Digital disruption is everywhere—and it’s hitting nobody harder than the large-scale traditional enterprise. In fact, technological disruption is shortening the lifespan of some of the world’s oldest and greatest companies. A study by Richard N. Foster predicts that just over 10 years from now, 75% of the S&P 500 will be entirely replaced.
Similarly, a report by the McKinsey Global Institute has shown that in the U.S., the most digitized sectors have pulled far ahead of the rest of the economy, and they’re maintaining a sizable lead. But—and this is crucial—it’s no longer about who has adopted digital technology versus who hasn’t.
Today, every enterprise is digital, even if its products are material and its services involve face-to-face engagement. The widening gap isn’t between the “haves” and the “have-nots”; it’s between the “haves” and the “have-mores”—that is, between companies that are merely making use of digital technology and companies that have undertaken digital transformation at a fundamental level.
What is fundamental digital transformation? It’s not an endpoint, and that’s why it shouldn’t be a goal. It’s not a place you’re trying to reach—because it literally never ends—but a way you’re trying to get there.
I see digital transformation as an always-evolving series of adaptations to an ever-shifting environment. It may begin by building a platform that can deliver your capabilities in far more efficient ways than you currently offer. It may involve the creation of digital products and services. It may require changing the way you interact with customers. It may open your organization to contributions from partners and third-party sources. And it may ultimately take your business to places you haven’t imagined.
The demands of the digital enterprise.
Because the very essence of doing business is transforming, we can’t measure success the way we used to. Instead, we have to look at the following three metrics:
- Engagement: Not long ago, phone and email were the only available channels of engagement between companies and their customers. Today, opportunities are everywhere—and engagement pays. Companies in the leading sectors in the U.S. economy show rates of digital engagement that are five times greater than those of companies that are lagging. In other words, digital engagement correlates with success.
- Responsiveness: As channels of communication open up, customers expect faster response times. One recent study shows that when corresponding with companies on social media, 42% of customers expect to hear back within a single hour. And companies need to respond to more than just customers.
- Agility: The digital world moves faster—by orders of magnitude—than the analog one, and companies must be able to pivot. How quickly can you pivot on a challenge from a competitor, a new technology, or a shift in the market? And how quickly can you get your latest process, service, or product to market?
Digital flow: The ideal journey for the successful enterprise.
When your goals are engagement, responsiveness, and agility, what type of business environment should you strive for? I believe that every business should aspire to digital flow.
Digital flow (noun): an evolution toward optimized productivity in which people, processes, and information are connected quickly, seamlessly, intuitively, and effortlessly with digital technology.
Whether we’re talking about the analog environment of thirty-plus years ago or the more recent years of early digitization, the old way of doing business was disjointed. Silos—both organizational and informational—have been a tremendous problem, stalling productivity, slowing innovation, damaging the customer experience, and driving up costs.
In healthcare, for example, the inefficient coordination of benefits and processes adds $800 million in administrative expenses across the U.S. every year. In the manufacturing industry, a single Fortune 100 company sustained $375 million in annual productivity losses from inefficiencies in sales enablement and training. In the financial services industry, slow or ineffective client on-boarding has resulted in $5 – $10 million in losses per year at one global bank, and another loses up to 5% of overall deals¹. And in the United States Department of Justice, FOIA requests alone cost $82 million and require 2 million hours of worker time annually.
These sizable expenses present equally tremendous opportunities—examples of interactions that can be digitized and flowed.
How digitization changes the flow
As we optimize the flow of digital business, we have to consider how products, services, and information flow:
- We’ve converted the design, manufacture, and delivery of products into digital processes.
- As the customer starts to engage digitally, we receive and analyze feedback. We identify new ideas to incorporate into the product, creating a cycle where increasing value is added to our digital products.
When driving this flow of digital business, it’s critical to have a coherent system for managing content, collaborating among a variety of different functions, and developing and iterating on products. In all areas, your information infrastructure should support your efforts.
Adjusting your thinking to support flow.
Digital flow sets in motion a virtuous cycle. Once you get there, all of your business processes move more quickly and easily, which means you can innovate on a faster cycle than your competitors. You can also more efficiently collect and absorb new data, respond to market changes, meet customer needs, and so on.
How can you engage it digital flow? It’s a process that starts in a very fundamental place—your thinking. To get started, download the ‘How to Achieve Digital Flow in the Enterprise’ eBook for an entirely new look at Digital Transformation and a step-by-step guide to implementing Design Thinking, Open Thinking and Platform Thinking in your organization.