Monday, August 28, 2017

Speed as a Competitive Advantage in Digital Transformation

The concept of speed as an advantage is not new. Over the course of 700 years, the Romans built and maintained a system of roads extending over 55,000 miles to enable speedy communications and the quick movement of troops across the vast expanse of the empire.

What’s different today is that digital technologies have warped our perception of time. As an example, a person might say they live five minutes from town, but that can have widely different meanings based on whether they were referring to walking or driving a car.  Digital technologies compress our perception of time and space while expanding our expectations of what can be accomplished in a given time. We expect to complete the equivalent of one hour of shopping in a supermarket in one minute online.  These changes significantly impact the way businesses must operate in a digital era to compete and remain relevant.

In his annual shareholder letter for 2017, Amazon CEO Jeff Bezos identified one of their key competitive advantages: high-velocity decision-making, or the ability to act quickly on limited information to stay ahead."   In our research for this report, all participants identified the pursuit of speed as a significant motivation for digital transformation:

Speed of innovation to attract new customers
Speed and time to market with new products and services
Fast reactions to competitive and customer pressures
Fast technology adoptions

When asked about the biggest challenges their customers are facing with digital transformation, respondents again identified speed (or lack of speed) issues: legacy systems (too slow), iterative approaches (too slow), technologies evolving too fast to react (response to slow), grappling with which technologies to adopt and how to build a business strategy (too slow).

Among managers surveyed, the number one mistake identified for organizations attempting digital transformation: moving too slow.  Or as author Robert Leonard writes in the book The Principles of War for the Information Age, “If I can develop and pursue my plan to defeat you faster than you can execute your plan to defeat me, then your plan is unimportant.”

Our research reveals four important areas where speed has a profound impact:

1. Technology Performance

The speed at which technology performs – and how that impacts the business’s ability to quickly change – has major implications for future business success. This is highlighted by the fact that a majority of the executives we interviewed see their IT infrastructure as a disadvantage to their business.  In our executive interviews, we gathered the following additional insights:
  • The longer an organization is in business, the more complex the technology structure becomes, and the more difficult it is to change. 
  • Technology limitations prevent a business from changing at the speeds required to remain relevant.
  • Technology limitations even more than business strategies may determine a company’s future direction and ability to compete.
  • The size of a company’s IT challenge is directly proportional to the number of legacy systems, custom apps and integration points they have. 
2. Organizational Agility

The speed with which an organization can change directions - its agility - is critical to success in a fast changing digital world.  As one executive said, “Digital transformation requires the ability to act and react quickly as an organization.”  The lack of organizational agility has real consequences. “We miss opportunities as a result of our reluctance to change,” said another executive.

Agility doesn’t happen by accident. An agile organize must be purposefully developed to act and react with speed to changing market conditions and consumer behaviors. It requires an organization that recognizes the competitive advantages available in the gaps between leaders and laggards.  Agility requires a business model, workforce and IT infrastructure capable of responding to the requirements of the business.

3. Leadership Decision-Making

Digital technologies (sensors, mobile devices, analytics, AI, etc.) enable data to be collected and processed in real-time, and it takes that kind of speed to support digital customer interactions, and to be competitive today.  Many leaders, however, have failed to recognize these changes and the need for digital transformation.  Executives had the following insights and comments on this matter:
  • “The pace of digital transformation took us by surprise.  The rate change happened was unimaginable to us.  The digital disruptors (software companies) have taken our competition to an entirely new level.”
  • “We got caught flat-footed.  We needed to embrace digital technologies faster.  We needed to unify our global operations and IT faster..” 
  • “We [typically] wait until a problem arises, and then find a solution.  We didn’t see digital transformation coming at this rapid rate.”
4. Customer Alignment

Along with increased competition, fast-changing customer behavior is the top motivation named by high-tech executives for engaging in digital transformation initiatives. When customers go digital, leaders must embrace a digital mindset, upgrade digital skills and talent, and enhance digital customer interactions, according to our surveyed technology professionals.

One executive we interviewed said, “Particularly for organizations with well-established IT solutions for brick-and-mortar stores - it’s quite a challenge to change to the digital needs of our customers, and to adopt new digital strategies.”

Digital consumers are changing their habits and behaviors at an extraordinary rate.  An executive we interviewed said, “Our customers’ expectations are always three or four steps ahead of us.”  Another said, “Keeping pace with our customers requires much more effort and up-to-date strategies.  We are always a few steps behind.”

Our research reveals leaders must find ways to measure and track the pace of changing consumer behaviors, and align resources and priorities to ensure they are transforming, if not at the same pace, at least at a pace ahead of competition.

If you find these articles valuable, I am available to provide in-house workshops and analyst briefings.  Visit my website at the Center for Digital Intelligence.

Read more from the Center for Digital Intelligence here:

  • Culture as a Competitive Advantage in Digital Transformation
  • Digital Technologies and the Compression of both Time and Distance
  • Patterns, Platforms and Automation
  • Making the Hard Decisions in Digital Transformation
  • Center for Digital Intelligence Interviews: Hitachi's Rob Tiffany on Industrial IoT 
  • Digital Transformation and the New Rules for Start-Ups
  • Digital Transformation and Leadership Development
  • Digital Transformation and Competitive Decision-Making
  • Combinatorial Nature of Digital Technologies and Legos
  • Digital Transformation from 40,000 feet
  • Winning in Chaos - Digital Leaders
  • 13 Recommended Actions for Digital Transformation in Retail
  • Mistakes in Retail Digital Transformation
  • Winning Strategies for the Fourth Industrial Revolution
  • Digital Transformation - Mindset Differences
  • Analyzing Retail Through Digital Lenses
  • Digital Thinking and Beyond!
  • Measuring the Pace of Change in the Fourth Industrial Revolution
  • How Digital Thinking Separates Retail Leaders from Laggards
  • To Bot, or Not to Bot
  • Oils, Bots, AI and Clogged Arteries
  • Artificial Intelligence Out of Doors in the Kingdom of Robots
  • How Digital Leaders are Different
  • The Three Tsunamis of Digital Transformation - Be Prepared!
  • Bots, AI and the Next 40 Months
  • You Only Have 40 Months to Digitally Transform
  • Digital Technologies and the Greater Good
  • Video Report: 40 Months of Hyper-Digital Transformation
  • Report: 40 Months of Hyper-Digital Transformation
  • Virtual Moves to Real in with Sensors and Digital Transformation
  • Technology Must Disappear in 2017
  • Merging Humans with AI and Machine Learning Systems
  • In Defense of the Human Experience in a Digital World
  • Profits that Kill in the Age of Digital Transformation
  • Competing in Future Time and Digital Transformation
  • Digital Hope and Redemption in the Digital Age
  • Digital Transformation and the Role of Faster
  • Digital Transformation and the Law of Thermodynamics
  • Jettison the Heavy Baggage and Digitally Transform
  • Digital Transformation - The Dark Side
  • Business is Not as Usual in Digital Transformation
  • 15 Rules for Winning in Digital Transformation
  • The End Goal of Digital Transformation
  • Digital Transformation and the Ignorance Penalty
  • Surviving the Three Ages of Digital Transformation
  • The Advantages of an Advantage in Digital Transformation
  • From Digital to Hyper-Transformation
  • Believers, Non-Believers and Digital Transformation
  • Forces Driving the Digital Transformation Era
  • Digital Transformation Requires Agility and Energy Measurement
  • A Doctrine for Digital Transformation is Required
  • Digital Transformation and Its Role in Mobility and Competition
  • A Revolution in Precision Through IoT, Analytics and Mobility
  • Competing in Digital Transformation and Mobility
  • Ambiguity and Digital Transformation
  • Digital Transformation and Mobility - Macro-Forces and Timing
  • Mobile and IoT Technologies are Inside the Curve of Human Time

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    Kevin Benedict
    Principal Analyst, Futurist, the Center for Digital Intelligence™
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    ***Full Disclosure: These are my personal opinions. No company is silly enough to claim them. I work with and have worked with many of the companies mentioned in my articles.