Digital Transformation is the Only Antidote
Every industry is evolving faster than ever, thanks to digital technologies. Some are further along in this than others. That creates the opportunity for us to learn from the disruption glide-path of other industries. Let’s take the retail industry as an example of early disruption.
The Fourth Industrial Revolution in Retail
The real estate firm Cushman & Wakefield estimated that 12000 retail stores closed in 2018 in the US, up from 9,000 in 2017. That includes several iconic chains that filed for bankruptcy including Sears, Mattress Factory, Brookstone, Rockport, Southeastern Grocers, Nine West, and Bon Ton in 2018. That’s on top of names such as Toys R Us, Payless ShoeSource, hhgregg, The Limited, Aeropostale, Sports Authority, and Radio Shack in the previous two years.
The retail sector continues to be among the top of the list of bankruptcies in the US along with the energy sector. Investopedia called 2018 the year of retail bankruptcies.
The retail sector is one of several industries being disrupted in the US and around the world. As we all know, media, telecom, hospitality, automotive, financial, healthcare, consumer products, education, manufacturing, and logistics are being affected, and they are not the only ones either. Zoom out further, and you see a broader trend altering how we live, work and communicate. That’s the Fourth Industrial Revolution, and it applies to all industries, including Retail.
What does this mean for businesses?
The Fourth Industrial Revolution has digital technology transforming and fusing together the physical, biological, chemical, and information worlds. It’s a force offering massive new opportunities in every area valued by society – i.e. convenience (e.g. online shopping), improved health (e.g. biotech), security (e.g. digital homes), food security (e.g. agrotech), and so on. Digital technology frees workers from tedious tasks, allowing them the opportunity to migrate to higher value-added responsibilities.
As with any new powerful technology, there is indeed the potential for destructive applications (e.g. weaponry, designer babies, loss of privacy, playing to humanity’s worst impulses on social media.) To what degree the good prevails over the bad is up to us, and is currently unknown. However, one thing is guaranteed, it will bring about dramatic change. As with the prior three industrial revolutions, individuals and societies will be affected significantly, and companies will either transform or die.
How to Thrive in an Industrial Revolution
We must understand why digital transformations fail, as a means to a more important end, which is how to thrive in an industrial revolution. There are five major foundational principles involved.
- Companies either transform or die in industrial revolutions
- Digital transformation is our current generation’s attempt to transform in the face of the Fourth Industrial Revolution
- 70% of all digital transformations fail
- The surprising answer to why digital transformations fail is a lack of discipline in defining and executing the right steps for digital transformations to take off and stay ahead
- It is possible to reapply the proven checklist methodology from the airline and medical fields to improve the 70% failure rate
The battle to thrive in the Fourth Industrial Revolution isn’t going to be easy, but it is possible. We can certainly do much better than the current 70% failure rate, as I have learned from my Procter & Gamble experience. The goal is worth it. At stake is not just the existential threat to individual companies and their employees, but the power to shape products, influence employee and consumer self-worth, to uplift societies, and leave the world in a much better place than when we started.
What does this mean?
The disruption of retail demonstrates the importance of the five principles mentioned above. We must define our digital transformation journey in the context of the broader disruption around us.
We need to acknowledge that businesses will have to undergo great change to stay relevant in a world that is becoming more and more digital. While change is not always easy, it is possible. Fear not the challenges of the future and instead use what is already known as an advantage.
It is time for great change, but remember that with great change comes endless possibilities!
This is an excerpt by Tony Saldanha from his best-selling book, “Why Digital Transformations Fail.”