One of the most intractable issues facing many companies is how to harness the power of the digital technology by developing a digital strategy. Typical questions that business leaders ask include: how much should we spend on our digital strategy, how long will it take to introduce, what will be the likely return on investment and, perhaps most critical, where should we start?
Faced with such uncertainties, it is not surprising that so many businesses struggle.
However, according to A.T. Kearney, the root of the problem may lie in the very concept of the ‘digital strategy’. The management consultancy believes that the key to digital innovation is not to treat it as something that needs to be added to an existing business, but to develop a strategy ‘for a digital world’.
‘Technologies have redefined the ways people communicate and interact, and this new reality must be at the core of all business strategies,’ A.T Kearney says.
While many businesses recognise that digital and corporate strategies need to be unified, few commit to doing so, the consultancy argues. As a result, ‘while more than half of executives say digital will transform their business, few say they are prepared to face the threats’.
A.T. Kearney says companies that have adapted to the digital world have ‘embraced the new dynamics, developing big ideas that allow them to reset and motivate the whole organisation behind a shared, meaningful vision for success’.
Commodities is a sector in which digital innovation has been crucial because global trading relies heavily on online marketplaces. In fact, the transition to computer-based trading of commodities such as agricultural products and base metals started well before the commercial launch of the internet; commodities traders were embracing electronic systems while executives in other industries were still accessing their emails via dial-up modems.
For this reason, Global Dairy Trade (GDT) is one business that has been successful in putting digital transformation at the core of its business, which involves buying and selling dairy commodity products from around the world.
GDT, a subsidiary of Fonterra Co-Operative Group, used Perfect Exchange, the auction and trading platform from Perfect Channel, to build GDT Marketplace a global, multi-seller auction platform. With annual sales of over 1 million metric tonnes of dairy products, the system operates 24/7 and is used by buyers in more than 90 countries.
Marketplace platforms like GDT’s are likely to become even more important over the next few years, as the latest technologies such as artificial intelligence (AI) and augmented reality create the next wave in the digital revolution.
According to consultancy PwC, AI is poised to have a transformative effect on consumer, enterprise and government markets, and 72% of business executives believe it will be the business advantage of the future. Technology research group Gartner, meanwhile, says 100 million consumers will shop in augmented reality by 2020.
Businesses will need to act quickly to take advantage of these innovations – and to ensure they keep up with competitors.
As A.T. Kearney says, companies should avoid developing a digital strategy; rather, they must put digital innovation at the heart of the business.
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