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A Truly Digital Business Requires a New Model, Not Just Cool Tech

December 20, 2018
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When we work with clients on digital initiatives, it is easy to allow the technology to take over – to get excited about analytics or mobility or artificial intelligence to the point of making the technology itself the goal.

However, real digital transformation – where the business and its operations are fundamentally changed – is about reimagining how your company delivers value to its customers and drives the execution of these changes into every part of your organization. By keeping your value proposition at the core of the project’s purpose, you bring focus and effectiveness to the initiatives themselves, creating immeasurably more value for the company.

Mark W. Johnson is one of the preeminent innovation thinkers in modern business and has a wonderful summary of this shift in mindset in a new HBR article titled “Digital Growth Depends More on Business Models than Technology” (subscription required). Johnson looks at Domino’s Pizza as an example of this shift, where a non-venture founded, traditional, business made a truly digital change that resulted in explosive value creation.

“A digital platform, or a digital solution, may enable a new epoch of transformative growth, but when you get under a company’s hood and look to see what’s really driving it, the engine of transformation turns out to be its business model.” - Johnson

Domino’s, (remember – they are a take-out pizza company), used digital tools to completely reimagine their value proposition to their customers. By engaging them more deeply in customizing their products, to offering loyalty programs to increased their frequency of customer interactions and pairing this with strong advertising and new product options, Domino’s went from a nearly-bankrupt pizza company to a fully digital, highly-profitable consumer juggernaut. They have more customers who buy more from them on average, more frequently. And it’s all because of changes they made by using the right combination of digital tech.

While Dominos is a massive, well-capitalized public company, the same principles can apply to private, middle market businesses. While the development mechanism can be different – for example, it is unlikely you will build a full in-house full-stack development department – the business model innovation can be just as effective.

Think about how you interact with your customers and how you can pair your R&D, marketing, and new tools to deepen your customers’ commitment to your products – and broaden the base of products and services they want to buy. How can you offer an outsized value proposition, compared to similar companies, to the point where the pain of going elsewhere is overwhelming?

Finally, how are you going to change your operations and cost structure to make sure this new model is profitable? How will automation, data, and other digital tools drive margins up in a scalable way?

Digital transformation can be a powerful tool for middle-market businesses as long as you keep the business at the center of the transformation. Reach out to us to find out how you can make 2019 a game-changing year for your business.