Are you keeping pace with digital transformation?

 

Embracing new technology will be transformational for UK businesses, according to Professor Derek McAuley, Head of Horizon – the digital economy research hub at The University of Nottingham.

Derek McAuleyOver the next ten years the continued reduction in the cost of communications and digital technology, especially at the very affordable end, will radically shift the economy. No business will be left untouched by the transformation. The key is to ensure you use change to your advantage.

The impact of the digital age is already becoming ever more widely spread; take the world of engineering and manufacturing for example. A large player like Rolls-Royce may be well accustomed to gleaning smart data from their jet engines, using it to hone the performance and appeal of their product. That’s almost a given in a high tech, high value arena. But soon the same will be true across the board – every domestic appliance will be ‘smart’, transmitting vital data to enhance its value to both consumer and manufacturer.

Transformational potential

The low cost of digital communications means that the technology path ahead is fairly clear, but the ways in which this developing technology will be applied are less obvious. Looking back, mobile technology has progressed steadily, but few could have predicted exactly what smartphones would quickly become capable of delivering in terms of its practical, and more frivolous, applications. Across the spectrum of digital technology, the opportunities and challenges mean there is a lot to play for. And this is the time to be putting real thought into how your business can get ahead of the game.

Virtually everyone I talk to across a range of sectors is very enthusiastic about how digital has the potential to transform their business, but at a structural level the practical rate of adoption, and certainly the commitment and ability to actually lead innovation, is varied. Generally, sectors dominated by a few big players are slower to accept new digital technologies because larger organisations find it harder to innovate or quickly introduce advanced technology. Meanwhile, sectors dominated by smaller and medium-sized players, such as the tech sector, can be fleeter of foot. But no one can afford to be static in a fast-changing digital era.

Targeting innovation

Irrespective of size and sector, keeping pace with technological developments is a challenge for any business. Larger organisations may be less nimble, but larger budgets do present obvious research and development (R&D) advantages – and the potential to acquire desirable innovative technologies into their portfolio. A large tech player such as Google, for example, may have launched as a fast-moving innovator, but acquiring new businesses to bolt-on to its offering helps to keep it ahead of the technology curve.

You can also keep a fresh perspective through outsourcing or consultancy. In the creative industries, for example, the giants of the TV and film industry often subcontract elements of production to much smaller firms – the trick is to identify vibrant, progressive teams who’ll bring an innovative outlook to the table.

Consumer influence

It’s also essential to keep the voice of the consumer in mind. Consumers, after all, are key drivers of innovation. The forces shaping digital technology are broader than technological advances, and include ethical standards, human psychology and emotional connections. As society adopts and appropriates new technologies, it reconstructs and reshapes the technological tool in question – the impact of social media on the evolution of mobile phones shows this in action. Trends and new spins on existing technology are often led by imaginative individuals ‘in the field’, so stay close to your customer – social media can be a great facilitator here

Future-proofing trust

The digital economy is becoming ever more central to us as a nation, as consumers and as entrepreneurs. Across the business spectrum, data analytics is already widely used to identify trends that will boost sales while managing processes and supply chains more efficiently – vigilantly monitoring and analysing these trends should be a key priority for any forward-thinking business. That’s where opportunity lies.

There are clear challenges too. In a digital age, consumers can – and do – share their experiences and opinions far and wide. Brand perception matters, and must be nurtured and protected. Businesses who manage data must continue to build and protect trust, to allay justifiable security and privacy concerns. Many of the biggest ‘bricks and mortar’ brands – those known for their physical, rather than online presence – have an advantage here, as they can build on long-established relationships with customers, which are based on more personal, face-to-face interactions. Prominent brands such as Tesco and Boots, for example, leverage their reputation across off and online trade – and use loyalty card programmes to both encourage sales and gather valuable consumer data. With the advent of apps, such programmes can now reach clients on the move, notifying them of tailored, up-to-the-minute offers and monitoring response trends.

A New Horizon

There needs to be some mechanism by which new generation digital companies, who don’t have a pre-existing ‘bricks and mortar’ reputation, can build brand trust. Working with the Information Economy Council, Horizon is currently developing a code of conduct for the digital economy. We’re creating guidelines on how personal information is used, and tasking the commercial community to respond by managing data responsibly.

What we’re striving to establish is a set of stringent criteria that not only reflects but goes beyond the law and into the ethical realm. This can provide smaller and medium-sized businesses with a certification of their adherence to these standards – the equivalent of a kitemark to help build consumer confidence in digital.

Our goal is a digital economy that is built on firm foundations of confidence and trust. It will encourage uptake, increase investment and create real opportunities for innovation and advancement – opportunities ambitious businesses must all be ready to act on.

Don't be left behind

Digital technology presents clear opportunities – the challenge is to ensure you apply it to your customers’ needs and protect your place in the market. Two recent examples demonstrate the importance of thinking differently – and digitally – about how you engage with your market:

  • Uber, the taxi-booking app has proved immensely disruptive to a sector which had not responded quickly enough to recognise and respond to evolving customer needs.
  • The music industry resisted the digital era for many years – and is now having to make up ground as Apple look to dominate digital music with iTunes.

About the author

Professor Derek McAuley is Director of Horizon, an interdisciplinary research institute, and Professor of Digital Economy in the School of Computer Science at the University of Nottingham. Horizon brings together researchers from a broad range of disciplines to investigate how digital technology can enhance the way we live, work, play and travel in the future.

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