The 21st century is an era of exponential growth and development of humanity. We have experienced disruption and pain before. Every generation has tried solving the fundamental problems we suffer as a society. Financial inclusion, access to food and clean water, safe living environment, ecological balance, education, healthcare and wellness are our primary challenges and there is no better time or opportunity to solve each of those.
The question we have struggled with for long is how do we do it? Till now, it has been people and organizations operating in silos or large multi-country platforms trying to talk about these issues and solve them. But results aren’t often satisfactory.
This is a real opportunity. We are the only generation ever with access to so many resources in addition to the technology frameworks needed to make it happen in our lifetime.
Unlike other digital transformation reports focusing on outcomes of the effort, we uncover the core fundamentals of why transformation initiatives of certain organizations have led to massive economic outcomes and delivered observable progress towards these goals. To this end, we decided to shortlist the world’s top 10 companies that have managed to transform and position themselves for relevance in the coming decade. We then have tried to understand their journeys, so that you can learn from them.
We hope this report not only gives you information but also a framework to re-think your organization’s vision and purpose, culture and your ability to create value through technology.
Three Steps to Digital
Digital transformation is a buzzword. We study companies who are really looking to understand and implement it the right way in their organizations.
It is one thing for business leaders to understand its importance from a business perspective but implementing and achieving success in this transformation involves an in-depth understanding and the ability to lead and manage an uncertain construct.
Recognizing the need for this understanding, we, at Twimbit, looked at 10 companies which has achieved phenomenal business success through digital transformation and ranked them on the basis of certain core factors and how well they performed in each of those key areas.
What is digital transformation?
Googling this term throws at least a gazillion results and surprisingly each definition often describes digital transformation differently.
For instance, Wikipedia, the encyclopedia of the web describes digital transformation as “the use of new, fast and frequently changing digital technology to solve problems. It often utilizes cloud computing, reducing reliance on user-owned hardware but increasing reliance on subscription-based cloud services.”
The Enterprisers Project, an online community helping CIOs and IT leaders achieve success further define digital transformation as “the integration of digital technology into all areas of a business, fundamentally changing how you operate and deliver value to customers. It’s also a cultural change that require organizations to continually challenge the status quo, experiment, and get comfortable with failure.”
We firstly asked ourselves if true digital transformation really is about adopting technology? Secondly, is it about finding a way to deliver value to customers and building a viable economic model around it? We felt all of these are really outcomes of certain fundamental shifts.
The 3 Steps
1. Sense of purpose
The first shift is leadership mindset. It means to instill in your people a ‘sense of purpose’. We can’t stress the importance of this fundamental factor. In fact, the key criteria of success in any transformative exercise isn’t management but leadership through purpose. A purpose-driven organization can rally all stakeholders. Digital transformation is to serve a larger purpose. Having a sense of purpose will allow organizations to look beyond short-term failures and achieve long-term outcomes with exponential impact.
2. Building tech expertise
Owning a digital transformation is to lock the ‘pre-digital’ mindset and adopt the ‘technology company’ mindset. This means investing in R&D in order to learn and build new technology skill sets, training existing employees and hiring new tech personnel to drive the change. It is about the democratization of technology so as to enable every functional department and every business process to own their own digital transformation journeys.
3. Business model innovation
The most sustainable value creation happens through business model innovation. The leverage of technology is enabling several new business models, viz., Pay-As-You-Go, Platform As A Service, Personalization, Direct-to-Consumer, Data Monetization and more. In fact, companies have reimagined customer journeys to help unlock value. Collaboration and partnerships have emerged as the core fundamentals of this new era of business model innovation.
The key purpose for us to judge true digital transformation is to firstly see it outside the purview of ‘digital native’ companies. However, we have included Microsoft and Adobe as the two exceptions. Both firms are software natives but because they are fairly mature organizations and their digital transformation journeys have been painful, both these stories present great learning and deserve a place in our rankings.
In the making of this report, we have ignored technology-first companies. So, you will not see a Google, Apple, Amazon or Alibaba here. The reason is simple; they are pure-play technology companies due to which it will be unfair to rank relatively new entrants in the space with stalwarts. We want to understand how companies with relatively little know-how in technology are understanding the used cases ground up, and building new and innovative business models.
Our rankings reflect these fundamental characteristics. We looked at companies that have successfully achieved digital transformation as well as have made a fundamental re-shift in the way they create and define value for all stakeholders. Our opportunity is to understand how these organizations did it. Perhaps, we could implement in our own little ways, a framework to improve the odds of a mammoth transformative effort.
Stock Market Performance
Our first point of analysis starts from the investor perspective. Are investors happy about the transformation initiatives?
The chart below showcases that all of these firms have delivered returns higher than the S&P500 Index. Therefore, the investors realize the value of the transformative bet and are willing to back up companies which may not yet have their financial performance fully reflect this disruption.
These companies have all made significant strides adopting digital. It is safe to say that despite being in completely different industries these firms realize the importance of adopting technology in so far as to call themselves as a pure play technology company.
Another point is the patience and long-term view most of these investors take. We often call markets short-term but on the contrary, investors are long-term and patient as this data shows. It shows how well leaders like Amazon understand the market. As Jeff Bezos famously said, “If you make it (product), they (profits) will come.”
Ranking of companies and their stock returns over a 5 year period
Section 1: Company Rankings