This year, you may have more conversations with chatbots than your significant other if David Plummer’s prediction is right. (1) Emerging technologies are not only changing the way we live; they are disrupting companies, both large and small.
“As industries are disrupted by digital transformation, businesses will need to invest in emerging technologies, rethink their workplace culture and redesign their business models to stay competitive,” states Pamela Hinds, Professor of Management Science and Engineering at Stanford University.
All industries are being affected in one way or another. International Data Corporation (IDC) predicts that annual spending on digital transformation will reach $2.3 trillion by 2023. (2)
So, what does this mean for today’s business leaders?
Companies Leading the Way
In IDC’s latest research, they predict increased spending of technologies directly related to digital transformation in more traditional sectors such as insurance, logistics, financial services and retail.(2) As these sectors are disrupted by digital transformation, business leaders must foresee and prepare for change.
Anticipating the impact 3D printing would have on where parts are manufactured and eventually shipped, DHL took the bold step to transform the industry from within; incorporating the technology in its core services and in effect disrupting the logistics industry.
“Logistics providers should embrace [this] change and anticipate the implications of 3D printing on global supply chain dynamics. This will start them down their own transformational journey to strengthen their role within the broader value chain and offer their customers new solutions,” stated Matthias Heutger, Senior Vice President, Global Head of Innovation and Commercial Development at DHL.(3)
Retail, an industry reshaped by digital technology and e-commerce, continues to evolve. When Burberry foresaw the impact digital played in customer experience, they radically transformed the company’s business model. The luxury brand also uses digital technologies to create an enhanced in-store experience for its customers.
Emerging technologies such as IoT, machine learning, AI, among others, continue to drive digital transformation and reshape the customer experience.
A case in point is the insurance sector, set to be radically disrupted in the years to come. New, digital-based providers are creating a customer-centric environment attuned to the ways of a younger audience. Lemonade, with their slogan “Forget everything you know about insurance”, uses AI, a mobile app and chatbots to cut bureaucracy and speed up the claims process for its customers.
Financial services are also undergoing significant digital transformation. The Nordic bank Nordea is using AI to serve its customers better through a chatbot that uses natural language processing aimed at interpreting customers’ queries better and helping employees decide on the best, and most relevant response.
The Pace of Digital Transformation
When the research firm Accenture surveyed 6,672 business and IT executives for their Technology Vision 2019 report, 45% of those polled said the pace of innovation had significantly accelerated over the past three years due to emerging technologies.(4)
At current rates, a company will need to change direction every few years.
Zvika Krieger, former Head of Technology Policy and Partnerships at the World Economic Forum, shows that the rate of change is unprecedented. He cites the rapid adoption rate of technologies by consumers. For example, the mobile phone took 12 years to reach 50 million users, whereas Facebook reached 50 million users in four years, WeChat—one year and Pokémon GO—19 days.(4)
Solutions to the Skills Gap
Leaders in digital transformation understand that employees with the right skill sets are fundamental for their company to succeed. As Jack Welch famously said: “There are only two sources of competitive advantage: the ability to learn more about our customers faster than the competition and the ability to turn that learning into action faster than the competition.”
Today’s digital transformation leaders know they must instill continuous reskilling and upskilling of their workforce as a central strategy to ensure that their organization can thrive into the future. Relying on hiring alone will be insufficient to meet the skills gap and deliver the workforce diversity needed to tackle the challenge ahead. (5) And as the rate of change continues to increase, they will also need to anticipate the skills required and promote the training of employees at a rate equivalent to the pace of change.
On the Road to Digital Transformation
How do companies ensure they are ready for their digital transformation journey? According to Hinds, it means creating flexible organizational structures based on customer needs or particular projects and having a fluid structure that can change rapidly.
This was part 2 in OpenClassrooms’ Digital Transformation Series. Also read:
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