Only a few years ago, digital was just an addition to the regular business model. Now, however, digital is a mainstream business. In fact, businesses can hardly imagine not being digital and some others are completely based on a digital business model. Digital economy is a reality which offers limitless opportunities as well as disruption in popular business models. From the perspective of business finance, research by MIT Sloan shows that companies adopting digital show 26% more profitability than their counterparts.
The disruption that digital technology has brought about is real. Customers have real power and they engage with brands digitally in a very regular way. The digital access and thus the impact that consumers now have on brands is mind-boggling. The service expectation of customers is sky high and meeting it continually is a challenge for brands and businesses. With technology evolving every day and consumers setting technology trends, businesses need to match the pace to stay in business.
Competition & innovation
This continuous state of disruption implies that businesses which figure out the right models will stay ahead of their competition. For example, Hershey’s is traditionally a knowledge company that makes and sells chocolate. Being an impulse buy item, chocolates are placed at checkouts in traditional retail. With purchase patterns becoming digital at an increasing pace, figuring out the right model for digital will be imperative for an impulse to buy a business.
Disruption also necessitates continuous innovation. For example, Schindler is now a mobility solutions provider instead of just an elevator or escalator company. Their mobility solutions are now available in different sectors from malls and retail to healthcare. Schindler was able to expand because of the smart technology is implemented in its escalators which collects data through its sensors and transfers it to Schindler’s back-end support. This enables the company to track any maintenance requirements much in advance of a fault appearing; thus, giving it a competitive advantage.
Even though disruption in digital economy fosters the spirit of competition, it also encourages collaboration. In the current digital scenario, it is neither possible nor healthy for businesses to be constantly competitive. It is the right time for businesses to collaborate and form platforms that enable customers to experience greater convenience. For example, banks and fintech startups can collaborate to provide digital financial services to customers instead of competing against each other.
In the coming decades, human development, in terms of skills and organizational capabilities, will have to keep pace with the rapid technological advancement. Digital economy is real and is poised to grow exponentially in the years to come. Companies who take advantage of the limitless opportunities that it offers will become beacons of leadership in future.