Digital Transformation

Chapter 1 - Digital Transformation – will you be next The world is in the middle of a Digital Revolution that has been ongoing since the later part of the 20th century, resulting from significant advances in digital technologies. This revolution began with the invention of the first computer in the late 1940’s. Like all initial inventions, these first computers were very limited in their capabilities and were very large. Over the next 15 – 20 years, the technology improved dramatically and software was written to increase the computer’s capabilities. So that by the early 1960’s when then President Kennedy stated the goal of the United States would be to put a man on the moon by the end of the decade, the computer would make that goal a reality. The technology that would be required to land a man on the moon, and bring him back again, was significant. Much of the technology we take for granted today, originated from NASA. Business also became a major consumer of computer or digital technology. By the early 1970’s, the majority of major corporations and governments had mainframe computer data centers that processed all the business’ data. Colleges and technical schools began adding to their curriculum to train people for technology careers. In the 1980’s, mid-range computers and the business software to support them, became popular for smaller businesses that could not afford the multi-million-dollar price tag of mainframe computers. A few years later, the first personal computers became available that made the computer available to everyone. These were not the easiest computers to use, and undoubtedly you had to be a skilled programmer to use them, but it was the early stages of a major societal change. By the 1990’s, the internet began to impact everyday life and cause significant societal change. And now, in the 21st century, the digital revolution has moved into high gear as digital technology has become an integral part of daily life. With the introduction of the smart phone and the tablet computer, and the supporting digital networks, consumers are now able to access information and computing power at their fingertips, anywhere and at any time. As new applications (“apps”) are created for consumers and industries, the impact on businesses has been dramatic. We have witnessed industry after industry be disrupted, resulting in corporation after corporation rapidly disappearing from the landscape. Formerly popular products like cassettes and CD formats for recorded music and information, and VHS and DVD for film, have all arrived and disappeared fairly quickly, based on rapid technology changes. Even the first smart phone companies, such as Palm Pilot and Blackberry, lost their edge to the Apple iPhone and the Google Android. Other products like phone directories, printed maps and other types of information publications had been available for decades and disappeared rapidly with the introduction of the internet and search engines. And industries such as retail have also been greatly impacted. New leaders have been created due to the power of the internet. Some traditional retail companies have been able to blend traditional and online retail, while other retail giants like Sears, have succumbed to the new retail reality. Many of the failures companies have faced as a result of technological change, is primarily the result of management failing to recognize the massive shift in consumer and business behavior resulting from the latest technology. Or, if the impact was recognized, many executives, owners, and corporate board members were unsure of how or where to begin. Another key reason for failure is the lack of vision to understand the new preferences of its consumers. So, they either did nothing, began picking technologies to try instead of creating a new definition of the business, identifying new customer preferences and defining a plan to create the new business model and or new products/services. I have been working with companies since the early 1990’s, helping to guide them through technological change. I have experienced executives feeling that I was overreacting or prematurely predicting demise. In the late 1990’s, I was engaged to assist a family-owned local yellow page company to advise them on how to automate their data flow and utilize new CRM software to manage the customers and sales representative appointments. Based on what I saw happening, I felt the business phone directory industry was in trouble and printing the yellow page directory was not going to be profitable in the long run. During that assignment, I spoke to the CEO about the impact the internet would have on the yellow page directory. He was insistent that yellow page directories had been around for decades and would remain relevant. Not long after that discussion, the yellow page directory, YP.com appeared online. My client sold his company to one of the main directories within a year after YP.com became a competitor. Today, while Yellow Page directories are still printed by some of the major phone companies, they are nowhere near as relevant, and the most companies no longer advertise in them. YP.com is still relevant and is a search engine for businesses. YP.com has also continued to keep pace with technology and has created a YP app. However, Google and other search engines have become consumer’s “go-to” method to research businesses. If my client had been open to discussing the potential impact and opportunity of the internet for his business, he could have created the YP app. In that same timeframe, I worked on a small project for a company that produced CD programs. They also were not ready to see the demise of the CD format. They were a small family-owned business with numerous issues and not really in a position to invest in the technologies that would ultimately greatly reduce the CD business. On the flip side, also in the late 1990’s, I was part of a team at Disney that was evaluating the impact technology would have on animation, film distribution, and opportunities the internet would provide. As with any project of that magnitude, we predicted some technologies and not others. The important lesson was that executive management recognized the importance of the new technologies to their ongoing stability. Ultimately, Disney capitalized on the technology of the 21st century and has thrived. The biggest mistake you, as an executive, owner or board member of a company can do today, is ignore the impact of the new technologies and think your business or industry won’t be affected. It will! Technology will continue to change the landscape of business and society. And as time moves forward, consumer and business preferences will change, a greater percentage of the population will become very technology savvy and do business with companies that meet their new requirements. In addition, the technology available will enable companies to reduce cost, improve quality, improve customer service and in short, be more competitive and profitable. You don’t want to be left behind.