The word “digital” is a dangerously generic buzzword that few understand or agree on, yet those left behind by digital’s evolution will have an increasingly hard time catching up.
The word “digital” has been bouncing around like a ball for the last 15 years or so.
In the Web 1.0 era, digital transformation was originally a descriptor for aspiring to paperless offices, and a useful term to encourage senior executives to stop having their emails printing out to read. The breathtaking revelation was that they should read them off the screen, and the Blackberry device eventually made this a reality.
Fast forwarding, the most recent January Davos World Economic Forum was completely digital dominated. Founder and chairman Professor Klaus Schwab’s carefully worded Fourth Economic Revolution book is the jet set ten-thousand-foot globalist aspirational business philosophy of our rapidly changing world: “The business models of each and every industry will be transformed” proclaims one of the edicts in the associated video above. The WEF aims to “bring together the most relevant leaders from all sectors of global society, and identify the best ways to address the world’s most significant challenges,” aiming to be a collective best practices model.
Meanwhile, on-the-ground usage of the word digital — and a whole lexicon of words that collectively represent it (blockchain being a current prime example) have been mangled beyond recognition. We currently live in a world dominated by winner-take-all platform companies: FANG (Facebook, Amazon, Netflix, and Google) in the Western world and BAT (Baidu, Alibaba, and TenCent) in Asia.
Despite media hype about innovation, research and development budgets have been massively shrunk in most companies and initial public offerings (IPO’s) are at a low ebb. Financialized corporations have been buying back shares, moving money around, and acting like bankers rather than innovating, as Rana Foroohar’s excellent book Maker and Takers documents in easy-to-understand language.
The application of practical digital thinking has largely been sadly lacking beyond targeted social media network marketing — accessing you and your data trails through your smartphone and then attempting to influence you has dominated spending on and understanding of the word digital in the last eight years. Much noise and hype has surrounded broader transformation attempts to remake legacy businesses as digital entities, with the old line IT services companies investing heavily to reposition themselves as digital solutions providers while distancing themselves from their past, despite that past continuing to be their main revenue stream.
The cultural gridlock and politics in most larger companies has meant digital initiatives tend to be a sideshow for medium ranking innovation directors looking to find justifiable ways that modern technologies could be grafted into the main body of the legacy business for demonstrable results. As part of my tracking of digital business realities, I regularly talk to recruiters and executive headhunters. Discussing the level of search requests for “Chief Digital Officers” last fall I heard about very limited appetite for digital new hires, but all sorts of VP level jobs are now routinely renaming incumbent’s titles to include digital… basically putting old wine in new bottles.
WHAT IS DIGITAL ANYWAY, AND WHY SHOULD WE CARE?
The old digital ingredients of “Social, Security, Mobile, Analytics and Cloud” (SSMAC) were a past business case for heavy investment in digital marketing, but they have been superseded by a far more sophisticated world of possibilities and opportunities that also aims to leverage artificial intelligence, (AI), distributed ledger technology/blockchain, the Internet of Things (IoT), and the relentless progress of automation and robotics.
Catching the right maturity point to leverage this expanding portfolio of modern tools, platforms and possibilities is hugely challenging even for start ups aiming to start from scratch as “born digital” businesses. For mature businesses with layers of existing technologies and processes, the cacophony of marketing red herrings, lack of standards, and general confusion makes things much harder than it needs to be. Technology is moving so fast that businesses and operating models, markets, supply chains, and brand relevance are all at risk of rapid obsolescence for those who are not paying attention. “Software is eating the world,” the well-worn 2016 marketing slogan for venture capital firm Andreessen Horowitz, continues to sum up realities.
However, Klaus Schwab’s old World Economic Forum quote — “In the new world it is not the big fish which eats the small fish, it’s the fast fish which eats the slow fish” — belies the fact that forum members are arguably all large global cartel businesses, maneuvering to protect their franchises… leveraging friendly lobbyists, cliques, and politicians to create digital moats.
Meanwhile, on the ground, digital initiatives continue to fall just outside the “key imperatives” boards and senior staff draw up as their main business objectives in order to make quarterly numbers and keep the gears turning. Digital is much talked about, with anxious checking of the horizon and peripheral vision for any sign of the dreaded well-funded digital startup competitor that will obsolete and tear away profit centers. Antennae are out to fast follow any competitor’s digital moves, with firms sometimes copying each other’s cargo cult moves and replicating illogical actions (mobile apps has been a good example), resulting in some industry vertical channels being dominated by a cargo cult version of digital.
Doing anything broader about digital inside legacy firms is another matter entirely and all too often is outsourced to the large accounting and consulting firms who sell them generic frameworks to run on their generic cloud platforms, resulting in zero market differentiation or competitive advantage.
Elsewhere, actual practical business model changes tend to be brought about by the platform realities we live with, whether supply chain or sales channel. The vast majority of formal digital initiatives tend toward tentative pilot initiatives and technology foundationed departmental change management projects rather than cross company transformations. The one well-funded and budgeted exception is digital marketing, which is tasked with attracting attention in an extremely crowded and increasingly desensitized online world, aiming to have authentic influencing conversations with prospects, customers, and users.
FUNDAMENTAL SHIFTS IN THE WAY THE WORLD WORKS AND PAYS
Cumulatively, the impact of distributed ledger technologies and smart contracts, cryptocurrencies, digital funding and payment options look likely to have a greater impact on day-to-day life than the first internet wave.
Cryptocurrency speculation and boom/bust manias have obscured the more foundational sea change in funding activities enabled by new ways of crowdsourcing ideas and businesses.
Micropayments are now a part of the operating system of Brave and other browsers, augmenting the mobile device contactless RFID payments revolution that is already well underway. Cumulatively, the impact of distributed ledger technologies and smart contracts, cryptocurrencies, digital funding and payment options looks likely to have a greater impact on day to day life than the first internet wave, which was huge.
Digital currencies are now being used to reward reviews and feedback on products and services, with a new global order emerging which transcends nation state currencies. The impact of this on huge platforms such as Amazon isn’t being felt yet, but it’s rapidly maturing. We will soon be adding this important foundational element to the digital compendium of modern tools and methods.
FILTERING OUT TODAY’S DIGITAL STASIS AND FOCUSING ON DIFFERENTIATION
Despite this rapid evolution, most businesses remain anchored in their past and mostly blind to competitive digital implications outside of marketing. Pockets of experimentation are common, but the implications for this inability to keep pace with change is the challenge of the ages, and the vast majority of firms are simply not keeping up.
Thinking beyond the constraints of the big platform providers, whether traditional enterprise software suites or the dominant cloud platforms of our era is essential to avoid being on the same starting line as everyone else in highly competitive markets. Outsourcing too much of this digital model thinking makes the core of your business weak, yet changing internal cultures and challenging calcified corporate fiefdoms is equally challenging.
Add in validation of what is real, what is fluffy hype and what is someone else’s agenda and what is dangerously wrong and/or a dead end — and you’ll have a migraine for the ages, too.
The takeaway is that there is nothing remotely generic about your digital world, and that differentiating in a platform dominated global economy is essential for survival. The quality and sophistication of the people you work with will define future reach and success, and to quote Steve Jobs, an important attribute of this is to “think different” to survive.
First posted on ZDNet