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The Impact of Digital on Business
Leading Digital Strategy authors Professor Christopher Bones and James Hammersley set out the impact of digital on different types of business and how to respond by creating an e-commerce strategy that addresses customer needs and which both business and technical professionals can understand.
There are two ways of thinking about the impact of digital on business. First, in terms of how it manifests itself, and second in terms of the competitive opportunity. We can start by defining the activity in one of three groups:
- Digital as a product in itself. This is where the data itself is the product or service, commonly referred to as ‘big data.’ This part is dominated by professional services and some digital services businesses who can manipulate data on behalf of very large organizations such as banks, retailers and governments.
- Digital as disruptive innovation. This is where it makes a market that has not existed before using new technology or applying technology in a novel way. This is the entrepreneurial part where new products and services come into being that were either impossible or commercially unviable in the pre-digital age. Whilst this is where fortunes can be made (and lost) for the founders and early investors, over time these businesses will establish and sustain themselves through the tools and techniques required to manage a digital route to market.
- Digital as a route to market. This is where it is transforming the delivery of existing products and services or allowing the development of new products and services within established markets. This is the world most of us inhabit and the world that is facing the most significant levels of change as old models break down and new models take their time to establish and work effectively. (This part is commonly what is referred to as e-commerce).
The issues faced by the vast majority of us working in established markets are classic leadership challenges. Despite individual issues, there are two that seem to reach across every sector and every size of business: first, the classic one of finding and retaining the right talent with the right sets of skills; and second, getting it right with customers so they respond positively to what a business is trying to do. Whilst the former is always a challenge in any emerging discipline, there are some creative solutions available. The single biggest challenge in e-commerce is getting it right for the customer. This is the focus for any digital leader and sits at the core of the thinking behind Leading Digital Strategy.
Leaders who are trying to implement an e-commerce strategy are required to establish three things:
- An agreed value at stake for the business against which investments will be made and returns expected. This is a commercial imperative, not a technology project in a vacuum.
- Clear leadership and management accountability for establishing a business model and an operating model and the most effective processes and structures that can enable these to deliver the expected value.
- A deep understanding of customers and how to attract, engage and retain them in the digital channel.
In our experience, what is missing in many organizations is a model against which leaders can build a common understanding of what is required to deliver these things and a shared programme of change to ensure they get delivered.