Business Transformation and the role of ‘Digital’
Recent CFO surveys indicate that “growth” strategies are set to overtake process optimization as a CFO priority. However, this seems to slightly confuse an outcome with an enabling strategy. Transformation can be both a customer facing growth strategy and a scalability enabler, to ensure the business can serve the needs of the customer at the right cost. As such, transformation remains on the strategic agenda for CEOs and CFOs. We tend to talk about transformation being adopted as a pre-emptive strategy when in practice it is much more commonly a reaction to changing, challenging, even threatening, circumstances. Such transformations represent a fundamental reboot of a company, with the goal of achieving a dramatic improvement in performance in dynamic markets. But transformation is a much-abused term. Maybe this is the year of realisation.
Transformation is often used to describe technology improvements, exploiting the latest tools to drive improved productivity. Whilst all progress is important, these are not the metamorphoses that the word ‘transformation’ describes. The growing evidence is that changing business models are what transforms business. Think about the ‘sharing’ economy of Netflix, Uber, AirBnB. The way in which these businesses view the consumer and their economic customer (not necessarily the same thing) represents a massive shift in business thinking and operation. Consumer convenience enabled by deep intimacy is driving even the oldest businesses to reconsider their models from classic Business to Business marketing and distribution, to a Business to Consumer (B2C) model. The biggest brands that rely on distribution networks are waking up to the fact that they need a direct connection to their consumer, even to survive, let alone thrive. I call this the “Uberization of business”.