Mitzi Ilagan | Negosentro.com
In almost everything that we do, a mobile phone, a computer of Wi-Fi is related or connected to it. When out on a trip to somewhere unfamiliar, we use an online map to reach the place. When looking for a nice and cozy place to have dinner, we use a mobile app to find that perfect resto. When looking for an alternate route during rush hours, we use a traffic and navigation app. When on a Friday night hangout, we use an image messaging and sharing application to update your other friends online, or even share what you’ve been eating and doing the whole night. The digital age has done a lot of changes in man’s way of life and now, it is barely controllable.
Because of that, more business models have changed and adapted to this advancement, such as known businesses of Uber, Netflix, Viber and Spotify. All of these have undergone digital transformation. This process involves a revolution in the business activities, practices, competencies and models to fully leverage the changes and opportunities of digital technologies and its impacts. This involves connecting and aligning multiple intermediary goals to be able to reach optimization.
Based on the Global Information Technology Report 2016 and the explanation of Lauro Matias, CIO of Starbucks during the CIO Leaders Summit Philippines 2016, digital technologies affect innovation in these areas:
1. The digital revolution changes the nature of innovation.
Businesses and governance are missing out on the rapidly growing digital population. For those in manufacturing and in research and development-based functions, there are many kinds of technologies coming out that you could use to actually decrease your cost in research. It allows accurate inference based on larger amounts of data and more extensive long-distance research collaboration, which could be affordable at the same time.
Product and process innovation. Digital technology gives firms cost and quality advantage over new products, services and re-engineering production systems.
Business model innovation. Digital technology provides firms the advantage of getting the chance to improve their business models. These things are happening right now and what one could do is take advantage of it.
2. Firms will face increasing pressure to innovate continuously. The increasing market size, especially if the digital population is dead and you see some of the numbers in devices themselves. Technology will act to integrate these markets together, making them accessible.
Digital technology is reducing barriers to entry: before, it may be too costly to do something, but now, it is very easy to do it. Examples are globally accessible cloud computing and online marketing platforms.
Acquiring and leveraging knowledge of consumer preferences. Through digital technology, especially through social media, firms get more accurate information about their consumer preferences so that they could it could be aligned to get more opportunity to target products.
But what is digital business, really? From Lauro’s experience, which was clearly explained through a book called Enterprise Architecture As Strategy. There may be too many hardworking employees in a company but nothing really changes their growth as a whole. Some formulate new strategies and yet, they still can’t get ahead. Some firms do the right thing– they go out in the market, listen to consumers and watch on their competitors’ moves but they seem to be not enough. His advice is to do your proposals based on your foundation of execution, which should be aligned with the IT strategy, rather than business strategy. He then proposes that firms, should rather extend your company’s foundation of execution using digital technology for their digital business strategy, rather than pursue with a disruptive business model. Digital technology basically means creating new business designs by blurring the digital and physical worlds and extending a company’s foundation of execution by digital technology. Just like Waze–before its creation, traffic was just there in front of us, with hundreds of cars stuck in front of us. But now, traffic could now be seen in an application, to every street that you would navigate and even all the way to one’s destination.
With these said, digital transformation, something that we could not stop from coming, could really be considered as a blessing, especially if you know how to deal with it. The faster you go, the better. It’s no longer the bigger fish that will eat the small fish. it will be the fast fish who’ll eat the slow fish.
Reference: Global Information Technology Report 2016: http://www3.weforum.org/docs/GITR2016/WEF_GITR_Full_Report.pdf