25 Years / How Digital Transformation is Changing the World
1997 was a very different place. Netflix had just started its rental service, DVDs were slowly taking over VHS and we accessed the internet via Netscape – at least those of us with the time and modem to do so. Even giants like eBay and Amazon were only 4 and 5 years old respectively. Google had only just registered its domain name that year.
As for people? We were all on the verge of becoming netizens with palmtops in hand. Oh how innocent we were.
1997 is also when our journey into commerce transformation technologies began. Looking back on how we were, it’s almost unrecognizable. We made some… questionable fashion choices, but back then we also had the hairlines to pull it off 😉
In the last 25 years, we’ve learned a lot regarding the nature of technology, in both how it impacts business and the lives of individual users. We wouldn’t still be here if we hadn’t learned a thing or two.
It would be another 9 years until AWS cloud computing services were a thing, and 10 years before Netflix offered online video streaming. Today, Google is the predominant search engine of choice, Netscape lost the fight to modern internet browsers and Netflix is available on more devices than you could probably imagine.
Innovation Starts With Disruption
Let’s start with the most important thing to note: digital transformation is not about technology. It never has been. It’s about using technology to achieve goals, make something better or otherwise make an impact.
Most notably, as far as business is concerned, it’s about causing a disruption. E-commerce grew because, even when it was buggy, required a lot of manual work and required sitting through the dial-up tone just to get online, it was still more convenient than going to a store – especially for items that were not conveniently accessible. The need always came first.
Change Always Comes With Fear
1997 was also the year that IBM’s Deep Blue defeated Garry Kasparov in a game of tournament-level chess (it failed the year before). The reactions from such event were manifold. Some worried about the role technology would play in our society. The upcoming millennium bug and films like The Matrix certainly didn’t help either.
These days, we’re not so worried about AI taking over the planet, but the fear of such change still persists. Considering replatforming or expanding online? There’s always the internal fear that “this will kill our business!” which seldom comes to pass because…
Sometimes, The Risk Is Essential
“Who is the happier man, he who has braved the storm of life and lived or he who has stayed securely on shore and merely existed?”
Hunter S. Thompson
While we’re talking about change, in our experience it’s usually those that fail to react that ultimately fail. While you don’t need to be a trendsetter all the time, identifying key improvements and being an early adopter is often necessary; otherwise, you lose your audience while you delay.
This is a gamble, yes, but an absolute example of a necessary risk.
Starting a company is also a risk. In 1997, the initial funding was from a contest. The need to secure more resources, hire staff and develop an offer that clients want (based on what they need) was always risky – there was nobody else to guide the way for us. We didn’t always get it right, but it’s important that we at least made those decisions. And taking action is important, because…
Nothing Lasts Forever
The biggest mistake in any digital transformation is thinking the next solution is future proof.
Netflix is still here because they moved to new mediums when it was equally advantageous, convenient and efficient to do so. Blockbuster, on the other hand, lost its leading position from its failure to adapt to the same changes. Nokia, likewise, used to hold the majority of the mobile segment, but is small player in the Android market today.
All of that happened because inaction is just as much of a risk as action. Adopting new technologies or business models is never a guarantee, but refusing to move further is just as bad. Thankfully, we managed it 😉
Digital Transformation is Defined By The Consumer
For B2C businesses, meeting the needs of the customer is everything today. In the early days, small markets meant that a poor experience or service was excusable. There’s no need to invest if you’re the only store in town, right?
When companies moved online, a similar story took place. As the market became more crowded, consumers were able to effectively vote with their cyber-feet.
Now, the B2B market is going through a similar process. The world is getting more connected and processes become streamlined. It also makes the competition much more visible. Companies that previously relied on direct outreach now have websites, automated platforms and a bucket load of digital marketing. What’s more, from our side, we’ve even experienced companies that interview potential partners in one group Q/A session.
Whatever your industry or sector, you’re never alone in the market. There is always a competitor (otherwise you’ve probably got a really bad business idea…) and it’s the end customer that decides which approaches work for them.
You Can Fall Back Into A Legacy System
Digital transformation often gets simplified as the removal of legacy systems. However, this implies that it’s a “one and done” solution. Experience tells us to disagree.
We’ve seen tapes move to VHS (let’s be honest… bigger tapes), to DVDs to personal hard drives and… now it’s all in the cloud. At every stage, a failure to move forward would have ended in disaster. Just look at Blockbuster. If we’re using that example often, it’s because it’s the quintessential example of failing to transform in time.
Not updating or checking industry trends are some of the biggest factors to building a legacy system. The first transformation can cure your digital debt, but a few bad choices can build up more and more technical debt as time goes on.
The moment you rest on your laurels and stop looking at new trends, you’re building a legacy system. The longer you wait, the harder it is to change. Just look at the government organizations and multinational corporations who are just now trying to move away from floppy discs.
Sometimes It’s Better To Think Small
There’s often a misconception that innovation needs to be some huge, impactful change that will reinvigorate the company from A to Z. Sometimes, the smaller changes can nonetheless lead to huge results.
Evolution is not an overnight process. Netflix changed numerous times over the years, while giants like Amazon make smaller, but numerous, updates near constantly. As a trend, the most transformative companies favor smaller, faster incremental changes. Google, for example, updates its search engine algorithms once or twice a day.
Smaller changes are easier and quicker to make. This is perhaps one of the biggest reasons why the world is moving towards composable architecture. Using e-commerce as an example, we can swap services in and out as needed, rather than migrating from platform to platform or rearchitecting the entire thing.
You Can Always Learn From Mistakes
In the early 90s, Betamax and VHS were competing to be the premier option for videotapes. We all know who won that. We’ve seen countless versions of this since, perhaps more recently between HD DVD and Blu-Ray: only the latter is still used, while the former is a ghost of a memory.
But did you know that Betamax and Blu-Ray are both developed by Sony? The mistakes Sony made the first time around (while smaller and arguably superior in some technical aspects, Betamax could only store one hour’s footage vs VHS’s two-hour runtime) helped massively when promoting the new Blue-Ray format. While it’s more expensive, it can store much more, among other things.
If transformation never stops, than the opportunities to adapt can always come around again. We’re seeing this now in the digital technology space. There are numerous ways to develop e-commerce. Do we go with Magento or Shopify? Do we use Akeneo or Pimcore? Perhaps it’s the right time to move into composable commerce platforms like Spryker?
We said earlier that digital transformation is defined by the customer. In the relationship between businesses and technology vendors, that’s us.
Silos Are Not Your Friend
Let’s use Amazon as an example (again!). in 2002, Jeff Bezos personally issued the “API Mandate” ordering teams to expose their functionalities and information through interfaces. Doing so changed how the company operated. Teams could connect with other teams, rather than sitting in incompatible silos.
The year after, the company finally made a net profit.
Today, we’re on the verge of API-driven integrations and composable solutions based on connecting smaller services (because monoliths are bad, if we didn’t make that clear 😉). But there’s also a cultural impact here, too. When one part of the company has an innovative solution, it can better spread throughout the organization when those barriers are removed.
Don’t Take Yourself Too Seriously
We all stand on the shoulders of giants. Nobody invented everything on their own. So we shouldn’t treat the future any differently. Great ideas and innovations will often come from elsewhere, and that’s perfectly okay.
Our job is to act on great opportunities, no matter where they come from. We work with partners that are willing to listen to us and – let’s be honest – we listen to them.
Taking yourself too seriously can actually be a major problem. It can lead to the delusion that you are never wrong. All ideas should be discussed and challenged – that challenge is a welcome part of the process. Whether it’s your internal departments or an outside partner (hello!), innovation succeeds when different voices come together.
What Are We Getting At?
If there’s one thing to keep in mind, it’s how digital transformation is changing the world. In fact, it’s never stopped. Those that are able to make the right choices, at the right time, can gain huge advantages.
Last year (2021), Walmart surpassed eBay to become the 2nd biggest e-commerce store in the U.S, 2nd only to Amazon. eBay, which had decades of technological experience and was one of the many ‘digital-first, digital-native’ enterprises of the 90s, lost its position to a brick and mortar retailer.
We’ve seen similar situations here in our home country of Poland. Amazon, arguably the biggest e-commerce marketplace in many countries, has only recently gained a foothold. It competes directly with a local marketplace – Allegro – and it’s leading status is far from confirmed. We also have another platform – OLX – dominating in the 2nd hand market. Amazon isn’t going to have it easy just because they’re bigger 😉
That’s because, where there are gaps in the market, there will be those willing to fill it.
