The digital economy is not just about smartphones or even the Internet of Things (IoT) anymore. A much larger pattern has emerged and CenturyLink has been working with 451 Research to understand it.
We are moving from a pipeline economy to a platform economy. Traditionally companies produced products and services in a pipeline fashion. Customers rarely interacted with the product as it was developed and brought to market — they received the end product or service when it was finished and then it was consumed. In the platform economy, consumers can interact with companies throughout the development and delivery process (awareness, consideration, configuration, price, quote, order, pay, use/reuse and buy more) because these actions can now be done digitally.
These digital interactions will not be wholly developed and supported by the primary company that the customer is buying from — they require a community of partner firms, housed on a common digital networked platform that brings the proper digital experience to the customer. The digital platform would reveal previously unavailable business processes and data that can be used to strengthen the relationship between the company and the customer. Companies large and small can benefit from the long-term value of digitizing their business processes and strengthening interactions with current and prospective customers.
We are finding that this digital transformation has the following themes — agility, operational excellence, customer experience and risk management (primarily security).
To flesh out the texture of digital transformation and add weight to its status in the global economy, CenturyLink worked with 451 Research to survey hundreds of decision makers from around the world. The results are eye opening.
And change is accelerating.
Our research shows that firms that are achieving their digital transformation goals are seeing revenue and profitability improvements. 59 percent of firms surveyed with a formal digital transformation strategy believe they are more innovative as a result of their investments. This finding adds weight to other independent research, such as an MIT study that showed 26 percent improvement in profitability for those digital masters when compared to their peers, as well, this Wall Street Journal article which published earlier this month about Panera.
Survey respondents identified with four key pillars of competitive differentiation to target with their digital transformation initiatives: 1) improving customer experience, 2) improving operational efficiency, 3) increasing the level of agility within the organization, and 4) to better manage business risk (including security). In short, companies are beating their competitors by achieving their digital transformation goals.
Digital transformation is not just digitizing though. It is the orchestration of a company’s digital and leadership capabilities. Great digital initiatives are important, but insufficient — they must be linked with an overarching strategy and a culture that encourages employee participation in the digital transformation journey. Anything less will be a series of disconnected, isolated digital experiences that will ultimately frustrate the customer even more than having no digital experience at all.
Our research with 451 Research has shown that many organizations are pursuing their digital transformation goals to some extent. Some are still assessing and developing a strategy, while others are dipping their toes in the water. Many responders, in particular Asian companies, are aggressively moving forward with their transformation. The research really does give you a sense of where you might be in comparison to your geographic and industry market peers.
Take some time to review the full results from the 451 Research study, and listen to a webinar I recently did with 451 Research analyst Sheryl Kingstone discussing the highlights of this research.
