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Customer-focused strategy more key than digital transformation hype

The tech industry's chatter about digital transformation and disruption are scare tactics that shouldn't distract companies from making purchases based on a customer-focused strategy.

Digital transformation could evoke images of a caterpillar becoming a beautiful butterfly. Instead, the tech industry has turned the phrase into a forewarning that failing to spend gobs of money on technology today will lead to your company's demise.

Marketers came up with the term as an answer to the upheaval caused by startups attacking listless industries that discarded a customer-focused strategy. The best example of that disruption -- another overused word in tech marketing -- was Uber launching its ride-sharing app in the taxi industry.

Taxi companies saw revenues plummet because of Uber, and avoiding such calamity in other industries requires more technology, suppliers argue. Cisco was one major networking company that cloaked its marketing message with dire projections of what startup-induced disruption could do to businesses unless they bought its software and services.

In 2015, I watched then-CEO John Chambers plead with customers attending a Cisco conference to overhaul their networks -- and feed the vendor's coffers -- to stay ahead of the next Uber.

"This is about survival," Chambers said.

Digital transformation is no savior

In tech marketing, digital transformation has become synonymous with staying alive by purchasing the latest technology a vendor is hawking. But survival does not require a metamorphosis, and new products do not guarantee success. After all, technology is only a tool that helps a company carry out its strategy to win and up-sell customers.

Therefore, companies should ignore the marketing of fear and zero in on a customer-focused strategy. Knowing one's customers will steer business to new technology that helps to create products and services buyers demand.

Consumer companies, for example, have invested millions of dollars in software that lets them interact with buyers in their favorite virtual hangouts, such as Facebook and Twitter.

Mobile devices have become the PC alternative for many people, so companies have developed technology-supported sales strategies for smartphones and tablets.

Manufacturers are executing on a customer-focused strategy when making internet-enabled products that deliver services and gather valuable information on usage that can be applied to future upgrades. By 2020, half of the Global 2000 companies will have businesses dependent on their ability to create digitally enhanced products and services, according to IDC research released this week at the analyst firm's Directions conference in Silicon Valley.

Companies are also using advancements in technology to build extensions to their core businesses. Corporations have partnered in constructing clouds that provide industry-specific digital services. For example, General Electric has developed with partners an industrial analytics platform called Predix.

Those types of industrial collaborative clouds are turning onetime tech buyers into suppliers that compete with technology providers. By 2020, three-quarters of Global 500 companies will deliver digital services through industrial clouds, according to IDC.

Enterprises worldwide will spend $2.1 trillion by 2019 on technology and services that help them adapt their businesses to trends like mobility, cloud and big data analytics, IDC predicted. All this activity represents evolutionary changes in business that keeps core principles intact, while shaping strategies to reach customers and boost revenues.

Instead of worrying about digital transformation, companies should attack these heady times with fresh ideas and not get distracted by the tech industry's scare tactics to drive sales.

Next Steps

Cloud-fueled digital disruption

Embracing the concept that every business is a tech business

Why banking is ripe for digital disruption

This was last published in March 2017

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How is your organization defending its turf as technology changes its industry?
Perhaps the gap here is few actually understand where the term Digital Transformation originated and why those of us that understood the shift in the Business, Users and Technology could predict it starting back as early as 2002.  The issue is not with the term but how it is overused like Cloud (talk about a marketing wash). 

Digital Transformation is not about customer focus or technology per se.  It is about the coming of age of a generation of users that have never known the world without the internet, Google or their mobile device.  They were exposed to technology in their formative years and had it reinforced by the parents and peers.  Their parents adapted learning from their children and became Digital Immigrants.  As a result the demand or consumption of technology has grown at an exponential rate because it is part of their core persona.  

Many of the items you mention above are about Digital Transformation if you speak to leaders that have successfully made the leap on the how.  In fact, I cover several really good examples with words of wisdom not only from leading neuroscientist for above but practitioners and leaders.  I recommend picking up a copy because technology is still critical.  Although aligning with a customer focused strategy is a good start it is not enough.   Unless you focus on fixing the infrastructure ailments - IT will only create more silos and security failure points. 

Chambers has a good point - how many of you would put your 16 year old in a Ford Pinto?  Yet many data centers are running on outdated hardware.  Time to upgrade before you crash and burn.  No matter how great your customer focus is.  If your customers can not access the applications or data they need - they will go elsewhere.