Firms Must View Digital as a Never-Ending Effort
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Executives must understand that the digital game never ends because the evolution of both digital tools and technologies is not going to stop.
This factually informed model provides a realistic, ever-changing view of markets, products and customers. With it, a company can react to an always-updating, never-ending view of these key business elements because it provides field-based factual information gathered in near-real time from social media, the internet of things (IoT), product sensors and devices.
For example, using the IoT and customer input, a company which had modeled that its new product would run for 500,000 hours without failure now knows that the product fails in real life in about 450,000 hours. It knows further what is happening in near-real time with the product and whether its new assumptions about the product’s performance are accurate.
In addition, companies can react by building products to meet accurate usage specifications. Product manufacturers, for instance, can sell their products by use and alert customers before replacements are needed. They also can recommend service and substitutions.
In the domain of customer engagement, companies that use the granular details provided by the new factually informed model can stop using macro-level views of the marketplace. They can stop dividing the market into extremely large customer segments and promoting their products to the “average” customer in those segments.
Now, they can slice their market segments into narrower and narrower models—in some cases, even down to the individual model that describes John, Jane or Javier. By doing this, they can create, in effect, a model that no longer relies on the “average”—a consumer for whom their products do not really fit—but instead enables the customer to buy specifically what meets his or her wants and needs.
If they are to grow their business efficiently, executives no longer have a choice—they must accept the fact that digital is an iterative, ongoing effort and is becoming more granular. To meet this new imperative, each executive will have to address the following three questions:
· What are the underlying models driving the growth and operations of the business? For example, what are the assumptions in customer acquisitions, supply chain or and manufacturing?
· Are the company’s financial allocations and governance built for this digital challenge?
· How do we evolve our organizational model to respond to this digital opportunity?
The answers to these questions will guide the executives’ reactions and determine whether their business will survive in the coming second decade of digital disruption.
Suketu Gandhi is a partner in A.T. Kearney’s Digital Transformation Practice.