How to Become the Disruptive—Not the Disrupted—Business

You need to become Digital by Design. This means building an organization that is committed to change...

Digital Transformation Series: Introduction.

Without question one of the hottest topics in business is the “digital enterprise.” In every industry, business leaders are talking about the need to leverage digital technologies to become the business that disrupts—rather than be the business that gets disrupted. It’s easy to identify companies that are born as disrupters —Amazon, Netflix, Paypal, and Uber for example. And it’s just as easy to recognize those that have failed to transform, like Blockbuster and Borders. Digital enterprises are experiencing 9 percent higher revenue growth, 26 percent more profit, and 12 percent higher market valuations compared to their peers1.


Disruptive vs. Disrupted

Tremendous market forces are driving digital transformation. The ubiquitous presence of SMACT technologies (Social, Mobile, Analytics, Cloud and connected Things) has empowered consumers as never before. While younger generations were the first to leverage the Internet and social media to communicate their feelings about companies they do business with, we now see every generation demanding that companies address the individual’s specific needs, engaging with us how we want, when we want.

Consumer willingness to interact via digital technologies has also produced a vast trove of data, enabling greater customer insight that can translate into effectively targeted offers and interactions. And all this nanosecond customer engagement and feedback, combined with constantly changing data and faster competitive response by “born digital” businesses, means today’s companies must embrace dramatically accelerated rates of change.

These forces make becoming a digital enterprise imperative. But what does this really mean? Slamming in a bunch of SMACT technologies before your competitors do will not make you a digital enterprise. You need to become Digital by Design. This means building an organization that is committed to change and leverages digital technology to continuously sense and rapidly respond to ongoing change in every aspect of your business—from changes in how customers interact with your brand to ways in which critical business processes must be modified to operate more efficiently, manage new products or comply with new regulations.

Pega and its partners have successfully led digital transformation at some of the world’s largest companies. For example, United Health Group optimized processes across five business units, generating $275 million in net benefit. OCBC bank has driven customer satisfaction rates up by 40 percent. Lloyd’s Bank has decreased operational costs by $1.9 billion pounds per year while improving customer service. ING entered into a new market in eastern Europe and gained consistency of performance by reducing onboarding a new sales channel from six months to eight weeks, opening entirely new distribution channels and tripling sales force volume in eight months.

From these engagements, we have developed a series of best practices for digital transformation that enables businesses to know what changes are needed and then successfully execute those changes. In a coming series of blogs, I will explore each of the following best practices to help you understand how your organization can become Digital by Design:

  • Build a sense of urgency—Make sure everyone understands that becoming a digital enterprise is now a “live or die” mission.
  • Define and communicate a sound strategy—Create a business strategy that defines how key functions and the people who depend on them can benefit from digital transformation, such as the customer journey and complex back-office processes. Communicate this strategy into every corner of your business.
  • Build the right team—Identify the new skills required and recruit the individuals who will champion the vision of the digital enterprise and can lead the organization forward with well-defined priorities and roadmap.
  • Define your priorities and create a roadmap—Prioritize objectives and create a prudent roadmap to incrementally implement processes that will achieve these objectives including short term financial benefits.
  • Leverage modeling and automation—Take advantage of agile technologies to simplify and speed up the process of designing, developing and delivering digital transformation.
  • Optimize processes and reuse everywhere—Don’t go for the big bang. Iteratively optimize each of the journeys and supporting business processes, and leverage these processes in multiple ways to create a consistent brand experience.
  • Be adaptive—Learn to sense and respond readily to change, the two components required to adapt and survive in today’s world. That’s true for organizations born digital and those evolving into digital enterprises.
  • Put the customer first—Define the customer journey first and then articulate the back-office processes needed to delight the customer in every interaction with the brand.
  • Govern for change—Implement executive governance and a center of excellence to radiate the business improvements while implementing scorecards for continuous improvement.
  • Become resilient—Recognize that it’s not all going to be perfect from the word go. Continuously employ these best practices to identify areas for improvement and then act on those insights.

1Embracing Digital Technology, MIT Sloan, 2013

Learn more about Pega's commitment to digital transformation. View Video