Putting digital to work

New technology waves are changing businesses – the way they operate and compete. Digital is one of these technology waves and Australia is in the midst of it.

At a recent Deloitte event, some of our Deloitte Private clients gained insights into the impact of digital from Deloitte Digital Partner Steve Hallam. In his presentation, ‘Putting Digital to Work’, he highlighted how technology has the potential to make a significant difference to their businesses.

What is digital and how does it affect your business?

Digital is one of the six technology eras we’ve seen, running in 10-year cycles since the 1970s, characterised by exponential growth and connectivity. The disruptors enabling the digital era are mobile, cloud computing, analytics, social media and wearables. While the digital era is proposed to run from 2010-2020, the next wave of technology – exponential – is already emerging, through artificial intelligence, sensors, home automation, driverless cars, digital money, quantum computing and 3D printing.

Digital image

Technologies of both the current digital era and future eras are changing the underlying economics of business. Businesses have been previously set up on economies of scale but are now moving toward economies of scope. In other words, the focus is shifting to the variety of products offered rather than the output level of one product. Digital and exponential technologies make it possible for business operations to be enhanced by efficiency. More so, it is imperative businesses use the technology available to improve all aspects of their operations, from sales, service and marketing to products, processes and collaboration. Or risk being left behind.

The ‘digital imperative’ means the focus of competition is moving away from products to services and to customer experiences. The complexity of delivering customer experience is becoming cheaper and people are willing, and wanting, to customise their experience at mass levels.

In a retail context, physical stores and digital experiences are merging. Organisations with a retail footprint need to understand if and how digital business models will integrate with their physical stores. This is to say, a store can’t have a digital model for the sake of it. The increasing focus on customer experience is forcing businesses to start thinking about how to create feedback loops to gain insights from customers about what is or isn’t working; and how to do it at scale. Deloitte’s first piece in a Retail Trends series, Technology in Retail, explores how digital disruption has allowed customers to redefine their shopping experience, with the power to choose when, where and how they acquire their goods and services.

Uber is a perfect example of combining the concepts of asset efficiency, customer experience and feedback loops. The Uber business model creates opportunity out of excess capacity – people become more efficient in using their car, an unutilised asset that for most people, most of the time, sits around idle. The experience factor comes into play through Uber’s rating system, in which the driver rates you and you rate the driver – an inherent feedback loop based on artificial intelligence.  These concepts are all reflective of the digital era and the forthcoming exponential era changing the way businesses operate and compete.

How well prepared are businesses to take on board the waves of technology?

For businesses, it may feel as though the pace of change is fast or even speeding up, but these trends and business model changes are not new. Most of the technologies of the upcoming exponential era have been around for a while. For example, 3D printing was invented in the 1980s but only now has the technology that underlies it become cost efficient.

Australia is one of the highest adopters of personal technology, such as smart phones and fitness devices. Deloitte’s 2016 Media Consumer Survey found that 86% of Australians own a smartphone. But we are one of the laggards in adoption of new business models and technology in a business context1. The latter could be attributed to the commonly accepted observation that in an economic sense compared to countries like the United States or United Kingdom we are about five years behind. However, this can actually play to Australia’s advantage, enabling us to learn from the mistakes of others and to determine the direction in which we are heading.

Regulation plays an important part in a country’s ability to adopt new business models as it gives confidence to that model; but ultimately as new technologies come through, we need to keep the right level of momentum and progress. The difficulty is to understand when to move across the different technology curves. It is possible for businesses to get ahead of the curve by thinking about technology trends over the long-term, how they have impacted business and will continue to do so.

1 The Collaborative Economy: Unlocking the power of the workplace crowd