Digital Disruption has required many companies to set up some sort of a digital growth functions. After carefully analyzing & comparing what most of these companies have in common, I have identified the following 5 Strategic Growth Pillars of a company focused on Digital Transformation.
#1. Ops & Infra Digitalization: In the past, driven by organizational pressure to get to revenue and launch the new thing rapidly, we abstracted and/or ignored the old. While the abstraction helped us get off the ground fast, it caught up with us very fast. The conversation about abstraction never really went away and we were constantly hiding or working around the bad until it caught up with us. When it was time to scale, we either had to rip open the systems to find architectural issues causing rework and refocus (or) simply unable to scale. Every digital transformation should start with immense focus on ops & infra and back-office digitalization.
#2. New Business Model Creation: Someone once told me that you are never going to get enough credit for fixing the broken thing or reimagining what is already working. In the digital world, business models are becoming boundaryless. Companies like Facebook spent 5+ years with no revenue model but relentlessly acquiring consumers and then simply “turned-on” services. Salesforce came at a time when big systems required a lot of Capital Expenditure and launched a pay-per-use model, and the Ubers and the AirBnBs of the world launched a taxi service with no cars and hotel service with no retail space. Warby Parker vertically integrated the value chain to compete with a behemoth like Luxottica and Dollar Shave Club launched a subscription service to disrupt how men go about conducting their everyday shaving routine. Almost all businesses need to start thinking about new business models.
#3. Ventures & Partnerships: Digital has democratized ideas. Ideas and the people who come up with ideas can just about be anyone. Big companies have scale and small companies are looking to scale. Many a times, the small disruptive companies come up with solutions to solve a big pain point for large companies. It is exactly at that intersection that ventures and partnerships begin to happen. Almost every company has a venture arm that is focused on investing and/or partnering to accelerate the mutual goals.
#4. Incubators & Accelerators: Now that most companies have ventures, the competition to attract, incubate, and help businesses accelerate success is at an all-time high. Many large companies are now partnering with the Techstars of the world and are now setting up incubators and accelerators (or) simply setting up their own. Incubators & Accelerators provide large companies with an opportunity to differentiate their value to the startups. It ranges from providing working space to providing differentiated support in marketing, sales, relationships, education, and a lot more.
#5. Change & Culture: Often ignored, culture transformation is key to digital transformation. It involves changing the way we work – something as simple as going from well-orchestrated and rehearsed status report to logging onto an insights platform to see the status, being consumer-focused, building empathy, user stories, and progressing them to conclusion in an agile way, or adopting approaches such as innovation accounting to fund initiatives or something as big as adopting Lean Startup principles in a large company.
There are many ways to go about digital transformation. However, most companies anchor themselves on one or all of the above pillars. Have you seen other growth pillars? Please let me know via comments.