
On-demand platforms: Online platforms to facilitate the exchange of goods, services and ideas
Robotics: Development of machines that are capable of carrying out a complex series of actions automatically
Most organizations recognize the potential impact of these emerging technologies, and have started taking action. We are seeing a shift in focus beyond the channel-focused aspects of digital to the middle and back office, with initiatives aimed at improving operating model efficiencies. But simply providing a digital customer experience or digitizing the operating model is not enough. We believe the true impact of digital will be the transformation and disruption of existing business models – reconstituting markets, reimagining product propositions, and redefining the customer. Organizations that fail to recognize this are likely to be eclipsed by existing competitors with greater agility and rendered increasingly vulnerable to disruptive startups.