A data driven future awaits traditional businesses

(by Sandro Zilli, Innovation Manager and Head of AIDR Observatory) In a world that changes rapidly and makes the reality in which companies operate increasingly changeable and elusive, digital transformation is not just an alternative to achieving success but a necessity no longer postponable. Companies are faced with a crucial turning point: changing their business through a different vision that leads them to a new operating model based on the deep integration between culture, people, business processes and enabling technologies.

This substantial rethinking of the way of operating, of the business models and of the entire customer experience, becomes the main focus of the company and is outlining a scenario in which the products and services destined for success are those that focus on customers and their needs, using digital as an accelerator capable of changing their daily shopping experiences. For example, when a plurality of subjects compete on-line with a vast offer of products and services, it becomes much easier for the consumer to make comparisons between these and it is unlikely that he will accept or be satisfied with conditions that are not in line with those of the market. This mechanism is actually changing the quality of life of people and at the same time the services offered by companies.

The key elements of this change are speed, simplicity, scalability, transparency, agility and above all the “data driven” approach of companies; that is the ability to effectively exploit data, from which information it is possible to achieve specific business results and the creation of “Human Centered” solutions. The correct analysis and interpretation of data can favor important changes in terms of products and services, can allow companies to take advantage of new business opportunities and above all, allow you to have a completely new approach towards customers, providing them with services or products customized. Data are therefore revolutionizing the economy, they are the starting point of every business, the key tool to face the challenges of growth, to increase the performance and competitiveness of a company, which thanks to data will be able to respond quickly to change in consumer behavior, their needs or market conditions. Precisely this reactivity to changing scenarios will determine the probability that the company will be successful.

In this context, it is evident that data is the fundamental asset on which the value of a company is based: not only of those innovative born on the internet or of startups, but above all of existing companies that have a history and therefore a "heritage data ”regarding their customers, their purchasing habits, the track record of product sales and current processes.

The biggest challenge arises precisely in front of these "incumbent" companies (traditional companies with business paradigms linked to the past) which must ask themselves if they are able to take advantage of the large amount of data in their possession, or if they are able to improve, test or implement evolutionary digital business models.

Many researches and surveys such as the one published by the Harward Business Review on the Customer Experience Gap Report, support this thesis, still noting a strong resistance to the transformation towards the '' data driven '' model; in fact, only 15% of respondents said their organization is currently very effective in providing a relevant and reliable customer experience. In the same survey, only 3% of respondents state that they are able to act on all the customer data they collect, while 21% say they can act in a limited way towards a data driven logic.

This inertia in the face of change on the part of some companies risks leaving room for new realities such as startups, which are more agile and lean from the point of view of processes and structure, able to take advantage of new technologies to collect data and carry out increasingly advanced analyzes. This will be the key to success that will probably allow us to win ever greater market shares in the future. The McKinsey Global Institute, in its report notes that data driven organizations have a better chance of acquiring customers (on average + 23%) than keeping them loyal (on average + 6%) and consequently they are more profitable on average by 19% .

The topic linked to data is certainly an excellent starting point for embarking on a coherent and responsible digital transformation path, since a conscious and strategic use of data brings with it a series of chain reactions, including a new approach to the customer, a change in corporate assets and new organizational models that substantially change the business of companies, thus triggering a radical transformation.

Digital transformation certainly represents a complex but indispensable effort. The ability to digitally reimagine one's business is determined above all by a clear digital strategy supported by business leaders who must promote a culture capable of changing and inventing the new. Although digital transformation has many traits in common with previous technological revolutions, what is unique and distinctive here is the need to explore and take the risk of change; accepting temporary failure as a prerequisite for success is the cultural challenge facing our managers and business leaders.

For every Google, Amazon or Facebook that takes major risks in exploring different opportunities, scenarios, solutions, always looking for new competitive advantages, there are hundreds of other companies that are still playing it safe by rejecting the uncertainty of change. Thus they end up unknowingly offering their competitors "digital disruptors" continuous opportunities to overtake them.

As Phil Simon, professor and author of books on technology and management wisely said, "Today the costs of inaction outweigh the costs of action."

A data driven future awaits traditional businesses