Speed as a Competitive Advantage in Digital Transformation

The concept of speed as an advantage is not new. Over the course of 700 years, the Romans built and maintained a system of roads extending over 55,000 miles to enable speedy communications and the quick movement of troops across the vast expanse of the empire.

What's different today is that digital technologies have warped our perception of time. As an example, a person might say they live five minutes from town, but that can have widely different meanings based on whether they were referring to walking or driving a car. Digital technologies compress our perception of time and space while expanding our expectations of what can be accomplished in a given time. We expect to complete the equivalent of one hour of shopping in a supermarket in one minute online.  These changes significantly impact the way businesses must operate in a digital era to compete and remain relevant.

In his annual shareholder letter for 2017, Amazon CEO Jeff Bezos identified one of their key competitive advantages: high-velocity decision-making, or the ability to act quickly on limited information to stay ahead."   In our research for this report, all participants identified the pursuit of speed as a significant motivation for digital transformation:

• Speed of innovation to attract new customers
• Speed and time to market with new products and services
• Fast reactions to competitive and customer pressures
• Fast technology adoptions
  

When asked about the biggest challenges their customers are facing with digital transformation, respondents again identified speed (or lack of speed) issues: legacy systems (too slow), iterative approaches (too slow), technologies evolving too fast to react (response to slow), grappling with which technologies to adopt and how to build a business strategy (too slow).

Among managers surveyed, the number one mistake identified for organizations attempting digital transformation: moving too slow.  Or as author Robert Leonard writes in the book The Principles of War for the Information Age, "If I can develop and pursue my plan to defeat you faster than you can execute your plan to defeat me, then your plan is unimportant."

Our research reveals four important areas where speed has a profound impact:

1. Technology Performance
The speed at which technology performs - and how that impacts the business's ability to quickly change - has major implications for future business success. This is highlighted by the fact that a majority of the executives we interviewed see their IT infrastructure as a disadvantage to their business.  In our executive interviews, we gathered the following additional insights:

• The longer an organization is in business, the more complex the technology structure becomes, and the more difficult it is to change.
• Technology limitations prevent a business from changing at the speeds required to remain relevant.
• Technology limitations even more than business strategies may determine a company's future direction and ability to compete.
• The size of a company's IT challenge is directly proportional to the number of legacy systems, custom apps and integration points they have.

2. Organizational Agility
The speed with which an organization can change directions - its agility - is critical to success in a fast changing digital world.  As one executive said, "Digital transformation requires the ability to act and react quickly as an organization."  The lack of organizational agility has real consequences. "We miss opportunities as a result of our reluctance to change," said another executive.

Agility doesn't happen by accident. An agile organize must be purposefully developed to act and react with speed to changing market conditions and consumer behaviors. It requires an organization that recognizes the competitive advantages available in the gaps between leaders and laggards.  Agility requires a business model, workforce and IT infrastructure capable of responding to the requirements of the business.

3. Leadership Decision-Making
Digital technologies (sensors, mobile devices, analytics, AI, etc.) enable data to be collected and processed in real-time, and it takes that kind of speed to support digital customer interactions, and to be competitive today.  Many leaders, however,have failed to recognize these changes and the need for digital transformation.  Executives had the following insights and comments on this matter:

• "The pace of digital transformation took us by surprise. The rate change happened was unimaginable to us.  The digital disruptors (software companies) have taken our competition to an entirely new level."
• "We got caught flat-footed.  We needed to embrace digital technologies faster.  We needed to unify our global operations and IT faster.."
• "We [typically] wait until a problem arises, and then find a solution.  We didn't see digital transformation coming at this rapid rate."

4. Customer Alignment
Along with increased competition, fast-changing customer behavior is the top motivation named by high-tech executives for engaging in digital transformation initiatives. When customers go digital, leaders must embrace a digital mindset, upgrade digital skills and talent, and enhance digital customer interactions, according to our surveyed technology professionals.

One executive we interviewed said, "Particularly for organizations with well-established IT solutions for brick-and-mortar stores - it's quite a challenge to change to the digital needs of our customers, and to adopt new digital strategies."

Digital consumers are changing their habits and behaviors at an extraordinary rate.  An executive we interviewed said, "Our customers' expectations are always three or four steps ahead of us."  Another said, "Keeping pace with our customers requires much more effort and up-to-date strategies.  We are always a few steps behind."

Our research reveals leaders must find ways to measure and track the pace of changing consumer behaviors, and align resources and priorities to ensure they are transforming, if not at the same pace, at least at a pace ahead of competition.

If you find these articles valuable, I am available to provide in-house workshops and analyst briefings.  Visit my website at the Center for Digital Intelligence.

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