Becoming digital is more than just about technology. It involves a fundamental change to the DNA of an organization, enabling it to become more agile and customer centric. Although digital transformation remains a key trend in 2017, industries and organizations are evolving at different speeds. Digital leaders within each industry are moving ahead of the industry majority, creating significant competitive gaps, as well as headroom.
CGI set out to explore the pressures digital leaders are experiencing and how they are responding to those pressures through our 2017 CGI Client Global Insights program, which involved face-to-face interviews with more than 1,300 business and IT leaders. We also conducted research in partnership with IDC, in which more than 200 business leaders were surveyed on the topic of organizational design.
Insights from these initiatives reveal roadmap steps digital leaders are taking to successfully drive transformation across their business and compete in an increasingly dynamic market. In a series of posts, starting with this one, I’ll share some of our findings on the impact of digitalization in key business areas and what digital leaders are doing in response. First, in this post, I’ll discuss the impact of digitalization on today’s market environment.
The barriers to entry are down, redefining the competitive landscape
Industry boundaries are blurring. In the past, organizations competed against traditional companies within their own industry. Today, they face not only this competition, but competition from disruptive companies in the same industry, as well as from businesses in adjacent industries.
Our findings demonstrate that organizations are facing major external pressure from:
- Traditional competitors (43%)
- New digital entrants (31%)
- Adjacent industries (32%)
What digital leaders are doing in response
Digital leaders understand the new competition they face and, in response, they’re driving innovation to move ahead, especially in terms of the products and services they offer. Innovation is not simply coming up with a new idea; it also involves expanding beyond or revolutionizing existing ways of doing business and, in turn, blurring industry boundaries.
Some digital leaders are innovating by expanding their business up and down their supply chain, leveraging their knowledge and experience to capture a greater proportion of the value. For example, a clothing manufacturer might move down the value chain by deciding to grow its own cotton rather than rely on a cotton supplier. Likewise, it might move up the value chain by deciding to sell its clothes directly to customers rather than rely on retailers. Either way, it’s going beyond traditional industry boundaries and threatening other businesses.
Other organizations are innovating by using their customer relationships and rich customer information to offer new products and services—sometimes expanding into new industry segments.
Digital leaders are creating disruption, moving beyond their industry boundaries and putting pressure on other companies that have been reluctant or slow to innovate. When only a few organizations are disrupting an industry, the pressure is not so great, but as more organizations disrupt, the pressure escalates.
Timing is critical. The failure to respond to this pressure in a timely manner not only impacts revenue and margins, it also limits the organization’s funds for investment in its own innovation and transformation.
Insights from our findings indicate the next three years will be critical as markets and digital leaders evolve quickly toward becoming agile digital businesses, operating beyond their traditional boundaries.
Is your organization facing a similar competitive environment? What strategic actions have you taken to compete beyond boundaries?
Is your organization exploring or pursuing innovation to better compete?
If you’d like to learn more about the insights and CGI’s perspectives from these reports and continue the conversation, please feel free to contact me.