How organizations can best embrace digital reinvention
While many would argue that digital transformation is au courant, today’s business environment is moving so fast that transformation has become somewhat old news. And while many legacy companies around the globe continue to grapple with “transforming” their digital ecosystems, the true leaders are already moving on to the next generation of what transformation looks like.
The next era of digital transformation would now be better described as platform thinking and “digital reinvention.”
The technology trends that facilitate digital reinvention are here today because they are evolutionary developments of the same foundational technologies that supported digital transformation strategies. Reinvention and re-imagining the customer experience are at the center of transformation, and reinvention and mobile are almost always the “first screen” when it comes to customer experience.
Addressing these changes has led to replacement of corporate server farms with the cloud, bringing infinite computing capacity, infinite storage and built-in resilience and redundancy. These changes in available infrastructure mean that cloud adoption is happening at the speed of light and having a profound impact on how companies think about their future.
Today, any firm can embrace the notion that they are no longer limited by server space – and the speed with which DevOps culture, containerization, microservices and continuous release strategies can push the envelope means that mobile-first strategies, along with responsive design, drive not just the app but entire business models and the complete customer experience.
Product Versus Platform
We’re all familiar with companies that were built as “platforms” such as Google and Facebook. The working logic is that a company becomes more valuable as more and more people use its services. This creates a valuable “network effect” for both users and the company. For traditional firms, digital transformation is no longer about using the latest technology to make processes and products more efficient; it’s about truly reinventing themselves as platform companies.
Sangeet Paul Chaudry, author of Platform Scale, says, “Once a platform gains traction, it is a virtuous cycle that attracts more partners and attracts more consumers.”
Creating a platform-style business is no longer about creating a product that becomes more valuable as it moves down the assembly line, like a car. Instead, for example, transportation companies like Uber and Lyft have created a platform on which constituents can create and exchange value.
Perhaps John le Carre said it best when he quipped, “I am still making order out of chaos by reinvention.” Companies like Airbnb, TaskRabbit, Uber, Lyft and industry behemoth Amazon are taking those words to heart.
Reinvention Means Being Platform-Centric
Being platform-centric means that companies must place users – and key considerations about how, where and when they serve them – at the absolute center of their reinvention efforts. This laser focus on customer needs and behaviors drives a deep understanding around how and why customers interact and, ultimately, buy from a given company.
However, this knowledge goes far beyond a single product or service and instead can make available new insights, partnerships and solutions that may have never been considered. What’s more, reinvention and platform thinking as an evolutionary business model can have real financial benefits.
According to recent research from McKinsey, digital reinvention has the ability to pay off handsomely, suggesting that “bold, tightly integrated digital strategies will be the biggest differentiator between companies that win and companies that don’t, and the biggest payouts will go to those that initiate digital disruptions. Fast followers with operational excellence and superior organizational health won’t be far behind.”
To meet this challenge, today’s platform businesses are becoming something analogous to Application Programming Interfaces (APIs). The classic definition of an API is “a software intermediary that allows two applications to talk to each other,” and firms will leverage infinitely scalable cloud technologies to become virtual customer APIs and recast themselves as platforms.
The most advanced companies, whether B2B or B2C, will “talk” with their marketplace constituents and become empowered to dynamically respond to changes in demand and business flow as they happen.
The capability for digital reinvention and API-like operation is built on some fundamental technical concepts. Reinvention is being driven by the ideas that the browser is the new operating system and that mobile-first, responsive design is the norm.
Voice and vision, in the form of speech and hand gestures, will increasingly become how we interact with our favorite brands and preferred vendors. This follows the lead of tech-savvy retailers like Amazon, which understand that commerce is interwoven with the flow of life and that the best implementations are unobtrusive and adaptable – in one moment I can shout an order for light bulbs, and in the next I can ask the same device to play a particular jazz song over my home audio system or turn on the heat.
Machine learning, combined with location data and contextual information provided by smartphones and IoT-enabled devices, will only continue to make those experiences more efficient and pleasant – an API-driven “conversation,” if you will.
Ongoing dialog – and business flow – between trading partners are what drive reinvention, as opposed to transformation strategies that are focused on incremental changes to the legacy model. Reinvention isn’t all about virtue, either; it is also a reasonable response to greater global uncertainty – not only in terms of competition that urges companies to serve customers better.
Instead, reinvention can be viewed as a strategy that builds business resiliency in an era of climate change, deregulation and other disruptions. Numerous factors may be creating the reinvention phenomenon, but it is becoming clear that the companies of tomorrow will talk with customers and each other, as well as other third parties, continuously and simultaneously.
This new era leapfrogs the old, limited-resource model of software, servers and bandwidth. Instead, companies will plug into technology as an infinitely scalable set of utilities that deliver essentially unlimited technical resources, options and connections, almost instantly – just as the smartphone ecosystem has done.
These always-on utilities will enable the company itself to function as an API and leverage a broad vision that is based on “anything goes,” rapidly assembling individual pieces that serve the needs of the moment. This dynamic capability will enable more than just “serving” an environment or market – it has the potential to re-invent markets and drive societal change.