5 Ways to Tell if Your Company Will Flourish or Vanish in the Digital Economy

The move from ‘brick-and-mortar’ to ‘click-and-buy’ has had a profound impact on retailers around the world. While some have flourished, many retailers have slashed costs and closed stores as shoppers migrated away from malls. But, it’s not just retailers that are trimming costs and relegating digital to the back corner of the technology team and calling it an ‘IT department problem.’ “Companies that take this approach are already suffering,” according to John Newton, Alfresco Software’s founder and CTO.

Newton says there are five ways to tell if you’re company will flourish or vanish in the digital economy and there’s not even a need to look beyond the senior-level executives in the C-suite.

1. Address new adjacent markets

Digital-first leaders focus their business on addressing new and adjacent markets. They are looking to avoid disruption from new entrants and startups. They prioritize the customer experience and the introduction of new products. Whereas laggards are focused on cost-cutting, efficiency and increasing revenue from existing products.

2. Start at the top

Successful digital transformation must start at the top. Digital transformation has become a board level agenda with the CEO often taking responsibility for driving the program. Lagging companies delegate transformation down the command tree as though it were merely a technology problem. It is not. Digital transformation will be the foundation for business in the future.

3. Focused digital transformation

Digital leaders have a more focused agenda for digital transformation than lagging companies do. Lagging companies’ objectives are all over the place, but mainly focused on refreshing technology and cutting costs. In companies that are digital leaders, the focus on digital transformation is on engaging customers more effectively and building out their ecosystem using digital technology.

4. Significantly more aggressive

Looking forward, we seem to be on the cusp of major changes in digital transformation. Digital leaders are ahead today, but their intentions over the next 3 years are significantly more aggressive than laggards. Digital leaders will invest significantly more in user and customer experience and in opening their ecosystem to connect their internal systems to their customers, partners and suppliers. This will have the effect of transforming how they develop their value chains to be more digital and more connected to their customers and ecosystems that will be a huge competitive advantage.

5. Open thinking

Openness and open thinking are the foundations of the digital transformation of fast growing companies. A clear majority have embraced open standards, open APIs and open source. This openness is critical in making the digital connections to their customers and their partners to transform how they do their business.

Recent research from Alfresco Software highlights what Newton is saying. The company, which makes open-source software for businesses found that roughly half of the CEOs at fast-growing companies are taking the bull by the horns and driving digital efforts.

So, what are so-called ‘fast-growing’ companies doing right? Here are three things:

1. They adopt a strategy of customer- and user-first thinking. 85 percent of them currently have dedicated user experience teams
2. They commit to an open approach to the flow of ideas and concepts in their organizations. Roughly 90 percent of them report the use of open source technologies as important.
3. They re-imagine a business model that supports a shared economy and leads the way in platform thinking. Today, fewer than 13 percent of companies allow their systems for customers and suppliers to connect to them.

For those executives that are struggling to figure out exactly what to do, there are three levers they can employ for successful digital transformation which catalyze a rethinking of the way organizations leverage technology:

• Design thinking — where a relentless focus upon optimizing user experience and customer experience guides all business technology decisions.
• Open thinking — in which innovation from both inside and outside the organization is encouraged to drive new initiatives.
• Platform thinking — where the desired outcome of systems and solution deployment is to build an ecosystem of partners and customers that exchange capabilities and data in a manner that creates added value.

“Today’s corporate leaders must realize that they need to disrupt or risk being disrupted,” says Newton. “Those who are not yet thinking about how they will innovate with new approaches leveraging technology are at risk.”

Newton points out that digital transformation is not just a critical stepping stone to success for businesses- but key to an organization’s very survival.