Technology-first new market entrants are challenging established firms in almost all sectors of the global economy.
By Johan Steyn, 19 July 2022
In today’s world, the billions of daily online interactions between individuals, corporations, gadgets, data, and processes have given rise to new economic activity known as the “digital economy”. It is built on a foundation of hyperconnectivity, which is enabled by the internet, mobile devices and smart sensors.
Traditionally held views about how businesses are started, how they interact with one another, and how customers receive services, information and products are being challenged by the digital economy.
There has been a dramatic increase in urgency in the previous two years around digital transformation. Digital technology has emerged as a critical component in organisations' responses and strategies for the future in the wake of the epidemic's disruptions. Many businesses who have dragged their feet to transform digitally were forced by the lockdowns in what some call a “reluctant digital transformation”.
For the larger part of the last three decades, large corporations globally have been well on their way on this journey. The buzzwords one often hears in board rooms and the corridors is that “we are digitally transforming”.
My experience with many corporate customers is that, while they may be “going digital,” they are not transforming. Technology is essential to digital transformation. In many instances, it is primarily a matter of discarding the old and replacing it with the new. It is also necessary to foster new ideas.
When it comes to digital transformation, it's not only about shifting to the cloud and reducing the carbon footprint of data centres; it’s also about building a corporation with a higher purpose.
This new paradigm will affect how organisations develop their core services for customers, reform supply chains, hold suppliers accountable and build ecosystem platforms to drive innovation in accordance with its essential goals.
At its core, it is about “transformation”, which means a new style of leadership, an honest, open-door policy to welcome innovative ideas, welcoming challenges to the status quo and infusion of new talent.
A cohort of technology-first new market entrants is challenging established companies in almost all sectors of the global economy. Often led by “bright-eyed and bushy-tailed” youngsters, these firms have a start-up mentality at their core. They are void of decades of legacy leadership and technology, they understand the demands of the digital economy as they grew up in it, and they are brave enough to challenge larger firms.
In an evolutionary race for survival, many large, established companies are losing the race in the survival of the fittest, which gave rise to the term “Digital Darwinism”. Businesses compete for clients that desire the most recent technology breakthroughs. When customers cease using or repurchasing a product or service due to outages, bugs, or other challenges, the company's bottom line suffers. Digital Darwinism is, from the consumer's perspective, the failure of a firm to respond to the needs of its customers.
Transformation as a technology-first initiative will probably almost always fail. It speaks mainly about people and not shiny new technological platforms to play with. If the plan does not first consider your staff, leadership and most importantly what your customers want, it may be digital but not transformative.
Your business may be doomed to the archaeological archives listing the once-great corporations that did not adapt sufficiently. As Brian Solis wrote in the Washington Post, “The point of natural selection is that only some businesses will survive.”