How can a CEO know for certain that her company’s technologies are truly driving her strategy and enabling strategic objectives? More pertinently, if she is considering a major capital investment into new, advanced digital technologies (ADTs), how can she be sure her organizational structure, particularly legacy systems and processes, will successfully integrate this technology?
Finding the answer to these questions is perhaps the biggest ‘digital transformation’ challenge in order to remain competitive in Industry 4.0, the label given to the effect that the technologies that arise from the fusion of the digital, physical and virtual worlds will have on industries and businesses.
More money, more (tech-led) problems
For CEOs without a technology background who think that throwing money at this problem will solve it, the bad news is: it won’t. Simply investing in technology, or hiring a CTO or a CDO will not fix the problem. In fact, it could make it worse. According to research from Forrester, a remarkable 80-90% of digital transformation projects fail, because they are led by technology, rather than by strategy.
Digital Transformation in Industry 4.0: a new way of competing
To digitally transform in this new digital context, case studies of those companies that have successfully done so consistently point to three factors that they focus on and prioritize:
1) Strategy. Technology today is becoming increasingly ubiquitous. Google, for instance, gives away most of its advanced AI, such as TensorFlow, for free. Any company can now access analytics through the cloud. Instead, your point of differentiation, your USP, is your strategy.
2) Organisation. Organizational structures remain the single greatest obstacle to digitally transforming, particularly when it comes to re-skilling your employees to create a greater digital DNA, digitizing your processes and innovating your business model. This last point is critically important, because your competitors in the future (if not already) will not be the same as you and will have radically different business models (think hotels vs AirBnB).
3) Data. A remarkable 75% of data companies hold are not used for any strategic purpose whatsoever. This is criminal because data can (and should) be one of your greatest assets. To turn data into a strategic asset requires a comprehensive data strategy, which then allows you to take advantage of Big Data and apply advanced analytics in a much more impactful way.
The key to successfully transforming
Companies are increasingly demanding more bespoke advisory to enable them to succeed at digital transformation. The good news is, a blended model is beginning to emerge for how this can be done, combining human-led intelligence with machine learning and advanced analytics. The key point of differentiation is that such an approach deeply personalizes a firm’s transformation, therefore setting its DT projects up for success. It also enables leadership, both to think and act much more holistically about how technology can add value to their business, whilst also ensuring it can seamlessly integrate into the organization.
Last week our Global Chamber® discussion was led by Rebecca Bachmann - Chief Technology Strategist and me, Matthew Hoffer - Managing Partner at Spire Strategy. Contact us.
About Spire Strategy
Spire is a strategy and digital transformation advisory firm. Learn more about how its digital agility evaluation can enable you to pinpoint the transformation challenges within your company and create a personalized roadmap on how technology can better enable you to compete.