Digital transformation could be killing or will eventually kill your company if you fail to accept and adopt it. This fact is well supported over the last decade as many businesses failed to see the changes that the digital age were making within their industries and how consumer habits were shifting. In fact, more than 80% of Fortune 500 companies that existed 20 years ago, either are no longer in business or are not even on the list anymore at all. What’s even more incredible is that many of the current fortune 500’s did not even exist as companies just 20 years ago. (source Forbes.com)
Do you think that digital transformation won’t happen to you or your industry? You better think again!
Failure to Transform Digitally Could Mean Death
It is a fact that businesses that have failed to digitally transform have faced enormous challenges or even death. This lack of digital transformation in the form of innovation has even gone so far as to kill entire industries. The outlook gets even more dire for the current fortune 500s with a study from the John M. Olin School of Business at Washington University that estimates that as much as 40% of today’s F500 companies on the S&P 500 will no longer exist in 10 years. (source CNBC)
Here are some examples of businesses and entire industries that died due to the lack of digital transformation through innovation:
Blockbuster Video – Remember when we used to drive to a store to search through movies to rent. We would pay $2-5 to rent a movie for a few days and be too busy to take it back. We would often pay more in late fees than what it cost to rent the movie in the first place and could have likely bought the movie for what we ended up spending.
This business model went on for years as brands such as Blockbuster, Hollywood Video and thousands of small local video rental brands did nothing to change, improve transform in the digital age. As cable TV began to adopt on demand functions and then Netflix and other streaming services came online with a new model that disrupted the old guard, we saw not only huge brands, but an entire industry reduced to rubble. Innovation and digital transformation is was the fulcrum of video rentals fall and the lack of the ability to see the future and innovate for it was the nail in the coffin.
Borders Books – In a similar way to video rental, the national chain and local bookstores have been relegated to the history books (digital ones of course). Consumers wanted less expensive and easier ways to discover and obtain content and bookstores and publishers failed to deliver until the market forced them to. The advent of technology through internet connections drove most bookstore revenue and power over information to crash hard.
Obtaining books and information is no longer something that requires hours, travel and searching in person. We take for granted what we have with our tablets and smartphones today, but it wasn’t always like this. These massive bookstore chains kept doing business as usual, without regard for the changes happening all around them and in their industry. Poof! Huge brands and an entire industry transformed and swept into the digital age where new innovative solutions lowered distribution costs for authors and publishers and gave consumers what they wanted.
MCI – Many of our younger generations don’t remember paying exorbitant costs for making long distance calls from a home, business or mobile phone. Does anyone remember MCI or Sprint when they existed solely as long distance companies and we paid up to 20 cents per minute to call out-of-state?
Mobile and other technologies completely changed how making calls was done and how we are charged for doing so. Since most of the long distance providers and even local phone companies failed to recognize how technology and consumer disapproval was transforming telecommunications, many of these large brands no longer exist. In fact, I don’t know too many people who even own a home telephone number anymore.
The digital transformation of telecommunications isn’t over and I suspect we will continue to see new innovation and disruption that kills many additional businesses that fail to look ahead, innovate and transform.
Eastman Kodak – It all started with instant pictures from a Polaroid camera. This innovation gave the novice photographer the ability to instantly see the quality of a picture they just took, rather than waiting for an entire roll of film to be used and developed by some technician. Consumers clearly adopted the instant photo technology, but the behemoth brand Kodak just sat back and watched, thinking that they had some kind of lifetime monopoly on film, cameras and processing, simply based on who they were.
Then it happened, the digital camera took over the world and it didn’t stop there! Now almost every electronic device we use frequently contains a digital camera. Not just a still picture camera, but even video and all in high-resolution. And another huge company and industry was gone in less than a decade.
What Digital Transformation Means
Digital transformation is often described as the transformation of business to integrate technologies, processes and priorities that allow for an overall more efficient, competitive and effective operation. However, I think it goes well beyond that to include forward thinking and the discernment of the trajectory of products, services, industries and the distribution models that surround them. True digital transformation must encompass all business elements in order for your brand to compete today, but too often we see companies losing sight of what they do for their customers and how the digital age is or soon will impact, change or even decimate their products and sales models.
Without innovation, transforming with the current digital trends or simply pretending that your industry will continue as it has for decades, will potentially lead your business into chaos in the very near future. Whether you are a startup, enterprise brand or even a small local business, digital transformation is crucial to the longevity of your business and industry. Brands need to identify the digital changes occurring around their industry and identify the challenges and requirements associated with those changes.
We are all seeing this played out today with the likes of Uber transforming transportation and disrupting the age old model of taxi cabs. We’ve watched as Airbnb is displacing massive hospitality companies with digital innovation that has made them the new leader in their industry. We are also seeing the massive shift from the controlling and largely hated cable industry toward a “cut cord”, streaming and online source of entertainment content for many. There will be no end to the disruption caused by new technological innovations that make up digital transformation.
Furthermore, companies that can see beyond the obvious things and what those things will mean in the future will be more likely to transform their business, products and services in time. “Digital transformation kills businesses and industries not because of the challenges associated with the transformation, as much as the lack of vision to see where things are headed after that.”
The question is this: Is your business transforming digitally, including looking beyond the current trends to uncover the transformative disruption that could take out your business, your industry or your market position if you fail to recognize it and take action now?