The latest buzzword in corporate parlance is "transformation," and rightly so. Speaking of corporate longevity, a study says, by 2026, half of Standard & Poor's 500 businesses will be replaced and the average lifecycle of a business model will come down to six to seven years. This should put in perspective that transforming is an imperative of our times to stay relevant and stay in the game. Forward-thinking businesses and brands are already realising that accelerating efforts towards transformation is critical in making them remain relevant in a digital age. This is not something new, as brands have always looked to transform themselves at all points in time for growth of business. The difference lies in the fact that unlike in the past where it has been incremental, the current times call for something close a fundamental reset. This is not about how to leverage digital but how to reimagine oneself for a digital world and therefore making it a part of one's DNA.
Companies like Airbnb and Uber have not only disrupted their own category but have created an experience for the consumer which is now expected from brands in other categories too.
These are interesting times we live in where a lot of the rules of engagement have been redrawn by consumers. Companies like Airbnb and Uber have not only disrupted their own category but more importantly they have created an experience for the consumer which is now expected from brands in other categories as well. A cab hailing experience could be the benchmark the consumer may now have from their hotel or bank in terms of the ease of interaction and fulfillment.
As companies embark on a transformation journey, here are some nuances that need to be acknowledged to successfully reimagine their business:
1. Awareness of what is the driving the need to transform
The biggest step in transformation is to understand the reasons why. The main market forces that are causing businesses to transform are:
- Competition can come from anywhere—not necessarily your own category.
- Technology is evolving at a very fast pace—pervasive and innovating.
- Consumers have ever changing expectations.
When these three forces act upon you, you cannot think of transformation in isolation (say, transforming customer experience, or transforming technology stack, or distribution network). You need to respond to all three forces and create a cohesive strategy and journey for transformation.
2. Putting digital at the core
Being digital is not about growing additional muscle in your business. It means making it part of your DNA. Putting digital at the core of the business is about examining every aspect— how am I structured, how do I put my data in play, what experience am I trying to create, what is my company culture etc.—and to make sure it all weaves together seamlessly to deliver on the opportunity that exists, to provide a differentiated value to the consumer. As an example, a well-established bank with a large employee headcount is now directly competing with a digital bank with a fraction of the number of people. Which of these businesses do you think will pivot faster and change the future? According to a study SapientNitro conducted, just 22% of companies have a formal roadmap for digital business transformation (DBT) and only 56% have made DBT a top priority. Those numbers aren't encouraging at one level but are an opportunity for brands that make the early moves.
3. Technology as a differentiator
Technology is no longer just supporting the business or enabling operations, it is the differentiator. The nature of competition is that a company not initially seen as a direct threat will evolve over time and possibly outperform the existing ones. Some of the winners are the new-age technology companies that are invading and overturning established industry structures. Examples include the development of mini-mills in the steel industry; the growth of Amazon in the retail industry; Airbnb's innovation in the hospitality industry etc.
For most market disrupters, the ability to change the constant has enabled them to overtake legacy brands within few years of their establishment.
Earlier, technologies were more about maintaining efficiency and businesses outsourced these non-critical aspects for efficiency gains. Technology will now have a seat at the table as an integral part of the business strategy and thus co-creation will become increasingly the norm. This calls for different approaches both by the brands as well as their partners.
4. Culture of seeking disruption driven by the C-suite
Large organisations are more comfortable operating in known territories than treading in unknown ones. Hence, for most market disrupters, the ability to change the constant has enabled them to overtake legacy brands within few years of their establishment. A mindset shift is the biggest thing required to be innovative and adaptive to change in response to varying customer expectations. It requires the company to constantly pivot according to the opportunities that come up in the future, and develop a culture that values people who seek change, and who believe in fail fast and move ahead. The willingness for a company to disrupt itself in order to disrupt the space will be a critical factor. This would require businesses to invest in cultural change that allows the workforce to accept an enterprise shift. This has to be driven from the top to the bottom by the C-suite, which needs to make this a core mandate and also be a role model on this front.
Times ahead will see brands make their transformation journey. The winners will transform to disrupt, the smart ones will be able to differentiate and rest will be condemned to defend. How they internalise and think about the nuances will decide the segment they fall into.