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By 8 April 2019 | Categories: feature articles

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Digital transformation is a phrase that we have already heard a lot of. No doubt, will continue hearing more as the technologies that empower it, such as artificial intelligence, cloud, and machine learning to name a few, continue to change how industries do business.

But what is it exactly, how is it impacting our lives and how can organisations, and people, benefit from it? That was the core of one of the presentations at Microsoft’s Cloud for Africa event, with Kim Scholze, the digital advisory services lead at Microsoft, delving into the topic in greater depth. He began by pointing out that beyond being a buzzword that is on the mind of most CEO’s, it is in fact impacting on everyone, from the consumer to the largest enterprise.

The future, now

For consumers, its impact can be seen in everything from the capabilities of their smartphones, wearable devices that monitor one’s heart rate and sleeping patterns, to connected collars that help them keep track of their pets and smart, connected appliances in their homes.  

For industries, some of the applications of the digital era would have been considered pure science fiction a few years ago, such as farmers being able to keep track of the health, wellbeing and movements of their livestock.

“What has really made this possible is that technology costs have decreased significantly. Today you can buy technology for a fraction of the cost than you could ten years ago. A drone for example that once costed R100 000 a couple of years ago, can now be picked up for a few thousand rands. As well, the capability of the technology has increased dramatically. So it is an exciting time we are living in and certainly the digital era is something we have to deal with,” he continued.

Welcome to a new world

For businesses in particular, digital transformation has changed the game. Scholze asserted that the ability to report and share information no longer gives one strategic advantage. Rather, it is fundamental, which businesses need to have in place in order to do business.

Furthermore, Scholze asserted just offering products and services are no longer the backbone of  profitability. “While that will remain, the reality is that just offering products and services is no longer something that gives unique advantage, as the margins have eroded,” he continued. Instead, he encouraged businesses to take cognisance of living in an “Experience economy”, in which the experience of their employees, and customers, is paramount.  

“This means that you have to create new experiences, both for your customers and your employees. We have a whole new workforce entering the market, with different attention spans, different needs, and who work in a different way. In the context of an experience economy we have to design for that. We also have a customer base with different demands, who don’t necessarily want to interact with you face to face, but rather, they want a different experience and you have to cater to them,” he elaborated.

Adapt or die

The question arises then, what is the best way to adapt? Scholze encouraged businesses to observe the behaviours and take into account the needs of their customer on the full end of the spectrum, and then design their solutions accordingly.

Additionally, he stressed that businesses can no longer afford to be complacent, and do their business planning once or twice a year.  “They have to be highly agile and continue planning on a continuous basis. In part this is due to disruption, new players who have entered a variety of industries, from Netflix which disrupted the movie industry, or Spotify which changed the music industry. These new entrants have also seen rapid returns,” he continued.

“If you don't embrace the digital era, then you face the real risk of disappearing, such as Sears, which are closing stores by the dozen mainly because they didn't transform fast enough,” he warned.

Co-opetition, rather than competition

Finally, Scholze encouraged businesses to consider building their own “Values Nets”, in which they partner with their suppliers, partners, customers, and even their competition, to increase their value proposition. “One important point to consider is that it is OK for your competition to be successful through the work you do. It can also be a good idea to partner up and cocreate with your competition on particular projects,” he continued.

Elaborating on that last point, Scholze explained that this could entail the likes of Subaru and Toyota getting together and pooling their research and development resources to design a new chassis, and then going to market separately with different vehicles. “That's co-opetition,” he noted. It also something he encouraged businesses to explore further.

Business as (un)usual

Ultimately, the main message from Scholze was that in an era of digital transformation, businesses in particular need to realise that the traditional ways of doing things don’t hold sway anymore, and that to reap the benefits of digital transformation, they need to embrace new ways of approaching the market and working to a greater extent now.

Much like many professionals, who find themselves having to upskill, adapt to a changing market, so as to thrive in a changing world.  

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