How to Harness Digital Transformation for Business Growth
Disruptive technologies like AI, robotic control, automation tools, big data analytics, IoT and blockchain are driving Industry 4.0. Many businesses are already leveraging these technologies to support efficient production and cost reduction.
Yet, studies from Deloitte suggest that most companies have an ad hoc, defensive approach to disruptive technologies, using them only for near-term business operations rather than truly transformative opportunities.
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The global Industry 4.0 market size is expected to reach $210 billion by 2026, growing at a CAGR of 17%. Clearly, there is significant demand, and many business leaders are ready to invest in digital transformation practices.
But without a well-crafted, offensive, growth-oriented plan, they will fall short of the dividends these technologies can garner.
The Outside-In and Inside-Out Approach to Digital Transformation
New technologies are the jumping-off point for digital transformation, and since many of these technologies are still evolving at a fast pace, it’s difficult to know how to leverage them or where to begin.
Business leaders have to take an outside-in and inside-out approach.
An outside-in approach means determining which industry verticals and use cases have the greatest market potential based on projected market size, market growth rate, and competitive intensity. Leaders need to address how their companies will operate in the uncertain markets of the future and what tactical adjustments they need to make to keep up with those changes.
They also need to consider a wide-spectrum view of the market and avoid getting trapped in narrow, single-application initiatives.
Another consideration for an outside-in approach is knowing how the ecosystem in which they interact with their customers and partners will evolve.
The inside-out approach helps companies define their own strength to lead in any market segment based on their current domain expertise, internal capabilities, brand credibility and the strength of their ecosystem.
Juxtaposing both the outside-in and inside-out approaches can reveal the verticals and use cases that the company is most suited to target for its growth.
The critical tactic is to identify adjacencies between the existing business and the desired opportunities that will become stepping stones to bigger and more ambitious projects that are currently not within the scope of the company.
Consider Hewlett Packard Enterprise’s foray into the IoT segment. The company knew IoT technology represented a large market opportunity for their organisation and wanted to leverage it as an area for company growth.
Firstly, it zoomed in on the industry verticals (such as manufacturing, retail, public sector, life sciences and health care and telecom) and the use cases (predictive maintenance, asset management and tracking, intelligent spaces buildings and venues, future cities, and connected vehicles).
Then the company narrowed down its focus areas based on its expertise in core data centers, edge computing, wireless solutions and IoT project delivery.
To strengthen its own burgeoning portfolio of IoT capabilities, HP built a robust partner ecosystem with hardware equipment manufacturers, software companies and systems integrators.
By starting its journey close to its core business competencies and supplementing its capabilities with partners, HP was able to make headway into an entirely new market.
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