Companies are pouring millions into "digital transformation" initiatives - but a high percentage of them are not paying off. That's because companies are tackling it from behind.
Companies that want to grow through the use of digital technologies often have a specific tool in mind.
"Our organisation needs machine learning" or "we really need to implement a CRM this year".
Yes, perhaps, but maybe not. Digital transformation should be aligned with the broader business strategy. There is no single technology that delivers 'speed' or 'innovation' as such. The best combination of tools for a particular organisation will vary from one vision to another. The key difference between successful companies and the losers is neither brand new technologies nor the right timing in entering the market. Successful innovations bring greater benefits in the form of lower costs, higher quality or better service to customers. This is true for pioneers as it is for late adopters¹.
The invention of the cotton gin, the internal combustion engine or the transformer may give the impression today that one day they invented this and that and the next day everything changed.
But that is not how the world works. The existing world, created to manage growth based on previous technology, is not approtirate for the new technologies. In almost all cases, there has been a long and bumpy road combining an era of technologies with an era of economic recovery. Carlota Perez is an award-winning economics professor at the London School of Economics. Her most acclaimed work focuses on the study of technological developments in the first, second and third Industrial Revolutions and their impact on business, culture and society. In all cases, the best business models have taken the lead².
Ford had not invented the car, nor were they early to market. Ford had the best business model, an organisational structure oriented towards the assembly line and the railway made cars for the middle class possible. Google, Amazon, Facebook and Uber are companies that emerged from the initial phase of the fourth industrial revolution. As long as history is not rewritten this time, the established, over 100-year-old organisations are just as well positioned³.
Literature sources:
(¹) The Blue Ocean as Strategy, W. Chan Kim
(²) Technological Revolutions and Financial Capital, Carlota Perez
(³) When Machines Do Everything, Malcolm Frank
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