In 2019, if you aren’t leading the digital transformation charge, you will fail. Your digital disruptor will steal your customers. Harnessing digital assets and applying digital thinking to all phases of your business will improve operational efficiency, improve customer engagement, and keep your business relevant in a rapidly evolving business environment.
The pace of disruptive change shows no sign of slowing down. Amazon goes into the grocery market. Google and Apple develop self-driving cars, applying new technologies in an industry with new business models. Startups enter existing markets and knock out established leaders.
Successful companies will embrace digital technology at a fundamental level: Digital transformation is more than just developing a digital strategy, or incorporating more technology into your business. Digital transformation is about fundamentally rethinking your business to fully leverage the opportunities of digital technologies. Digital transformation means rethinking processes, customer relationships, and the very premise of your business. It is an ongoing process, constantly adapting to new technologies.
Here are some specific predictions about digital transformation, technologies, and the resources to realize them in 2019:
Entrenched professional services companies that haven’t gone through their own digital transformation won’t be of use. You’ll look to professional service firms to help you in your digital transformation. But lumbering dinosaurs will flounder. There is a simple reason that startups are dominating more traditional players across many industries – startups don’t assume they know the right answer and are willing to iterate to discover what customers really want. New players are emerging who understand that your digital transformation requires not just a digital strategy, but a fundamental rethinking of your business model and style of doing business. They’ll understand it because they practice what they preach.
Machine learning will drive digital transformation. We used to call it the GIGO Problem: garbage in, garbage out. Now machine learning is driving digital transformation, bringing artificial intelligence capabilities to facial recognition in auto-tagging on Facebook and voice recognition in your Amazon Alexa, and we’re learning all over again: garbage in, garbage out. The datasets that machine learning systems are training on are based on existing data records of human decisions and labels, and often reflect data errors human prejudices. This year IBM, Google, Microsoft, Amazon and providers of machine learning APIs will meet this problem head-on, releasing more inclusive datasets to combat embedded bias in AI.
Tell Me Why. In 2019, AI software will become more introspective, allowing us to retrace its decision-making: to ask, “Why did you decide what you did?” The multiple layers of neural networks in AI software are black-box decision makers, the details of their processes completely obscure. Fed a set of symptoms, measurements and a patient history, an AI program can return a diagnosis that we can either accept or reject, but not discuss with the program. But the goal should be to augment human decision-making, not replace it. In healthcare and finance, we will begin to see software to interrogate these black-box deciders, to better understand and make more sophisticated use of their decisions.
Freelancers – a Cloud for People. The pitch for cloud computing is to let you effortlessly move workloads to where it matters to you. Imagine applying that to your workforce, matching the right skills to the right task on the fly. Last year, freelance workers exceeded 30 percent of the available workforce. Competitive pressures in the digital era will force a fundamental rethinking of old models of outsourcing talent. In 2019 we’ll start to see cloud-like platforms for people, effortlessly orchestrating hybrid workforces of internal employees and independent contractors.
The focus on customer service and retention will escalate. Digital transformation changes the relationship between companies and customers. Companies that reshape their businesses as digital enterprises will find it cheaper and easier to engage with their customers, as Starbucks does with its “My Starbucks Idea” program. Equally importantly, that engagement will steer their business goals. As Amazon leader Jeff Bezos says, “You want to be customer obsessed, not competitor obsessed. Customers are always dissatisfied, and they always want more. If you’re competitor obsessed and you’re a leader, you see everyone behind you, and you slow down a bit. But customers pull you along.”
Direct customer relationships will continue to disrupt industries. An obvious effect is the elimination of the middleman with direct-to-consumer business models, but look also for a shift in the power relationship between company and consumer. The customers of Dollar Shave Club are members. Customer-created buyers’ clubs will be easier for consumers themselves to start. Your customers will expect you to be more responsive to them than ever before. And the more power customers have to articulate their needs and desires, the more precisely you can meet them. This refining of the ability to meet customer needs will be a significant success factor for digitally transformed businesses this year.
Digital transformation will intensify the battle over technical talent. Machine learning and data analytics are core competencies in the digital company, skills that you’ll want to keep in-house. But demand for people skilled in machine learning is expected to exceed supply for the near future. People with the right skill sets will come at a premium. You’ll be paying top dollar for these skilled professionals, as well as luring them with perks like flexible scheduling and work from home options.
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