“It is worrying that one in five firms have not yet considered in detail the development of digital capacities and have not defined a corresponding strategy. German dealers and manufacturers jeopardise their market position compared with international competitors when they are too slow and hesitant in addressing the digital transformation.” Gerd Bovensiepen, head of the trade and consumer goods division, PwC Deutschland and EMEA
Relying on success is not an option as numerous examples of traditionally successful firms have shown: Kodak was already developing a digital camera in 1975 but did not recognise the potential of the technology and declared itself bankrupt in 2012 in spite of a great deal of success. Quelle made fun of the idea of on-line sales when the Amazon start-up began to sell its goods on the Internet.
Blackberry developed a Smartphone years before Apple and HP designed an E-Reader long before the Amazon Kindle. However neither of these companies exploited these findings and they were outperformed by the more courageous, customer-orientated competition. Have you recognised the need to digitise your company? Great news if you have, that means that you are a step ahead of many of your competitors!
But which digital strategy promises success? How do you combine your digital projects and how do you guarantee that all areas of your firm are working towards a common goal? This is the only way to ensure that your efforts lead to a far-reaching, sustainable digital transformation rather than petering out as a result of unrelated individual measures. Only when you plan your ideas and efforts as part of “a whole” rather than as unrelated individual measures will you be able to implement a successful forward-looking digital transformation.
A digital strategy is the central theme; a digital roadmap around which all your e-business activities should be developed. Unfortunately, however, there is no blueprint for success. All markets are continually being transformed and customer wishes, channels, business models, value chains and technologies are changing faster than ever before.
Tradition is not a business model in e-business
Pioneers such as Amazon, Zalando & Co provide the benchmarks and anyone wishing to succeed in the face of such dynamic competition will have to be able to keep up with this high tempo and extreme dynamism. This cannot be achieved, however, simply by investing in new tools and technologies: Only firms which challenge established business models and see disruption as an opportunity rather than a risk will be able to master digitisation successfully.
Is reading books a tactile experience? Can publishers alone guarantee journalistic quality? Do we need to be able to try on fashion items before purchasing? Many firms which used to insist on these and similar traditional models are now in decline. According to Steve Jobs, founder of Apple, “Innovation distinguishes the pioneers from the followers”.
An environment which promotes an innovative spirit is one of the main success factors in e-commerce. Companies with a flexible mindset and courageous management are a step ahead in this respect. Companies need to be prepared to recreate their business models in a radical way and react flexibly to changes in the market, ideally anticipating trends even among competitors.
Even if this means that firms use their own business model to begin with, as did Amazon with the Kindle concept, creating its own book sales. However, acting courageously in no way equates to blind activism. In order to set the right course and develop an appropriate digitisation strategy, it is important that you have a detailed understanding of your market, brands and goals.
Digitisation must provide added value
This is frequently misunderstood: Digitisation does not automatically lead to success simply because firms digitise their processes or offer their portfolio in an on-line shop. It is true that all technological developments offer new possibilities. But every smart software package and every innovative piece of technology has to be checked and assessed to determine whether and how it contributes to the firm’s value chain.
Can the customer experience be optimised? Are costs reduced? Is access to products simplified or accelerated? Or are completely new offers created, satisfying customer requirements (more effectively)? The starting point for digital transformation is therefore a well-established analysis of your individual framework conditions. Part 2 of our blog series deals with practicalities and raises questions which every digital strategy should be able to answer, such as:
- What is your target customer like; what are the requirements and “pain points” of your target group?
- What does a typical customer journey look like for your customers?
- How is a customer experience map created?
If you would like to find out more about value propositions, personas, customer experience maps and touchpoints you can read part 2 of our blog series soon.