Prior to the COVID-19 crisis, global spending on digital transformation was projected to reach USD 2.3 trillion by 2023. Though adjusting these projections may be impossible at the moment due to the unpredictability of global health and economic conditions, it is safe to assume that this number will rise exponentially.
According to McKinsey, consumers and most businesses have undergone five years’ worth of digital adoption in the space of eight weeks of the COVID lockdown. As experts prescribe digitalization of business as the most effective -if not the only- way to recover and grow in the post-pandemic economy, which businesses need to digitally transform the most?
First, let’s define digital transformation to set the stage for the companies who need it the most.
What exactly is Digital Transformation?
So many exceptional brands have become household names thanks to their radically new way of thinking. However, as they grow bigger, they tend to focus on perfecting the innovations that brought them recognition rather than continuing to push the envelope. These businesses become targets for disruption by a new wave of startups, which are typically small, fast-moving, with a highly agile team betting everything on innovative new concepts.
“Digital transformation” is a general acceptance by corporations that technology has ushered in a new reality. It is the ability to see the opportunity for what it is, and act with an eagerness and urgency to take advantage of the new possibilities.
The Walt Disney Company built its organization by creating media content, theme parks, merchandising, and for 80 years continued to push that bet to bigger and larger levels. When Bob Iger was campaigning to become the CEO however, one of his key areas of focus was to embrace technology to the fullest extent. He understood that technology was changing the way content was being consumed and failing to act would threaten every aspect of their business.
Watching Disney bet big on technology from Pixar to Magic Bands, collecting data and, eventually, a massive bet on Disney+ is such a perfect example of what true digital transformation looks like, and was a linchpin of one of the greatest CEO tenures in history.
Which Businesses Need to Transform the Most?
This is actually a much harder question to answer than it would seem, for a few reasons. There are only a handful of examples of truly reinvented industries. Instead, there are some amazing examples of businesses within certain industries that have embraced technology and the mindset that goes along with it.
The main reason for this is that digital transformation requires more than the right strategy, technology and implementation. In fact, the key component to the success of digital transformation is the mindset -if you will- within all layers of the organization.
More often than not, the businesses that are in dire need of digital transformation are the ones that are set in their traditional ways and unable to adopt the agility this process requires – a real catch 22. The businesses or corporations that invest in and embrace technology “to the fullest extent” will thrive for years to come.
Let’s take Home Depot for example, who invested more than $11 billion to digitally transform its business. By combining its physical and online shopping experiences, Home Depot has drastically improved its customer experience and its overall value. Since they decided to commit to digitally transforming in 2017, they’ve seen their revenue increase by nearly 27% and the stock price has risen more than 60%.
Most of the human population has been forced to try out the products and services of the future—which are usually reserved for early adopters and find their way to the general population after being around for years. But now that most people have tried and made a habit of using these new services, they will never be blind to them again.
So the thought that after COVID-19 passes things will go back to how they were before feels naive. Some of the specific trends we may see on the rise as the consequence of the pandemic are:
- More companies leveraging consumer insights
- Organizations will automate processes to eliminate costs and reduce inefficiencies
- Companies will Increase their addressable market to serve more customers
- Technology providing a better and more efficient experience for the customer
Companies that are agile and able to adapt will learn to “swim” and to flourish in this new reality; unfortunately, those who are unable to acclimate will sink. Also, new and needed competition in the “digitally transformed” space will breed a lot of amazing innovation, insanely great user experiences, and products that will ultimately help move all of humanity forward.