For most existing organisations, a key question is how to approach the digital opportunity and where to start. There are four stages in the progression from industrial to digital.
The first stage is Digital Denial. The organisation either ignores digital or is waiting to see how it will play out for their industry. Some have not yet identified the opportunity, or believe their customers are not yet ready. Organisations at this stage will have a website but little else.
The second stage is Digital Tactics. Here organisations realise they need to be digital but have not yet worked out the strategic opportunity. Thus this group will be active tactically with some or all of an online store, digital marketing, social media, perhaps online chat to support customer service but few of these efforts are integrated or have common goals. Metrics of success are often absent or are not very meaningful to business outcomes.
The third stage is Emerging Digital Strategy. The key difference between the second and third stage is mindset. Emerging Digital Strategists understand there is no recipe book for driving value from digital so have initiated efforts to experiment, measure, and iterate. As they work out the opportunity, these ‘digi-dustrial’ companies drive real change by reinventing customer experience, changing distribution strategy, and/or reinventing manufacturing and supply chain.
The fourth stage is Digital Leader. These companies regard digital as a core competency and a cornerstone of their business strategy. Right now, Digital Leaders are mostly natively digital organisations like Facebook, Google, and LinkedIn.
But there are a growing number of ex-industrial companies at this stage. Apple is an example, transforming from selling PCs to earning most of their revenue from iTunes, App Store, and internet devices (smartphones and tablets). Zara grew from a large traditional retailer to a global giant by using digital technology to invent ‘fast fashion’ (turning trends from the street and catwalk into clothes a week or two later which are only stocked for a short time).