Digital is fundamentally changing how companies do business. Enabled by data and technology, digital is a continuous form of disruption to business models, products, services and experiences. It has radically changed the way people consume content, communicate and access products and services.
New companies are popping up overnight even as existing companies work to gain the agility to compete in today’s increasingly complex market landscape. Today’s survivors and tomorrow’s winners understand the opportunities and the risks that digital creates.
They are exploiting the opportunities and managing the risks by making their organizations essentially digital.
No executive should be more concerned about the opportunities and risks digital represents for their business than the CFO.
Digital technologies are fertile grounds for innovation, which lead to new products and services, new channels to market, greater efficiency and more effective, measurable marketing spend. As a result, digital is already reshaping many industries, giving the early adopters a clear competitive advantage that can disrupt the industry as a whole, and forcing other players to either follow behind or lose their ability to compete.
Market leaders in industries at the fore of the digital revolution, such as media and entertainment (M&E) and technology, have learned that digital is not something they needed to adopt at a point in time. It is a continuous reinvention of how they link with customers, consumers and employees to create different ways of working.
Other industries are still on the cusp of their digital transformation. For example, the pharmaceutical industry is starting to use digital technology to shift its focus from selling medication, to selling health outcomes. In a few years' time, wrist watches may stream data about blood pressure and other vital health measures to the cloud.
The automotive industry is also starting to use digital technology to create peer-to-peer car sharing businesses. Cars may soon be digitally connected to other drivers, traffic conditions, insurance companies, the police and the parts of the supply chain that monitor the different parts of a car that get serviced. These changes will fundamentally alter the automotive industry.
Digital can also disrupt the competitive landscape by levelling playing fields, giving small start-up companies or non-traditional competitors the same level of market access as an established company. Organizations that were once on the periphery of your industry can suddenly become a real threat to the core of your business, thanks to innovative use of digital technology.
Digital is not a technology or marketing issue and therefore cannot be thought of in isolation. It is changing how business is done, and will be one of the defining characteristics of this era.
For CFOs, it presents massive opportunities to create shareholder value and grow the business as well as new and unforeseen risks that can put a company’s finances, brand and reputation in harm’s way.