Posted By PLURALSIGHT
Visit Fortune, Bloomberg or the Harvard Business Review and you’re seeing them: headlines about digital transformation. Don’t be tricked into thinking this is another buzzword – it’s not. Digital transformation is the top strategic priority for half of executives globally in 2017.
What exactly does digital transformation mean? Ray Wang, principal analyst and founder at Silicon Valley-based firm Constellation Research Inc., defines the term as “the methodology in which organizations transform and create new business models and culture with digital technologies.” We sat down with Ray to discuss how today’s leaders can create a successful digital transformation. This is the final post in a six-part series.
“Digital Darwinism is unkind to those who wait”
If you’ve spent any time in the technology world over the past decade, you already know that the pace of change is increasing exponentially. And there’s no sign of a slow down. According to a global survey conducted by HBR, “companies are predicting sizable leaps in business performance from their use of digital technologies.”
But that same survey reported that the effects so far are not evenly distributed. The biggest hurdles preventing organizations from enjoying the fruits of the digital transformation include the inability to experiment, legacy systems, organizational silos and risk-averse cultures. Sound familiar?
Disruption by the numbers
These hurdles are among the primary reasons that more and more companies are being disrupted by industry outsiders. And that disruption is dramatic. 52% of the Fortune 500 have merged, been acquired, gone bankrupt or fallen off the list in the past 17 years. Only a few years ago, the S&P 500 was primarily made up of companies started in the 1950s and 1960s. Today the average age of S&P 500 companies is 15 years and trending towards 12 years.
It’s not exaggeration to say that digitization is remaking dozens of industries and giving new-comers an enormous advantage. The Blockbusters of the world are being rapidly replaced by the Netflixes, and the disruption for customer, employees and shareholders has been massive.
Staying ahead, from within
So how do organizations avoid the fate that disruption threatens? It starts with culture. The companies best positioned to thrive in this changing environment foster a learning culture—an innovative culture—that isn’t afraid to disrupt their own businesses with new products, services and delivery models. It doesn’t take a genius to identify inefficiencies and irritants in existing solutions. Rather it takes the willingness to examine customer pain points and negative feedback, then think outside industry norms to identify new solutions to old problems.
Forward thinking industries are learning from each other as they disrupt slower moving incumbents. Car manufacturers are thinking beyond new automobile design and adopting ideas from other industries like entertainment and ride sharing, mashing ideas together to create new solutions that appeal to today’s customers.
Healthcare is being transformed by video, robotics and big data to offer new services like remote surgery, broader access to medical personnel and information online, and pharmaceutical development using new testing models that rely on artificial intelligence.
Digitization doesn’t discriminate
Digital Darwinism isn’t limited by sector. Even in laggard industries there are innovators—those companies that encourage learning and skills sharing will rise to the top and become the new leaders long before the laggards realize what has happened and find themselves out of business and forgotten.
Darwinism is alive and well in the digital world. The only question is, will your organization evolve or be counted among the extinct?
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