Treating digital as a bolt-on and passing the digital buck around the organisation is the nail in the coffin for big business. Treating every new digital channel as another project generates organisational and technical chaos. If the CEO can't handle it, the chief marketer and chief information officer need to take the lead. Or their firms will eventually have to "sell their souls to the digital devil".
That's the thrust of Forrester research's latest report.
A mobile app and a Facebook page do not a digital business make, said the firm. Shoring up a big business up for the future means applying digital thinking across the business and senior management taking ownership of it.
Three quarters of business leaders say their company has a digital strategy but only a third think it is the right one, and just 15% believe their company has the skills and capabilities to execute it. Nine in 10 business executives believe their business will be impacted by digital disruption in the next 12 months, but most think it is someone else’s problem to deal with. Marketing is the top area of the organisation that business leaders think will be impacted, equal to e-commerce and IT.
Digital transformation of a business can't come from a digital department, according to the report. It has to come from a “reboot” across the entire organisation, led by the CEO and spread though education and training for all staff.
If the CEO isn't equipt, the CMO or CIO are best placed to take the lead. Forrester cites GE, L’Oréal, Nestlé, and Procter & Gamble as multinationals that are investing heavily in the digital education to create networks of digital champions across regions and brands.
“Companies based on legacy technology systems will sell their souls to the digital devil … Having made this bargain, the dinosaurs will find that their new partners know more about their customers than they do themselves,” states the report.
Many businesses' first step towards thinking more digitally was adding new departments but this leads to “organisational chaos” and starts to hinder progress, according to Forrester.
The report states: “Eventually, treating every new digital channel as another project generates organisational and technical chaos. This chaos intensifies the operational challenge: that your organisation’s structures, technology, and metrics are siloed into functional building blocks, each striving for internal efficiency and fighting for scarce resources. The “digital bolt-on” way of thinking makes it much harder to respond to change in agile ways.”
Traditional business thinking “hinders” digital transformation, claims the report and the things that used to set companies apart such as scale, distribution strength, and brand are less “potent” than they used to be. They are being replaced by speed, agility and digital nouse.
By 2017, digital touchpoints like mobile devices will influence 50% of US retail sales, and 10% of all sales will be online. Seventy-two percent of US adults will use online banking, and 43% will use mobile banking services according to the report, demonstrating the need for even conventional sectors to think digitally.
To stay competitive, traditional businesses must start thinking like disrupters and looking at alternative business models that shift away from the linear value chain. Working collaboratively with complementary businesses and suppliers to share data and services will help brands position for a digital future.
BMW offering mobility services like vehicle leasing in major US cities alongside its traditional sales model or retailers like American Eagle using iBeacon to enhance and personalise the experience each shopper gets in store, are cited as examples of digital thinking.
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