Without a doubt, the lives of everyone on this planet has been impacted by the digital economy. Approximately 2 billion of us don’t leave our homes without a smartphone in hand. We shop online for almost every conceivable product. And for the 57% who are still unconnected, they are benefiting from a growing social community that is exchanging ideas, influencing governments worldwide, inspiring change, creating awareness of injustice, and coordinating aid to those in need.
At the same time, a growing number of companies are extending the possibilities of hyperconnectivity. Kaeser Kompressoren is embedding sensors in its systems to predict potential breakdowns and generate revenue by tracking the volume of compressed air consumed by its customers. Haier Asia is doubling up its digital platform to get closer to its customers and give them exactly what they want. Even Europe’s second-largest port found a way to increase capacity by 150% without physically expanding its bustling facility.
For these companies, digital transformation is not just a strategic move – it’s a fundamental part of their survival and overall business model. In fact, a recent study by the Economist Intelligence Unit (EIU) revealed that 59% of executives view the failure to adapt to hyperconnectivity is their organization’s biggest threat.
2016: The year of real digital transformation
Despite all of this change, we have yet to scratch the surface of the possibilities the digital economy offers. Mark my words: 2016 will further prove the transformational power of the digital economy.
As we prepare to usher in a new year, here are my top predictions of how the digital economy will continue to revolutionize everything:
1. Digital masters will emerge – and win every time.
Companies that digitally transform everything they do and touch will further differentiate themselves from those that just dabble in digital services. Although the EIU reports that 19% of companies are radically changing their business model to seize the opportunities hyperconnectivity offers, they are becoming powerful brands.
Take Nike, for example. The well-known sports apparel company has transformed itself into a fitness and lifestyle brand. By actively engaging with customers through social media, mobile technology, and embedded sensors, it is fostering an empowered community. From tracking diet, activity, and fitness progress to sending reminders to get their customers moving, Nike is making sure that their customers have the support they need – whenever and wherever they need it.
2. Digital Darwinism will become a significant threat.
Technology and society are evolving at a pace that is simply too difficult for many organizations to keep up with. In fact, according to some predictions, 40% of the Fortune 500 are expected to no longer exist within 10 years if they do not evolve soon.
To survive, companies must be not only the strongest and the most intelligent, but they also must adapt to change. We have all seen this firsthand as we spent the last 20 years saying goodbye to brand leaders that resisted the call and opportunity to digitize. So for the 81% that are not taking digital transformation seriously, make 2016 the year you start to get serious.
3. Digital transformation will be pervasive across every area of the business.
To be truly transformed, companies must go beyond window dressing the customer experience, embedding a few sensors to monitor production, and monetizing a service with digital technology. They must reach deep into the bare bones of the company, going as far as human resources and finance and as high up as the executive boardroom.
Digital transformation is just the enabler – real change happens when the business culture, leadership, and processes of profit centers and cost centers embrace it and evolve with it. The cloud, mobile technology, networks, and analytics present every business area with a unique opportunity to gain greater efficiency, perform instant data analysis, and achieve better collaboration. Not only does digital transformation help companies modernize and become an attractive employer brand for younger talent, but it also creates a seamless customer experience, promotes more effective collaboration, and empowers the entire workforce.
One brand that shows the power of such an undertaking is Burberry. Famous for its digital retail experience online and in physical stores, the luxury retailer has taken its personalization strategy to its employees too. By making it easier for employees in all areas to sell the brand to customers, Burberry is experiencing increased engagement across its workforce. And in the end, that means a better customer experience – anytime, anywhere, and through any channel.
4. The sales funnel will disappear – for good.
For decades, the sales funnel has been used as a visual representation of separating qualified buyers from the rest of the prospect pool. However, thanks to the Internet and social network, the sales process has accelerated to the point where the funnel is no longer relevant.
CEB recently uncovered that the average buyer is 57% through the purchase decision process before their first interaction with a sales representative or channel. Plus, companies only have 12% of their customer’s mindshare through the buying experience. As a result, customers tend to fall through the funnel undetected and without a defined journey.
Through digital transformation, sales and marketing can better address this issue by providing multiple touch points that can make the brand accessible to every existing and potential customer – no matter the path taken. Along the way, data should be collected, consolidated, and distributed across the enterprise to provide insight and power decisions at the moment of the interaction.
5. Cryptocurrency will pave the way for better data security.
Bitcoin. Drones. Virtual reality. Cloud. All of these emerging technologies has drawn a fair amount of press lately. However, there are always naysayers fearful that these innovations will not measure up in terms of protection from cyberattacks and data breaches. And probably the most eyebrow-raising one of all is cryptocurrency. However, Bitcoin has included a level of security into its ecosystem: The blockchain.
Through redundancy, computational compliance, and high-speed processing, all transactions are logged on a publicly available general ledger and copied across thousands of servers. When a transaction is initiated, every one of those servers must agree that the information given is accurate. Should someone try to cheat or hack into the ecosystem, it will be rejected as soon as the new account identifier is detected to be unidentifiable.
Is it possible that someone can work faster than these servers? According to The Economist, it is nearly impossible to generate a new version of the blockchain quick enough to overtake more than half of the servers controlling it. As computing power and speed increases, so will the servers’ ability to process information faster than the most-competent blockchain miners.
What do you think of these predictions? Dust off your crystal ball and share how you foresee the digital economy evolving!
Learn more about what’s possible for your business in the digital economy. Check out these reports detailing the Economist Intelligence Unit’s research: