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Time to clarify your digital business ambition: Transform or optimise?

Graham Waller | Aug. 18, 2017
An optimisation strategy can work for a long time, but even the most stable industry is liable to transform at some point, writes Graham Waller of Gartner.

In the digital world, it's often technology driven new business capabilities that emerge to make possible a new product or business model. It grows until it disrupts the industry. At the height of its dominance, an even newer combination of technology and business can appear that fuels new products and business models. This takes revenue from the old model and transforms the industry.

The music industry is a perfect example, having undergone several rapid transformations. Other industries, on the other hand, have resisted transformation for a long time, such as the hotel industry, which looked the same for decades until Airbnb changed the terms of competition.

An optimisation strategy can work for a long time, but even the most stable industry is liable to transform at some point. You’ll need to make judgment calls about when to urge your enterprise to invest.

 

3. Consider your competitive stance

Once you understand when/if your industry will hit a tipping point, you will be in a position to choose a digital ambition. At a simplistic level, if the industry is about to tip, then the enterprise should pursue a transformation path. If it is not about to tip, then they can choose a digital business optimisation path.

However, the industry dynamics are not the only determinant. The competitive or enterprise culture profile also determines the chosen path. More pioneering companies often choose to follow a digital transformation path ahead of the tipping point — they want to be early adopters. Some even plan on being the disruptor that will cause the rest of the industry to tip.

 

Next steps

It’s important to set a planning horizon and investment posture that reflects your chosen digital ambition. This problem is especially pertinent to enterprises choosing a transformation course. Many times we see enterprises claim that they are pursuing transformation, but then rely on a small innovation team and budget to pursue these ends.

If you’re truly pursuing digital business transformation, you should ensure executive and board commitment to a new vision; utilise business change capabilities well-suited to a transformation path; and proactively manage the people and cultural change critical success factors.

 

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