Commoditizing and re-inventing digitalization
Should we accept the fact that digitalization’s value will diminish no matter what or is there a way to find a different model? The answer lies in re-inventing the concept and its applications, according to Fatih Ogun, Head of Strategy at Akbank.
Digitalization has been a mainstream concept for some time. It has been implemented in many different industries to varying extents and the impact of digitalization, even in its more limited applications, has been momentous in changing the way organizations work, produce and deliver. However, this is only one side of the story. On the other hand, the technology, approaches and methods used in digitalization have quickly become commoditized, as following a rational approach has no copyright protection.
Commoditization is a positive thing as it implies that the underlying approach and technology are both accepted by the industry. Additionally, different players can work on adapting and implementing digitalization methods concurrently. However, commoditization also limits digitalization’s competitive advantage since many other players apply the same or similar techniques with different impact levels. In other words, it is affected by the inflation caused by its many applications in different companies. Despite these downsides, investment in this area remains imperative so as not to risk falling behind the competition.
As such, what is the solution? Should we accept the fact that digitalization’s value will diminish no matter what or is there a way to find a different model? The answer lies in re-inventing the concept and its applications.
Let’s take a look at some important considerations:
• Scan the new S-curves. Digitalization, as it intersects different business areas, has unique S-curve opportunities. It is important to look for them; to identify when current capabilities reach a plateau and when to make the jump. When moving to the next S-curve, there are different factors to evaluate, including technology capabilities, organizational readiness, business applications and so on. One critical consideration is that after identifying and moving into new S-curves, the speed of adaption and implementation should be a priority given that digitalization S-curves progress much faster compared to other business cycles.
• Look for underlying and emerging trends. Everything is obvious in hindsight. However, as you move forward with your digitalization efforts in an organization, it is important to scan the landscape for emerging trends. One example is artificial intelligence. Many of the today’s top-notch algorithms and applications use technologies that have been around for some time. They became mainstream applications with the convergence of different technologies, yet it was possible to identify many of them as emerging trends. The same goes for digitalization, as many of these nascent developments may later differentiate an organization and its digitalization efforts.
• Make the organization and its capability-base ready for action. Your teams must be knowledgeable about digitalization and how it is applied in different business settings. Creating this knowledge base is not easy and it can easily disappear if you do not ensure continuity inside the organization. Consistent training and experience are necessary to maintain and increase the knowledge-holding capacity of an organization. It is important to remember that people can learn new things quickly if they are already halfway there.
• Pivoting is caring. When things do not go as planned or market trends shift considerably, it is time to make changes to the original plans. Monitoring external factors closely and being ready to make changes when required are crucial factors for success.
The only constant is change and commoditization is an inevitable part of change. In the era of digitalization, it is possible to manage commoditization and turn it into an advantage with agile reinvention approaches.
The views expressed in this article are the views of the author only. This article provides general information and a point of view; it should not be considered as professional advice.
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