[FN2] Westerman, G., Bonnet, D., McAfee, A. (2014) Leading Digital. Turning Technology Into Business Transformation. Harvard Business Review Press, ISBN 978-1-62527-247-8.
The Digital Economy is driving market transformations all over the globe. With it, winners and losers are being defined at a faster pace than ever before – how can you win?
It’s time to dive into the Digital Economy!
What IS the Digital Economy?
The digital economy is how you leverage today’s globally interconnected technology to deliver on your company’s mission and vision. While the methods and tools for the digital economy continue to evolve, there is a starting point. The starting point is in using the technology components which enable operations to integrate backoffice systems with the marketplace (get closer to the end customer).
Digital Economy integration generally consists of Social, Mobile, Analytics, external data signals, and then tying into a back office transaction system like SAP.
How Does the Digital Economy Impact Me?
Gartner’s Peter Sondergaard, SVP and head of research suggested:
By 2020, every company will be an IT company and every leader will be a digital leader…”digital is the business; the business is digital.”[FN1]
The Harvard Business Review Book, Leading Digital, provided the results of a Digital Economy study of large business. They excluded Tech companies to reduce the technology bias and focused on “big companies, in industries from finance, to manufacturing to pharmaceutical” and determined:
Digital Masters – companies that use digital technologies to drive significantly higher levels of profit, productivity, and performance — do exist, but they’re rare… and it’s why we believe you’re probably not ready to survive and thrive [in the digital economy]. [FN2, pg. 3]
[Digital Masters] are 26% more profitable than their average industry competitors. They generate 9% more revenue with their existing physical capacity and drive more efficiency in their existing products and processes. [FN2, pg. 4]
To become a Digital Master requires 2 key components [FN2, pg. 6]:
- – Excel at applying digital capabilities as a change lever for business transformation (technologies).
- – Build strong internal leadership to define and drive business transformation (leading change).
“Digital Masters do more than just invest in digital capabilities. They create the leadership capabilities to get the most from their digital activities” [FN2, pg. 12]. They are gaining significant competitive advantages, and corresponding market share, through technology enabled business transformation. Now is the time to become integrated into the digital economy no matter what industry you are in.
Where is the Digital Economy Today?
Social media is playing a transformative role in marketing, even in its infancy. When the unstructured data of social media channels is combined with structured business transaction data, you gain powerful new analytics to evaluate markets, competitive position, and find new niche plays for your business or service.
Gaining insight into customer sentiments or thoughts, around your products or services, is not optional in today’s highly competitive global economy.
The proliferation of mobile devices and the emerging “Internet of Things” (especially web connected consumer products) will cause more market disruption over the next 5-10 years.
Combining today’s “Big Data” and analytics with mobility and future connected devices will yield even greater market intelligence. Today’s digital economy primarily integrates the following technology components:
- – Social media
- – Big data analytics
- – Mobility
- – The Internet of Things
- – Back office transactional systems (ERP systems like SAP)
These have the power to transform business, by providing actionable insight, like never before.