Original: Li Sheng
Why businesses should pay attention to digitalization
Why Business
Attention should be paid to issue of digitization
I want to clarify a few things
First
What is digitization
In fact, digitization itself
It's not just a product or service you already own
Go online to sell or advertise
Digitalization
This is entire structural process of company
Create a new ecology in terms of business model
In this ecosystem
The company has fixed assets
Liquid assets and digital assets
They can be organically related
Create value for company together
Not just improving efficiency or changing marketing strategies
One,
The connection between digitalization and business
What is relationship between digitalization and enterprises?
From a strategic point of view
Digitalization is closely related to business
If
Simply separate strategy into competitive strategy and corporate strategy
Digitalization
The impact of these two strategies is completely different
The so-called corporate strategy
How to choose direction or track
Past
When a company makes diversified investments
Usually pat yourself on head or do some market research
Digitalization could completely change this practice
Choose a path through market digitization
Digitalization provides timely feedback and direction
This diversification logic makes more sense
So
Digitalization is a very good transformation tool for large enterprises
For some small businesses
He may not want to transform, or business itself is relatively simple
No cross-industry investment
Competitive strategy is more important to him
Competitive digitization strategy
This is actually a means of differentiation
Collect data using digitization
Can communicate with consumers
Adds a very strong stickiness
This kind of stickiness is hard to imitate
Is it true
Corporate strategy or competitive strategy
Digitalization has a good relationship with enterprises
Second
Digitalization itself will create a new industry
Ignore corporate strategy or competitive aspects
Digitalization itself will create a new industry
We can often see
Many Internet companies have a front, middle and backstage
The role of middle office is very important
Many companies are relatively large in entire industry
Or an industry leader - it doesn't have to be big
But it could be segment leader
This type of business
Usually possible
With digitization, you can not only expand your capabilities
At same time, it can also create an intermediate platform for expansionopportunities across industry
In this case
All digitalization has become a new industry
In this new industry
The middle station will connect foreground and background, and cost-effectiveness is relatively high
Theoretically, this position is a structural hole
For companies or industries with structural holes
take a better position
This has also motivated many companies to venture into this new industry
This is different from corporate strategy and competitive strategy
However, this model is not suitable for all enterprises
If
Every business does it
This is also a waste of resources for entire industry
This should be industry-specific
Can industry associations play a coordinating role?
Three,
Good companies face need for digital transformation
The pressure of digital transformation is very high
The very companies that succeed in physical companies
Inside strategy
There is such a word as basic competitiveness trap
.What does this mean
This
When you do a very good product and service
Actually
When you are very dangerous
Because what you do is so good
Therefore, some changes in industry can be overlooked
Currently
If industry changes once
Your original assets will then become liabilities
Or
Your core competitiveness will become a trap
So, for these companies
I feel need for digital transformation
This transformation is subtle and not obvious
Give me an example
GE's digital transformation has been very successful in recent years
GE Company, 2018
Digital Platform Revenue Hits $1.2 Billion
Almost 50% annual growth
Actually
Traditional manufacturing company
Engineers play a major role
Engineer
It is usually emphasized that life cycle of a product should be long
After product development
Better to sell for decades
Then minimize that unit cost
Profit will be higher
But
The logic of digital platforms contradicts this logic
Completely different
Digital platforms focus on user
Agile development
So-called agile development is what market wants and how it changes
Product should have fast iteration
So
These two logics completely contradict each other
GE Corporation
Take advantage of your core competitiveness
It takes a lot of courage
For small businesses
Those who want to scale up but have limited resources
Like county and city supermarkets, there were only five or six in past
Now he wants toget an increase from 1 to 10
It is possible to open 10, 20, 30 stores
In this case, digital transformation is also very important for him
For these companies
I suggest they find a professional consulting agency
This
Transformation and what I just said
There are fundamental differences in transformation of large enterprises
How companies should digitalize
This
Problem related to survival of enterprise
Digitalization
Transformation is actually a strategic response
Strategy
It's really a question of company's survival, primarily from a people's point of view
Corporate
The mental model of a CEO or chairman must believe in digitization
Second
This is a long process
This is a dynamic process
This is a gradual process
Get ready for a long fight
It's never too late
Because
The characteristics of each enterprise are different
The path of our own digital transformation is also different
Enterprises should be based on their own characteristics
Make
A strategic system adapted to its own digital transformation
-Enterprise Digital Transformation Community
I recently did some research
Published in journals such as Harvard Business Review
My research shows
Although businesses vary greatly
But there is something in common
Summing up, we note a few important points
First
The ultimate goal of all digital transformation
Don't try to get result
Create
An ordered system or a process of continuous transformation
This is not a static result
This is a dynamic process
In this process, we must constantly adapt to environment
The second paragraph is same as first paragraph
Although transformation is a long process
But it's also a continuous feedback process
In fact, this is biggest benefit of digital transformation
Past
I always think strategic planning takes three to five years
But digital transformation is different
It's accessible and timely
You can continue to improve based on feedback on this data
That's why he doesn't have a fixed concept of time
Third
I'm in process of researching
It also lists weaknesses of digital transformation of some enterprises
I have found that many businesses are in process of digital transformation
Imbalance between long-term strategic goals andshort-term interests
Because in long run
Businesses can follow trends of global digital transformation
Explore new revenue opportunities
But in short term
It also requires a lot of capital investment and uncertainty
This creates
Imbalance between long-term goals and short-term interests
Second
These are strategic and executive levels
Consensus on digital transformation is essential
Person in charge of certain businesses
There may be time limits in this process
Perhaps
Creating mismatches between strategic and executive levels
The third one makes decisions
This is a mismatch between top-level design and technical level
These three points are incompatible
Creating a gap between strategy and real transformation
2. How businesses should drive digital transformation
First
You need to contact middle management
Even lower level leadership is involved in developing this vision
Must allow
Everyone understands why
Develop very clear goals
Second
Strategic guidance needed
You need
Knowing digital technologies is very important
But digital technologies
The essence is a means to achieve strategic goals
Many businesses
The application of digital technologies should be separated from technical level
The value of technology
Assigned to entire application layer if it cannot be applied
Then no matter how good this technology is, it is useless
Therefore, companies need to develop a clear digital strategy
Digital must be integrated
Combination of corporate culture and leadership
Ensure that digital technologies can play their proper role
CEO
Think strategically about some of challenges you face
Third
Changing organizational structure
Many traditional businesses are vertical structures
There are many levels and chain is very long, and horizontal coordination is not smooth
Difficult to match flexibility of digital transformation
Therefore, whole structure must be changed
Second, change collaboration
The GE company mentioned above did a better job
Former GE CEO Jeff Immelt said
Difficulties in moving to an IoT platform
This is not caused by technology
Because General Electric has deep technical knowledge
And creatively proposed some digital completion concepts
But GE
Failed to establish a collaborative relationship between digital department and traditional department
Employees of traditional departments
focus more on original business
Become a resistance to promote change
So, in this case
Decision of organizationalproblems - re-communication
And establish a clear and understandable incentive mechanism
IT and business
There are many solutions to problem of cooperation between departments
For example
Create an independent digital department or project
Team trains several translators
Be link between business and IT
University of Chicago
Professor Bolt has a very good word "broker"
This
Be able to imagine this market situation
Speak to technician in a language they understand
Or install advanced technology
Speak to market development staff in a language they understand
Therefore
When organizational structure matches talent
There should be such a cross margin
You must also have a very fine business sense
Deep understanding of business
If enterprise resources are limited
I can't hire such a person
You can compensate for this with a variety of commands
Digital transformation makes it easier to find direction
I would like to introduce
Relatively new organizational structure Dual organization
It's called in English
Both hands
This is business
Strategic research in progress
Two different logics of thought are required
One of them is called an exploit
How to get most out of my resources
The second is to explore new unknowns
Like a business
You must do both at same time
But these two things contradict each other
Currently, we need to create such a double organization
Like GE
The Chief Data Officer of CDO was created at HQ from start
and was hired directly by CEO
He is different from chief information officer (CIO)
These are two different positions
parallel
The CEO is more customer focused
CIO is responsible for implementing company's internal IT structure
CDO is responsible for data
GE data and GE headquarters are two relatively independent entities
Different regions, cultures, organizational structures, processes, etc.
This is a binary organization
Completely separate
At same time, various GE business segments
We created our own CDO
Simultaneously report to CEO of business and Headquarters CIO
When they run into problems
Headquarters CEO
CDO and CEO will communicate in private meetings
CDO of each module
He is not recruited by HQ Human Resources or Business Unit
Instead, CIOs are recruited to head officetechnologies
GE installs
This organization also sets rules for rewards
Here's how GE data generates revenue
If it's related to a traditional business
Then it will be registered as a traditional business and a GE data business
Remember twice
That's why everyone is motivated to do it
His dual organization and motivation system match perfectly
What to do if small business resources are not enough
In fact, there are many different dualities
GE is what we call organizational duality
If there are not enough resources
This can do a time range transformation
This is binary time differentiation
For example, 80% of time this year
Concentrate energy and resources on traditional business
20% off new business
Then next year it can be adjusted up to 60%
40%, one year after nextadjust to 40%, 60%
This is second organizational structure I mentioned
Fourth
Environmental aspects
The digital environment is very different
On one hand, because macroeconomics has undergone very profound changes
The emergence of a new generation of consumers
As a result, customer needs have changed a lot
Rapid iteration of customer needs is a challenge
I share
A case of unmanned convenience store failure
At time, company was investing heavily, including in cameras
Algorithms and whole digital transformation process
but for clients
Lack of understanding of changes in demand
Main unmanned goods store
Competitors are traditional convenience stores
For example
seven eleven and whole family
This offline store is right across from Seven Eleven
But result
This store isn't even seven eleven
Because
The market is not supposed to be very important to consumers
50% of sales of many convenience stores come from hot food
Hot food is a very powerful drainer
The other 50% is what consumers will go for other things after they come to store
But there is no hot food in self-driving convenience stores
It's real
No information about consumer changes
Therefore, he has no way to drain water
After hot food is placed
This is not an offline store
So
Understanding consumers is a very important point in process of digital transformation
On an environmental level, we must learn from McDonald's
Create a client center
McDonald's is very responsive to changes in consumer tastes
The fifth level of resource
The study also revealed
Many times
Own enterprise infrastructurecannot meet requirements of digital transformation
Especially
Mismatch between short-term gain and long-term investment
What leads to unsustainable funding
Here I mainly want to talk
Financial capital and investment in research and development
Let's go back to self-driving convenience store example
Founder invested heavily
But then
I feel like I shouldn't vote so much
In terms of investment in technology
I think
Some technologies don't have to vote for best technology at first
Because market is changing
You can play less at first
Improve technology by constantly testing market
And find out if this technology is suitable or not
Second
This is digital transformation of many businesses
A lot of data is collected
But collecting data alone is useless
How
Combining physical and administrative data becomes a challenge
Third
Many IT departments still have a traditional mindset
No communication with business department, product does not meet requirements
Requires integration with marketing department
Besides recruiting
On other side
You can also set up some mechanisms for more convenient communication
There are several aspects here
First, it is synergy of value
Enterprises must open up access to data. Don't let data become an isolated island
If data becomes an island
It's pointless
Only through close cooperation of different departments
To identify your own strengths in digital transformation process
Midea has done a very good job of digital transformation
It is based on concept of user demand
Implementation of a collaboration model with a full value chain "T+3"
By combining data algorithms
Create an intelligent decision-making system based on data
Conforms to Midea system standards
Make original
Relatively fragmented departments have been linked through a digital platform
This is more accurate for consumers
Detailed data will be higher
The fourth one is data store
This is how you want to pass algorithm
Create more value with numbers
Because data itself serves as a strategy
You need
Understanding customers with data
Or how customer behavior will affect company
Hey Tea is a good example
It collects a lot of data while running
This completes gender of consumer
A collection of professional hobbies to get exact user
Netflix
This is actually a very powerful data processing company
Walks past profile
(Profile) Single Source
Analysis of DVD rental consumer data
Finally, make a film according to consumer preferences
If
Consumers love romantic dramas with Asian themes
Just make this video
That's why almost every movie made by Netflix is a hit
Last - employee level
Employees have a very big conflict with digital transformation
Many employees do not want digital transformation
On one hand, some employees may be older
Can't accept new
On other hand, it may be contrary to his personal interests
Due to digitization
The transformation should make entire business model more transparent
It can
Moved some cheese for some employees
In this case, companies should pay attention to two points
First, grow with your employees
like Disney
Provide a good digital learning platform according to needs of employees
You can allow employees to participate together
Not just a performer
The second one leads transformation
The CEO must be personally involved in digital transformation process
Help team
To understand if their actions are in line with your strategic plan
So
An enterprise CIO is sometimes more like an audition director
Listen to new ideas, listen to employees' ideas
Listen
All voices to transform
The above shows how I perform the transformation
Including some personal views on lightning protection
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