Digital transformation has been much misunderstood. Most are getting fixated by the technology on offer but few are understanding the changing industry dynamics or the way in which the fundamentals of economics are being altered. That is why so many digital transformation initiatives are failing. The first pitfall causing this is the lack of clear definitions on digital transformation. Most think it is merely an upgrade on existing IT functions. But by most estimates, by the year 20205, there will be twenty-billion odd digitally connected devices generating enormous quantities of data warehousing enabling the information mining and the derived business analytics functions to be highly accurate. The basic fundamentals of economics have also been challenged as concepts of profit, rent and capital investment have gone out of the window, confounding many a decision maker. This is causing major concern to industry incumbents, seeing their margins sliced off. Crowd opinions now matter more than that of experts. A study by McKinsey has also shown how the digital world encourages a winner-takes-all ecosystem. First movers and a few of the superfast followers tend to hoard up market revenues. Instead of focusing on the activities of rivals, companies in the digital age need to align their structures to leverage platforms such as Amazon, Apple Pay, Tencent or Alibaba. More than half of the world’s top twelve companies for example are such ecosystems. Another error on the part of chief executives is the failure to recognize the dark horses, by instead focusing almost solely on the usual suspects. The digital shifts in the B2B segment are oft ignored for the more obvious customer facing segment, yet equally crucial. An aspect of digital not well understood is that it operates on multiple levels, so a matrix structure ought to be created to make sense of any situation such as possible disruptions.

Source:https://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/why-digital-strategies-fail?cid=other-eml-nsl-mkq-mck-oth-1802&hlkid=46696854e4f64b7fb338bd8b6984cce5&hctky=2657824&hdpid=cf69bc13-2f25-43e6-8c6d-793294bbe44e

Uploaded Date:12 March 2018