The 21st century will be remembered as the era of digital transformation. According to IDC, 40 percent of all technology spending will go toward digital transformation efforts, exceeding $2 trillion by the end of 2019. Companies are embracing digital transformation not just to gain a competitive advantage. They understand that those who fail to master digital innovation are destined to become obsolete.
Master digital innovation or become obsolete
An analysis by the American Enterprise Institute for Public Policy Research, known simply as the American Enterprise Institute, revealed that only 12 percent of the companies that made the Fortune 500 list in 1955 still appeared on it in 2016, which shows how easy it is even for the largest and most prosperous enterprises to fall into obsolescence by failing to adapt to new technology quickly enough.
But despite understanding the critical importance of digital innovation, most companies still struggle with their digital strategies, with 78 percent of nearly 4,000 CIOs worldwide rating their digital strategy as either moderately effective or worse, according to the 2018 KPMG Harvey Nash CIO survey, the largest IT leadership survey in the world in terms of number of respondents.
“While we see progress on customer experience, organizations have not kept pace on building the necessary capabilities in operations, IT-business relationships, vision, engagement, and governance,” explains global leader in consulting, technology services and digital transformation Capgemini in its report titled “Understanding digital mastery today.”
This article is not about struggling companies, and it’s also not about the Amazons and Alibabas of the world. Instead, it’s about companies that were operating long before the digital era and have successfully embraced digital transformation to beat their competition and establish themselves as leaders in digital innovation.
Anyone who’s familiar with Domino’s’ digital strategy probably isn’t surprised to see the American pizza restaurant chain occupying the top spot on our list of companies that have mastered digital innovation. Founded in 1960, Domino’s has become one of the most celebrated comeback stories of the business world, and for a very good reason.
“Domino’s is a technology company disguised as a marketing company disguised as a pizza company,” a JP Morgan analyst famously said. In the 90s, when most other pizza companies were just starting to become aware of the existence of the world wide web, Domino’s was already working tirelessly on establishing its online presence, launching its first website in 1996 and making it part of its company culture.
Online and mobile ordering were introduced by Domino’s 11 years after that, the revolutionary Domino’s Tracker debuted in 2008. Considering that Domino’s annual revenues rose from $5.6 billion to $9.6 billion, it’s safe to say that Domino’s was doing something right at the time.
Recently, Domino’s has embarked on a mission to enable its customers to order a pizza on virtually any platform, from desktop computers to mobile devices to smartwatches and smart refrigerators. It has also introduced its first self-driving delivery vehicle, called Domino’s DXP (Delivery Expert), which it hopes will allow it to deliver orders more quickly and reliably.
2. The New York Times
To understand the struggle of print media, all you need to do is look around the next time you’re on the subway during rush hour. What you’ll inevitably see are rows of heads glued to their phones, watching YouTube, messaging with friends, looking at memes on Reddit, and reading online articles.
With such a broad range of content available with a few simple taps of the screen, there’s simply no room for newspaper companies like The New York Times anymore—or so everyone thought until The New York Times proved them wrong with their mastery of digital innovation.
According to an earnings report from the newspaper company, digital subscription revenue increased 40 percent year-over-year, and there are now over 2.2 million people who are paying for the digital edition of The New York Times, representing almost 70 percent of the total subscriber base.
“We have become a very data-driven company. We’ve built what I think is a very productive partnership between data, technology, and our partners in consumer revenue to actually put more control in their hands as well,” described Tristan Boutros, SVP & COO for Digital Product, Strategy, and Design. “We’ve had to undertake a big systems transformation in order to truly drive a cross-platform experience for our customers that delights.”
“The Walmart brand is at the center of a new ecosystem which integrates shopping, services, health and wellness, and first party and marketplace e-comm,” Oliver Chen, a managing director and senior equity research analyst covering retail and luxury goods, wrote in a memo to investors. “Walmart is seizing the moment to transform through innovation and utilization of unique store, grocery, and people assets.”
Why is Walmart doing all this? Because it knows that only those who embrace digital innovation to improve their services can survive Amazon. The Walmart mobile app is now blending e-commerce with traditional retail by allowing customers to add up the costs on their shopping lists before they get to the store and then guiding them to items on their list once they get there.
Walmart is also doubling down on robots, using them for various repeatable, predictable, and manual tasks, such as mopping up floors, identifying which items are low or out of stock, and even unloading boxes off delivery trucks. This will inevitably eradicate some jobs, but Walmart’s CEO Doug McMillon believes that more attractive jobs will be created to replace them.
The Swedish furniture retail company has been recognized for its digital transformation efforts on multiple occasions, from its online catalogs and home planners to digital product design to virtual reality show booths. Keenly aware of the astronomical growth of the Internet of Things, Ikea now offers a broad range of smart home products, which includes smart plugs, smart lightbulbs, smart speakers, and smart window blinds.
The company would like to have a zero-emission delivery fleet in select locations by 2020, and possibly in all markets by 2025. In the future, self-driving delivery vehicles could be used to deliver Ikea products directly to customers’ homes, along with the same amenities Ikea offers in its stores.
Known for its flat-packs, Ikea saw an opportunity to go beyond self-assembly, which is why it purchased TaskRabbit, an online and mobile marketplace that matches freelance labor with local demand, in 2017, bolstering its digital customer service capabilities to better compete with rivals. All this and more shows a remarkable ability to evolve and adapt, a key prerequisite for digital innovation.
Not all companies have what it takes to survive and thrive in the long run—that’s how it’s always been, and that’s how it always will be. Today, digital innovation has emerged as the biggest differentiator, and there are already many companies whose digital strategies have proved wildly successful. The rest can either embrace digital transformation as well or get ready to perish.