Digital Transformation: It's a question of survival
Everything you know has already changed: your job, your industry, the people you talk to and the way you talk to them, the way you amuse yourself, all the way through to where your money is and how you spend it.
Yet many business leaders still discuss the digital transformation of tomorrow, not of now.
This is the warning serial digital entrepreneur Leonard Brody sounds every time he mounts the stage to warn the world's business leaders that business as they know it already doesn't exist.
For the first time in history, millions of people can talk to millions of people effectively for free, and the result is that entire industries are collapsing and being rebuilt, Brody says.
Underpinning this massive change is an interconnected system of data creation and transfer that combines the interactions and messages of millions of people with data streams generated from billions of mobile computers, wearable devices and automated sensors.
Meet the challenge
This new reality, says Telstra chief technology officer, Vish Nandlall, is leading to the streamlining of many processes, so that they no longer require either our physical or even conscious effort to do what we need them to.
Nandlall cites the example of the television set. Initially we had to turn a TV off physically by turning a dial on the set; then we could turn it off by remote control. Now the TV set can be configured to read the data stream coming from a wearable device such as a fitness tracker, and turn itself off if the viewer has fallen asleep.
“We’ve started to develop these really interesting and very sophisticated feedback loops, when everything becomes tracked, measured and instrumented,” Nandlall says. “I have continuous monitoring, so that all my applications and conscious effort falls into the background.”
While technology is the cause of all this change, it is business strategy that will determine whether companies lead the way or are destroyed by it. According to Brody, the sudden and chaotic destruction of the status quo that has already affected many industries is proof that large, incumbent businesses are failing to keep pace with fundamental shifts.
“The only companies that will survive are already sewing the seeds of their own destruction,” says Brody. “Because if they don’t, someone else will.”
Transformation requires digitisation
In Australia, companies that are responding to these changes by participating in the digital economy are already growing at twice the rate of the rest of the market. Professional services firm Deloitte predicts these companies will continue to outpace the rest of the economy through to 2018.
Virtually costless global communication, and the massive new data flows generated by digital technology are unlocking underutilised resources, effectively creating entirely new markets.
With their traditional advantage gone, large-scale incumbents need to respond by effectively creating and launching their own competitors: they need to incubate and support competitive start-up ideas.
“As a chief executive, never think of your business in terms of what you make and what you sell,” offers US management thinker Gary Hamel. “You have to think about the deeper human need that you’re satisfying and always be open to other ways of doing that.”
Hamel points out that the only way for senior executives to stay ahead of the digital curve is to create a strategic framework that prepares the organisation for continuous, incremental change, rather than short bursts of large-scale change, which is effectively a legacy of the industrial era.
As a service provider essentially offering a logistics platform to channel these data flows, Nandlall believes it is incumbent upon Telstra to facilitate the strategic change underpinning digital transformation.
“If you get caught up in saying, ‘well, this is how we deliver voice service’ or ‘this is how we deliver a financial service’, then you get held hostage by that old product paradigm, rather than saying, ‘no, there’s a completely different way of doing this if we’re willing to use new digital technologies’,” Nandlall says.
Survival Requires Reimagining
The chaotic reinvention of industries, where large-scale incumbents suddenly collapse, is the result of this failure of business leaders to understand the way digital technology changes the basic value proposition of what they offer.
“Newspapers have traditionally focused on generating news and selling papers, but if you reframe their market and say that it’s really about giving people something to do for five minutes, then the press competes with the entertainment industry,” says Nandlall. “So the question then becomes, existentially, what is a service provider doing?”
For the telecommunications sector, which once focused on the engineering required to connect fixed-line telephones, this means not only providing the communication systems, but also the innovation ecosystem required to ensure excellent new experiences can be created and delivered to customers.
“It’s a really important distinction that we’re no longer just a telephony company, that we are really playing on the stage of mobile computing and it changes the market perspective,” says Nandlall.
Although the challenge is considerable, Nandlall is also upbeat about opportunities to create excellent experiences and services across the entire economy in the near future: “The ability to create virtuous cycles from the consumption side and the supply side. What we need the telco of the future to be is an engine that can match the velocity with which we see services being built.”
This article originally appeared on Telstra IN:SIGHT.
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