Going down the Digital Transformation Road

The way of survival and gaining competitive advantage these days are best achieving by adopting a digital transformation in every level of operations in any company. Top executives in any company should develop and appoint a new cadre of leaders who will drive digital exploration and change. This is necessary because digital business will be a unique journey, often into unknown territory using emerging management tools and techniques. It is not a prepackaged, one-time transformation like customer relationship management, enterprise resource planning and other waves of technology change. Some new leaders can be developed by accelerated empowerment internally. However, some new blood also will be needed to bring in new skills and a fresh perspective. And this is very critical to be followed in the Kingdom of Bahrain in order embed the digital concept and school of thought deep in the roots of the Bahraini companies and enable them to leverage digital business in every piece of their operations.

Born digital companies, such as Google for example, possess high digital leadership talent sources. Some of these companies have tens of thousands of employees, which makes them large enough to be internally competitive academy firms that sometimes develop more talent than they need. Another source is the mobile telecommunication sector, which grew very rapidly through the nineties and decades later but has since slowed, yielding a surfeit of high-competency, experienced tech business talent. A third source is the top end of the technology management consulting industry.

Further, chief information/digital officers, chief marketing officers, and legal and regulatory officers need to collaboratively and creatively explore and assess the timing of major new market opportunities that digital technologies will enable. These executives must agree how to judge or nudge the triple tipping point, judge when it is most likely to arise or nudge it to occur at a time that suits the company’s competitive need. Sometimes the tipping point can be brought forward, for example, by investing in clever marketing to influence market social acceptability or investing in active lobbying of the regulator to permit the innovation. In other circumstances, the company may wish to delay the tipping point by raising customer doubts and fears, lobbying regulators to control the actions of new entrants, or acquiring key technologies to stop others from gaining access. Thoughtful strategy can adjust the timing of the tipping point to your advantage but never rely on inhibiting a digital innovation indefinitely.

Digital business fundamentally changes the core of products and services. The value that customers experience often becomes more data centric and digitally controlled. Cars have remote control smartphone apps and jewelry is 3D-printed on demand. Both the competencies required to create that value and the pathways to its delivery are unusual, challenging and often resisted. However, once companies engage and start to develop the new competencies and pathways, their power and attractiveness often grows quickly. Traditional players that have enjoyed dominance for decades can find others suddenly seizing these new routes. The walls that once defended one industry from another crumble and lines become blurred and ill defined. Defending your old core will not do; instead, go after the new opportunities and build your part of the new platform before someone else uses it to control your business.

There are many examples of this effect. Apple entered and took considerable market power over the music industry with iTunes. Amazon entered and took considerable control over the book industry with Kindle. Apple is now in the payments business via Apple Pay. Perhaps the most startling of recent times is the way the digital behemoths have been penetrating and starting to set direction in the car industry. Google has its self-driving car experiments and Uber is investing in autonomous vehicle research. By using digital and information technology engineering ideas and principles, Tesla Motors has already become a significant player in the industry.

As digital technology penetrates products, the sensor and software capabilities yield valuable data. Whether collected and stored over time or immediately analyzed in real time, data creates new value. Today, data is commonly collected, processed and accessed in the cloud. In some ways, parts of the value that customers get are moving to the cloud to build a cohesive and suite of cloud-hosted services that are tightly integrated which incentivize customers to get more of such services. Starting the digital transformation journey might seem difficult with an unknown stable destination, but it all clears once the first step is taken with thorough strategic planning.