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The digital business transformation can be compared to a permanent disruption, a self-imposed regime that does not recognize the transformation as a one-off endeavor, but rather as an ongoing commitment to adapting to changing customer needs and changing industry landscapes.

One of the biggest changes in business in the last decade has been value creation. While successful established businesses have always been value-driven, companies have created value for most of their existence through a combination of their core products and services, brand, economies of scale, and efficiency. These were the sources of competitive advantage that Warren Buffett identified as the basis for the corporate “economic divide”. The challenge now is that these traditional sources of value that determined the width of this moat are no longer sufficient to maintain the advantage.

As a parent, I repeat with my son that what you know is not as important as your desire and ability to learn. For a 10 year old boy, the advice is pretty straightforward, and a restless curiosity makes it easy to follow. However, it is far more difficult for established companies that may have had decades of success on well-established processes and ways of working to break away from the rigidity of “knowledge”.

Perhaps the most fundamental component of building a digital moat is creating your company’s ability to learn, unlearn, and relearn. For established companies, this requires a shift from a product mindset to a software mindset. Product companies traditionally think linearly with a clear beginning and end of product development. Software development and management, on the other hand, is continuous and constantly evolving. New features and changes are added in response to customer, business and market demands. This allows for a faster response to the rate of change and the extent of changes in consumer expectations.

Digital assets and liabilities

Once you have an idea of ​​what your differentiated future business model might look like, one of the most important questions is: What features should we invest in? What are the skills that are the essence of what it means to be digital? These are not just the technologies that you believe will support the future. They are robust, evolving skill categories that you will define as a company going forward. They are your capital and your identity as a digital organization, your SPEED skills: strategy, product, experience, engineering and data.

Gone are the days when a company’s primary focus on technology and digital could be considered for cost reasons. As assets, they are an integral part of adding value to your customers and in the marketplace. Several years ago, I spent time with Molecular Chef Heston Blumenthal and film director James Cameron at a series of Idea Exchange events that Publicis Sapient hosted for clients and partners. What struck me was that each of them, perhaps more than others in their respective fields at the time, pushed the question of what technology enabled them to create and how it changed the rules not just about what was possible, what was expected of them was their colleagues and their “customers”.

Heston Blumenthal was not classically trained and was sometimes belittled by critics for not being a “real cook” and for being too reliant on technology. “But fire is technology, a furnace is technology,” he said. “People thought it was strange that I used a centrifuge in my kitchen. You all use a blender today, but it used to be cutting edge technology. “Today, Blumenthal has expanded its relationship with technology from its application in food production to the role that innovations like virtual reality and robotics can play in the experience of food.

James Cameron stated that in order to make the films The Abyss and later Avatar – for which he already had the creative vision – he had to wait until the necessary technology was invented and, under certain circumstances, invent it himself. In the case of Avatar, this didn’t just include advances in filmmaking and graphics, which you can of course associate with the film. Cameron partnered with Microsoft to develop Gaia, a cloud-based platform that processes the film’s distributed team and gives them access to the vast amounts of data generated for the film. Gaia became so critical of the film that producer Jon Landau said, “Without Gaia we wouldn’t have been able to do the production. Gaia was the backbone on which everything else ran. “

If there is a lesson here, you need to have a vision of the value you want to create in the world and then use not just technology but the breadth of your digital skills to realize that value. In this way, digital becomes more than an enabler, it becomes an asset. And just like creating Avatar, that asset can move beyond your limits into the partner ecosystem, expanding the possibilities for your business.

Digital business transformation: why it’s more than just technology

What is especially challenging for established businesses is that acquiring technological skills alone is not enough to create the kind of moat you see around the most successful digital companies. The competitive advantage of digital companies rests on their built-in skills, what they can create with those skills, and the cultural principles that underlie the systems that produce their results. Digital native companies consistently challenge established brands in terms of platform business models, network effects, convenience, agility and customer experience. These are the results of their “digital moat” – the competitive advantage created by their digital capabilities.

Contribution to Branding Strategy Insider by: Nigel Vaz, excerpt from his book Digital Business Transformation with permission from Wiley. Copyright © 2021 by Nigel Vaz.

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