Whether you call it the information age, digital era or the fourth industrial revolution, we are in the midst of a major transformative change that is reshaping the way we live, work and relate to one another.
Today, companies are increasingly using technology to blur the lines between the physical and digital worlds—and creating incredible new products and services that disrupt “business as usual.” Predictive recommendation engines on shopping sites, voice assistants, autonomous cars and facial recognition are just a few examples of how technology is changing the status quo.
Amazon is the poster child for digital disruption—using technology and data to best competitors on convenience, price, fulfillment, selection and more. Amazon’s objective isn’t just to meet customer expectations—it’s to reset them and push out slower-moving incumbents.
This phenomenon isn’t confined to Amazon though, it’s happening everywhere in every industry. For example, companies such as StitchFix and Rent the Runway are shaking up the fashion industry; Lyft and Uber have upset the taxi business; Airbnb has challenged traditional hotels.
No company is too big—or too small to ignore these trends. Those that apply technology to build a better mousetrap can gain a significant competitive advantage, while those that ignore change do so at their own peril.
SMBs See the Digital Writing on the Wall, But Often Lack a Well-Defined Strategy
Fortunately, most small and medium businesses (SMBs) understand this reality. More than 80% of respondents in SMB Group’s 2019 U.S. SMB Digital Transformation Study agree that technological change is reshaping their businesses, workplace and culture, and industries.
However, only 19% strongly agree that their company has a well-defined digital business strategy. This isn’t surprising. Change of any type can be daunting—and digital transformation requires thought, collaboration, time, expertise, money and will power.
Just figuring out what solutions will best help the business is the top challenge for SMBs. The lightning-fast pace of innovation and the continual stream of solutions that are being introduced into the market make it hard to keep up. Resource issues—including inadequate IT staff, lack of time, and budget constraints—also pose significant barriers. And human factors, such as resistance to change, also obstruct the path towards digital transformation.
Even when you see the writing on the wall, these issues make it all too easy to put on the blinders and put off making the changes that are increasingly necessary to ensure business viability and growth.
Steps to Getting Started on the Digital Transformation Path
All of which begs the question: How can resource-constrained SMBs get on solid footing? Here are a few tips to get moving in the right direction.
- Remember you don’t have to boil the ocean. SMB Group defines digital transformation as “how businesses use digital technologies to create new and/or modify existing business processes, practices, models, culture and customer experiences to meet changing business and market requirements.” Simply put, it’s about identifying how you need to adapt your business to compete successfully in the digital age. There’s nothing in this definition that says you have to tackle everything all at once, or even know what all the components of your strategy should be from the get-go. Digital transformation is a journey, not a destination. Start small, learn, make adjustments and then take the next step.
- Assess the cost to your business if you don’t adapt. Change is hard. It’s easy to put the blinders on and convince yourself that your business won’t be impacted—even as change swirls around you. But can afford to stick with a business as usual approach? Chances are, if you’re being honest, you’ll realize that the costs will be high.
- Evaluate how the ground is shifting around you. Take a fresh look at what’s happening in the business environment so you can determine what changes you need to make, and start crafting a vision for the future. What’s changing in your business, with competitors, and with customers? Maybe repeat business is falling off, or you’re having difficulty hiring and retaining talent, or a competitor has introduced a new business model or product that is negatively impacting your company. Zeroing in on specific business issues can help you to focus on the areas that will have the biggest impact for your business—instead of getting caught up in the technology buzzwords and spin.
- Prioritize. What are the top one or two things that you MUST do to sustain and grow your business? Evaluate which changes are most likely to provide the biggest return with the lowest risk. Once you set your priorities, whether it’s to improve employee productivity, personalize the customer experience, streamline business processes, stay focused.
- Collaborate and communicate. Get input early and often and from all relevant parties to strengthen decision-making, foster buy-in and create a shared vision. In addition to decision-makers, involve employees who will need to shift to new processes and technology solutions. Remember to get feedback from your customers too. Solicit their views of what you’re doing right and wrong, how their needs and expectations are evolving, and how you can better serve them.
- Take a digital, data-driven approach to support your initiatives. Finally, assess your technology requirements. Are the solutions you use today capable of helping to you achieve these goals? Or are old software and clunky processes holding you back? Look for more modern, automated and integrated solutions that will enable you to spend less time on process and more time on decision making and activities that can help grow the business. Consult with trusted vendors and advisors that can provide you with different approaches to help you meet your objectives, and provide clarity around the costs, resources, timelines other factors. Create metrics to measure progress, and iterate to improve on outcomes. Finally, remember the rate and pace of change will only speed up. Select solutions from vendors that build their systems with open, flexible technologies so that you can readily take advantage of new technology capabilities as you need them.
Reaping the Rewards
If you’re still hesitant about getting started, keep this mind: SMBs that are investing in digital transformation initiatives forecast higher growth than their peers. 79% of SMBs currently investing in digital transformation forecast revenue growth, while 60% of those planning to invest have a positive growth outlook. In contrast, only 41% of SMBs with no plans to invest in digital transformation are projecting growth.
Even if you are somewhat uncertain about the best approach, just recognizing the need to shift gears and start setting plans in motion will help you to better position your business for the future. Digital transformation may seem like a buzzword, but the forces behind it are very real.
© SMB Group, 2019