In the modern economy, digital reliance has already become a fact of life for most companies – to participate in the business world, businesses must adopt and fully integrate new technology into their operations.
Most companies recognize the need to implement new tools and technology, but the path forward is often less clear.
Below, we’ll explore digital reliance in detail, including basic concepts and definitions, how businesses can become more digitally reliant, and more.
Digital Reliance: Key Definitions and Concepts
To start, let’s look at a few fundamental ideas that can help illustrate the meaning and importance of digital reliance:
- Digital reliance. Digital technology has become so important for modern businesses that they cannot succeed without it. This reliance on digital technology will only become more pronounced over time, since digitization and the digital revolution are far from over.
- Digital maturity. Digital maturity is a scale referring to an organization’s overall digital capabilities. Those capabilities depend not only on the actual tools a company uses, but also on factors such as organizational culture, business processes, and employee skill levels. To become more digital, organizations must deliberately invest in digital-first business strategies and change projects.
- Digital transformation. Digital transformation is the process by which an organization becomes more digitally mature. In many cases, these initiatives revolve around a strategic aim, such as improving the customer experience or enhancing organizational performance.
- Digital adoption. The ROI of technology depends on how fully it is implemented and adopted. If employees lack the proper skill set, for instance, then product value and performance will both suffer. Digital adoption strategies are crucial to integrating new tools into the workplace, building digital maturity, and driving transformation programs forward.
In short, digital maturity is the solution to surviving in a business world that is becoming more and more reliant on digital technology.
However, to gain an even deeper grasp of the factors driving change in today’s marketplace, let’s look at how digital innovation is driving the economy and fueling the reliance on digital tools.
Why Digital Innovation Leads to Digital Reliance
Technology has been advancing at a rapid clip for the past several decades, and many expect that its pace will pick up in the next few years. As it does, we can expect to see the rapid deployment and integration of emerging technologies into society, business, and our daily lives.
Today’s Innovations Will Be Tomorrow’s Norm
Digital innovations quickly find their way into the commercial marketplace and, when those innovations prove profitable, they often disrupt the status quo. And the more significant the innovation, the more substantial the disruption.
The internet, for instance, has completely revolutionized the way that we live, work, and communicate.
Mobile devices, likewise, have also radically transformed our daily lives and, among other things, the business landscape.
When it comes to digital reliance, the most important point to note is how quickly these innovations became normalized and essential.
Today, for example, having an online presence is virtually mandatory for companies that want to participate in the business landscape. The same will hold true for today’s emerging technologies: in the coming years, they will become the norm and participation in the digital economy will depend on digital adoption.
Key Technologies that Will Drive Change
There are quite a few technologies that have yet to hit the mainstream – but when they do, they will likely drive rapid change across the landscape.
For instance, according to Ark Invest, an investment firm that focuses on innovation, there are a number of technological trends that will grow exponentially in the coming years.
A few of those include:
- Cryptocurrency. The blockchain, or distributed ledger technology, will give way to new forms of digital currency. Though such digital assets were once considered volatile and highly speculative, major financial organizations have been placing bets on digital assets such as bitcoin.
- Fintech. Financial services companies have begun reinventing the way people perform transactions and interact with their financial services providers. Online banks, commission-free stock apps, and virtual financial assistants represent only a few of the innovations in this arena.
- Next generation internet. Technological advances such as artificial intelligence, cloud computing, the Internet of Things (IoT), and the blockchain will all continue to change the way people communicate, conduct business, and more.
Just as the internet quickly became normal and essential for the modern business, trends such as these will become normal in tomorrow’s economy.
To prepare for that future, it is important to understand the chief characteristic that will define tomorrow’s economy.
Change: The Only Constant in Tomorrow’s Digital Economy
Volatility has been a chief feature of the technology revolution, and that volatility only increased during the COVID-19 pandemic.
According to many experts, the pandemic acted as a catalyst that has accelerated change in many areas, including technological innovation.
For instance, certain technologies experienced significant growth during the pandemic, such as:
- Remote working software. Companies across the world implemented telecommuting policies during the first few months of 2020. This drove the widespread adoption of certain types of technologies, such as video conferencing applications, collaboration tools, and digital adoption solutions.
- Robotics. Robots were used during the pandemic to perform a variety of tasks, such as meat packing, street cleaning, cooking, and customer service. Increased investment in robots will undoubtedly continue even after the pandemic has ended.
- Ecommerce. Many brick-and-mortar businesses had a difficult time during the pandemic, but ecommerce flourished. Companies that had strong foundations in ecommerce, such as Amazon, were able to operate successfully or even grow. Those without online channels, however, often had a much harder time serving their customer base.
The hyper-growth of these technologies – along with the stagnation in other areas – will cause significant volatility for years to come.
To survive and thrive in that world, it is important to plan ahead and pivot now.
How to Plan for Digital Reliance: 5 Strategies and Best Practices
Organizational transformation carries risk, which is why many business leaders hesitate or prefer to move slowly. This strategy makes sense in a normal, stable economy.
However, when the economy itself is evolving, not changing is usually the riskier option.
Below, we’ll look at a few of the most important strategies to focus on when planning for the digital future:
1. Modernize IT Systems
First and foremost, to stay competitive in a world reliant on digital technology, every business must maintain modern IT systems.
- Implementing the latest software. New digital tools are essential for several reasons. For instance, they frequently offer more features, more efficient workflows, and more possibilities than their legacy counterparts. Ultimately, having the latest tools offers several potential advantages that can positively impact an organization’s bottom-line performance.
- Adopting modern data storage and computing solutions. Cloud computing is one example of a modern computing and storage solution. Unlike on-site data storage and computing, cloud computing can be scaled quickly, easily, and affordably, meeting whatever computing needs an organization may have. It also opens up the possibility for remote working, allowing employees to perform their duties from any location.
- Integrating IT systems and tools internally. All of today’s digital tools operate as part of a digital ecosystem. When implementing new software, therefore, it is important to integrate those tools into that ecosystem and ensure interoperability. Cross training employees, likewise, is vital to ensuring that workers can stay productive in that digital ecosystem.
- Keeping pace with the IT systems of business partners. In the same way that internal digital tools form a digital ecosystem, business partners also operate within a digital ecosystem. It is therefore crucial to not only keep up with one’s own network of partners, but also to innovate and push the envelope when possible.
It is useful to view IT systems and digital tools as the machinery of the modern work world. Like industrial machinery, it is necessary to have the latest tools to stay competitive and profitable.
Yet, as with industrial machines, digital tools require human operators – and in order to stay productive, those human operators must have the right skills.
2. Train the Workforce
Organizational performance, employee productivity, software ROI, and many other business performance metrics depend on employees’ skill levels.
However, given the current state of the business landscape, it is important to train employees in house.
There are several reasons why:
- Every business maintains its own unique mixture of digital tools and software, so most employees will need to learn that company’s unique workflows and software setups
- Digital tools are being continually updated and implemented, so on-the-job training is often the best place to gain hands-on experience
- Employees actively seek employers who provide them with learning opportunities, which means that a training program will boost engagement, productivity, and retention
- On-the-job training boosts proficiency, performance, and productivity, while also helping to improve organizational communication and teamwork
Employee training solutions, like other business programs, should be viewed as investments. And, like investments, a training solution comes with its own costs, risks, and rewards.
In the digital workplace, the best solutions provide hands-on, practical skills, rather than theoretical knowledge.
Tools such as digital adoption platforms, for instance, use in-app walkthroughs and tutorials to teach step-by-step workflows.
3. Invest in Innovation
At first glance, innovation may seem to be far removed from the concept of digital reliance – after all, innovation lies within the domain of inventive, growth-oriented companies.
As mentioned, though, the economy itself is undergoing a period of rapid transformation.
In the wake of COVID-19, digital maturity may only be the first step.
To stay competitive during the technological revolution, it may be necessary to:
- Strategically pivot several times in order to keep up with the changing business landscape. According to predictions from firms such as Accenture, the post-COVID world may be volatile for some time to come. This post-viral era, which at one point they called the “Never Normal,” businesses should be prepared for an economy that undergoes constant change. Innovation, in such an environment, will be as crucial as digital adoption.
- Adopt new ways of working, new organizational cultures, and new mindsets. Organizational change is the best way to keep up with a constantly changing business environment. Managers and business leaders, therefore, should be ready to design new workflows and business processes. Depending on the degree to which the economy changes, it may also be necessary to adopt new mindsets and cultural norms.
- Invest heavily in innovative technology-driven initiatives. Technology, as discussed elsewhere in this guide, has been driving disruptive change for several years. Rather than reacting to disruption, though, businesses should proactively invest in technology in order to become digital leaders and disruptors.
In short, innovation, adaptability, and other strategic imperatives will be just as critical as digital maturity.
4. Don’t Just Change, Transform
Organizational change projects can be large, small, or anywhere in between.
Many business leaders feel that bigger change programs carry bigger risks, yet that perception may or may not be true.
As mentioned above, when the economy itself is transforming, companies that don’t adapt are actually bearing a larger risk than those who are willing to change.
It is useful, therefore, to understand the definition of change management and the difference between organizational change and organizational transformation.
- Change management is the management discipline dedicated to organizing, executing, and managing organizational change projects
- Organizational change refers to a project or program aimed at changing some specific area of the business
- Organizational transformations are large-scale transformation endeavors designed to completely reimagine or reform an organization
The idea of undertaking a complete transformation may be overwhelming to many business professionals, but it is often more profitable.
Research from McKinsey, for instance, concluded that larger business transformations tend to deliver better returns than smaller-scale transformations.
5. Cultivate a Digital Culture
Mindsets, attitudes, and values are all influenced by a company’s culture, and in today’s economic environment, culture can have a significant impact on organizational performance.
As with the other topics mentioned here, it is important to create a culture that is conducive to today’s fast-paced business environment.
Before implementing organizational culture change, however, business leaders should understand what organizational culture is and how it affects employee behavior.
One useful model of corporate culture comes from Edgar Schein, a former professor from the MIT Sloan School of Management.
According to Schein, culture consists of three elements:
- Artifacts and behaviors. Artifacts include physical, visible, and tangible elements that can help identify a company’s culture, such as furniture or interior decorations. Behaviors refer to employee behavior and social norms, which are physical representations of the deeper elements of the corporate culture.
- Values. A company’s values are regulated by rules of workplace behavior and expressed through the corporate mission, its philosophy, and so forth. These values, in turn, are representative of the deeper assumptions held by the workforce and the employer.
- Assumptions. While behaviors and artifacts are the most visible elements of culture, assumptions are the least visible. These refer to the workforce’s unconscious beliefs, many of which are taken for granted and assumed as a priori.
Though there is no such thing as an ideal culture, in the digital economy, certain cultural traits can prove very valuable.
Cultures that are data-driven, digital-first, and pro-learning, for instance, will perform well in tomorrow’s volatile business landscape.
Frequently Asked Questions (FAQ) About Digital Reliance
Here are a few commonly asked questions about digital reliance that can help flesh out a few of the finer details around digital reliance.
What are the biggest obstacles to becoming digitally mature?
Every organization is different and will face different obstacles on the road to digital maturity, so there is no one-size-fits-all answer to this question. It is important to conduct an assessment of one’s own organization in order to best understand the barriers that lay ahead.
That being said, there are a few common obstacles that are faced by those advocating for digital transformation, such as:
- Employee resistance. Resistance to change is one of the most common obstacles faced by employees during any organizational change project, including digital change. There are a number of reasons for this, many of which are based around fear. The fear of incompetence or job displacement, for instance, can fuel resistance in the workforce.
- Executive buy-in. Without sponsorship, it is much more difficult to launch and maintain a successful change initiative. It is necessary, therefore, to sell business leaders on the benefits of the change program. An executive will, for example, be much more supportive when they can see a program’s potential ROI and how it will benefit an executive personally.
- Integrating new technology into an ecosystem. Innovative technology is only useful if it can integrate within a digital environment. Implementing a new and innovative software program internally, for instance, will only be useful if that platform can integrate successfully with the organization’s other tools. The same holds true for the external digital environment as well: if only one member of a network of partners uses a tool, it will not deliver on its value promise.
- Costs. Operating expenses are a natural limitation faced by any business investment. Since every business is unique and has its own budgetary allocations, there is no universal solution to budget problems. However, as above, it can be useful to focus on programs that deliver the highest ROI when designing and promoting a digital transformation plan.
Many of the barriers faced when implementing organizational change are, as this list suggests, based around humans, rather than technical implementation.
After all, deploying new tools and systems is relatively easy – successfully adopting those tools into the workplace, however, takes more effort.
How has COVID-19 affected the digital economy?
COVID-19 has accelerated change and demonstrated how reliant modern businesses are on digital technology.
Many of the technology fields that have been growing in recent years have only seen more growth during the pandemic.
A few of those include:
- Artificial intelligence. Artificial intelligence is beginning to see major growth and it has been labeled one of the most important technologies in the digital revolution. Proper use of this technology can deliver major competitive advantages to early adopters, which is why early investment should become a priority.
- Robotics. During COVID-19, robots have been used in several ways: meat packing, street cleaning, customer service, caring for the elderly, and more. In the years ahead, these innovations will continue to see more interest from investors and innovative companies.
- Cloud computing. Cloud computing grew significantly during the early part of 2020, since so many companies began operating remotely. Though most companies will return to normal operating procedures after the pandemic, at least to a certain extent, cloud computing will remain a staple in the post-COVID era.
- Remote working tools. Remote working quickly transformed the workplace during COVID-19 and it will remain a permanent part of the future work environment. As mentioned above, most companies will renormalize to a certain extent, but in the years ahead, we can expect to far more interest in telecommuting.
Coming out of the pandemic, businesses should expect to see an economy that is far more reliant on digital technology.
What are the best technologies to invest in?
As with most of the other topics mentioned here, it is important to evaluate one’s own business and industry when making any investment decision. Different technologies, after all, will support different business strategies.
However, it is important to watch certain macro trends in the technology space.
Some of the most important emerging technologies today include those mentioned in the previous question, such as artificial intelligence and cloud computing.
The fourth industrial revolution represents one useful framework for conceptualizing these macro trends.
It is based around the fusion of three technologies:
- Physical. These include robotics, manufacturing, 3D printing, and other technologies that deal with the physical world.
- Biological. Biological technologies include those that interface with the living world, such as human genome sequencing and agricultural innovations.
- Digital. The digital revolution will continue to accelerate, especially as the digital world integrates with physical innovations, giving rise to technologies such as the Internet of Things.
According to proponents of this framework, these trends represent a new type of technological revolution, akin to the agricultural or industrial revolutions – hence the name, “the fourth industrial revolution.”
While it is certainly useful to focus on individual technologies, it is perhaps better to look at the wider macro environment, since that environment will guide digital adoption at the local level.
When should companies invest in digital transformation?
The digital revolution has been ongoing for some time and it will continue for the foreseeable future.
In short, companies should begin investing now.
As mentioned, digital transformation forecasts predict rapid scaling in the coming years, which will increase digital reliance across every industry.
Every company should evaluate its own industry carefully, then build digital transformation plans around future trendlines and economic scenarios.
Shifting to Digital Reliance: A Step-by-Step Process
Organizations that have yet to build digital reliance into their operating model will need to implement and manage an organizational change process.
Here is a short top-down overview of how to implement such a plan:
1. Assess digital maturity
Digital transformation, as mentioned above, is the pathway to digital maturity.
The first step along that journey is to assess the current state of the organization.
A few of the most important areas to assess include:
- Existing digital tools and IT systems. New tools cannot be adopted without evaluating their fit within the existing digital ecosystem. Upgrading one tool, after all, may require upgrading several tools, if not the entire system. Those updates will all have major impacts on a project’s budget, the workplace, the change process, and more.
- Digital skills. The adoption of new tools will inevitably widen the digital skills gap. Assessing employees’ current skill levels and their digital literacy will inform decisions around digital training and adoption strategies.
- Workflows and processes. Many business processes are built directly around digital tools. When new tools are implemented, therefore, it is also necessary to design new business processes or redesign existing ones. Designing new processes and workflows will play an important role in the planning process, so it is important to evaluate that impact beforehand.
- Attitudes and organizational culture. Culture, as discussed elsewhere, plays an important role in employee behavior and performance. To understand how culture will affect a proposed change plan, managers should conduct interviews and assessments beforehand. That information, in turn, will help determine whether culture change would be beneficial or unnecessary.
The information collected in these assessments will inform the strategy and the action plan, the next step in the process.
2. Develop a digital strategy and plan
A strategy will refer to the approach and direction underpinning the action plan. It is, in short, the vision that articulates and guides team members as they progress forward.
The actual plan itself refers to the action steps – it is a stage-based plan of action that outlines goals and objectives, as well as team members’ roles and responsibilities.
Having a well-documented strategy and plan will help employees stay in sync throughout the change process, while also improving performance and reducing potential errors.
Here are a few elements to focus on when develop a digital transformation plan:
- Business strategy. Digital change strategies should support, if not drive, the organization’s overall strategy. As we progress forward into the digital age, it is becoming more and more important to implement digital-first strategies.
- IT modernization. The logistical part of the plan will be built around the actual implementation of new software, tools, and systems. Since the implementation of new tools is a technical effort, in some ways it is the least difficult. What often presents the greatest challenge to IT modernization, instead, is the human element.
- Employee training. Employee training is an essential component of any digital transformation program. Employees, after all, must be trained in order to become skilled at new software. The success or failure of digital adoption efforts depend on, among other things, the quality of training, so it is important to prioritize this during planning.
Once the strategy and plan have been developed and documented, they can be implemented.
3. Implement, monitor, and review
Those leading the plan should be proactive leaders and careful managers. Every plan, after all, will run into difficulties and obstacles, and no plan is guaranteed to succeed.
Following these steps can improve performance and reduce the risk of failure:
- Develop key performance metrics (KPIs). Metrics and KPIs should be tied directly to the change plan’s performance goals, then tracked throughout the program’s implementation. These metrics will tell managers what works, what doesn’t, and what needs fixing.
- Monitor those metrics continuously. Tracking metrics in real-time, or at least very frequently, can help managers respond quickly to any issues or problems. Though some managers may not be used to taking such a data-driven approach, using real-time data can dramatically improve insights, decision-making, and outcomes.
- Continue to evaluate performance. Performance should still be monitored even after the final stages of a program have been completed. After all, employees can easily revert to old behavior, forget the skills they have learned, and so forth. To prevent such problems, managers should continually reinforce changes, train employees, and conduct performance reviews.
- Review the program’s performance. Post-project reviews will provide insight into the program’s overall ROI, what went right, what didn’t, and what to improve upon next time. That information can also be used to inform future digital initiatives and business strategies.
The more agile and adaptable managers can be, the better they will be able to succeed when implementing any change programs, including those aimed at building digital reliance.
Conclusion: The Future Will Be More Reliant on Digital
As we have seen, digital technology is transforming the world, and that transformation will not end for some time.
In fact, the future will only become more reliant on digital technology.
To survive and thrive in that digital future, organizations must begin pivoting now and incorporating digital technology into the very fabric of their organization.
Those that can stay ahead of the digital curve will stand a much better chance of succeeding as we move into tomorrow’s digital-first, fast-paced future.