The two hottest buzz words in all industries these days seems to be ‘digital transformation’. Linking these words was actually an evolutionary process that started in the 1970’s when computer-aided designs and manufacturing were first used in business. In the 1980’s enterprise resource planning was added, followed by customer relationship management in the 1990’s.
The objective of these solutions was to improve efficiency and productivity by digitizing manual processes. “In the late 1990’s, we saw the rise of eCommerce and online banking. These activities were initially carried out offline but were later moved online as internet speeds increased. This was followed by the introduction of social media in the mid-2000’s, which revolutionized how we communicate and share information.”
The pace of change is accelerating. Survival as a company requires intensive focus on increased digital connectivity with consumers and markets.
Here are some interesting statistics of the increased digitized world:
- 70 percent of organizations either have a digital transformation strategy or are currently working on one.
- Global spending on digital transformation is expected to reach $6.8 trillion by 2023.
- 87 percent of business leaders think that digital transformation will disrupt their industries.
- Digitally mature companies are 23 percent more profitable than their less mature peers.
- The success rate of digital transformation is below 30 percent.
This article summarizes some key charts from my ‘Disruptive Future of Retail’ global keynote on the accelerated pace of innovation. It highlights major disruptions in the retail industry, general technology trends, two recent examples of online disruption, and ends with an optimistic view on how to increase the success odds of digital transformation above that 30 percent.
Technology Megatrends Disrupting the World
Retail as an industry has transitioned through three major megatrends driven by technology. Post World War II, efficient production lines concentrated the power of retailing in the hands of manufacturers. This changed in the 1970’s with the introduction of the barcode.
On June 26, 1974, at 8:01 AM, a ten-pack of Wrigley Juicy Fruit bubble-gum was the first item scanned with a barcode at a Marsh Supermarket in Troy, Ohio. Those simple black lines which became ubiquitous on all consumer packages shifted the power of retail into the hands of retailers.
The third megatrend occurred on June 29, 2007 with the market release of Apple’s iPhone. The Wall Street Journal lauded the device on balance as a beautiful breakthrough handheld computer. Time Magazine named it the Invention of the Year. The true reality is that the smartphone shifted the power of retail into the hands of consumers.
Innovation is not isolated to the retail industry. Long waves of technology changes have been taking place since the industrial revolution. We are currently in the sixth wave which includes artificial intelligence, Internet-of-Things, robots & drones, and clean technologies. Note that the length of each wave is getting shorter.
The Forces Speeding Up Innovation
Two major forces have been speeding up innovation in recent years. The global internet and smarter mobile devices are connecting the majority of the world’s population. Through mobile devices, by 2030, 64 percent of the global population will have access to the Internet. A major opportunity for brands and retailers is that 92% of those connections will be on smartphones.
As technology has evolved, it is not just people but all devices that are being connected to the Internet. We have labeled this concept as the Internet-of-Things or IoT with many billions of connections still to come.
Note again the accelerated pace at which new technologies have been adopted through history. It took the airplane sixty-eight years to reach 50 million users while Pokémon Go did it in nineteen days.
How Fast Can Innovation Go
Two recent examples of technology adoption inspired this article: ChatGPT and Meta’s potential competitor to Twitter which they branded as Threads. In the most recent edition of my keynote ‘The Disruptive Future of Retail’, I highlighted ChatGPT as revolutionary in having achieved 1 million users in just five days and two months later reaching 100 million users.
As above chart confirms, Meta’s Threads reached one million users in just one hour. More impressive, it reached 100 million users in a stupefying five days.
What is our Innovation Destination?
Digital transformation trends will continue to accelerate. Retail is not THE leader in delivering impactful ROI from all the investments to date.
Buzzing past the hype of digital transformation requires clear strategic planning, incremental investments that build on each layers’ value, and never forgetting what made the business successful in the first place. Avoid chasing the latest far-flung technologies that alienate your core customers and you too can achieve the maturity of 23 percent more profitability from digital transformation.
Soon, I will unveil the 4th retail megatrend that will carry the retail industry forward to a much brighter future. Digital transformation combined with AI are a hint on what that will be.
Aristotle summarized it best. “Excellence is never an accident. It is always the result of high intention, sincere effort, and intelligent execution; it represents the wise choice of many alternatives—choice, not chance, determines your destiny.”