What are the traits of an authentic digital business?  If I made a dollar for every time I’m asked what a true digital business is, I’d be a millionaire. Alright, I’m exaggerating. Seriously speaking, I have made it my goal to educate businesses about digital strategy and transformation. While there’s a lot of information out there about digital, there also seems to be quite a bit of confusion. Recently, I have been invited to speak at conferences regarding disruption – why it is coming and where it’s coming from. Leaders, especially from incumbent businesses, are concerned and they are right to be.
Recently, I also read McKinsey’s article on Digital Quotient (DQ) as it refers to the digital maturity of business. I was both intrigued and inspired.

When I engage the CxO team in digital strategy workshops, the first question I usually ask is this: what would your digital business look like if you were to start building it today?

This question has generated a spectrum of reaction from these executives – some can’t even begin to articulate re-inventing the business, especially given today’s business landscape characterized by hyper change and increased complexity. For the tech savvy leaders, answers come readily in the form of leveraging new technologies and embracing continuous improvements. Not bad. But it’s a rare instance when I receive an answer that goes like this: “let’s totally change the way we do business and engage our customers.”
Why? These are radical changes. And so let me enumerate the characteristics of an authentic digital business.
Self-Disruption. Traditional businesses are low-risk takers. This makes sense since they have to protect their margins and existing markets. Public companies are even more challenged since they are under pressure to report healthy earnings on a quarterly basis. Most companies are also focused on the present operational pressures like cost-cutting and cost optimization. These are not bad priorities at all. But when businesses focus exclusively on these financial metrics, they miss out on the sustainable growth engine that digital transformation delivers.
Digital business are risk-takers, according to a report by MIT Sloan Management Review. They continually disrupt themselves. For these organizations, change is the only constant. Digital businesses live and breathe change. Business priorities shift constantly and so they have designed themselves to be lean and agile – able to adapt quickly to changing customer behavior and market shifts. Apple is great at this. It is not afraid of cannibalizing its lines of businesses to re-invent itself and offer forward-thinking products and services in the market. Amazon disrupted the tail end of book sales. Then it decided to go to market and offer their own web services capabilities. A digital business accepts and practices business innovation.
Core Business. Digital businesses are not concerned with incremental business change. The goal is the upending of the core business. For them, digital transformation is not merely digital marketing. A digital organization consistently innovates by exploring new business models. They leverage existing assets (e.g. data). New business models seek to identify and articulate new value. The tap adjacent markets and go after new customer profiles.
Customer Experience. In our business education, we have accepted the mantra that the sole purpose of a business is to make a profit. While this may be true, it distorts business priorities and is destructive in regard to relationship management. I would like to offer an alternative view and it is this: the only reason a business exists is because of its customers. Take away the customers and the business is gone (along with the profit).
Digital businesses understand the one single and most critical business priority of all: shaping and designing the customer experience (CX). These businesses understand the power of the digitally connected customer. With the ubiquity of smart devices and popularity of social media, the changing market landscape has given birth to the voice of the customer (VoC). Now, the buyer-seller dynamics has changed: customers control the conversation. Hence, digital businesses understand that financial and technology investments must be aligned with and directly impact the various customer touch points in their digital journey.
A digital organization identifies and nurtures its digital talent. Let’s face it: in order to be relevant in the next 3-5 years, companies need digital expertise. And yet, many businesses acknowledge that their present workforce is unprepared and its skills inadequate. In order to accomplish this, digital businesses establish digital centers of excellence (CoE) where fresh thinking on business model innovation and digital ideas can be tapped in a collaborative format for execution.
Technology Approach. Many businesses today still deploy an incremental approach towards technology deployment – a CRM here, an ERP there. A digital business approach is not a siloed technology improvement deployment. The focus here for technology goes beyond meeting operational metrics and excellence. Digital businesses have a sound and compelling digital strategy with the big picture of the business in mind. Mind you, this digital strategy is not confined to the domains of IT alone but rather addresses the needs of functional business groups. More importantly, the digital strategy is authored by the executive leadership team in collaboration with the rest of the company business leaders.
In short, digital business is not business as usual.
Written by Ken Polotan