The Complete Guide to Digital Transformation for Realistically Competing with Amazon
Amazon? Really?
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Why did I choose Amazon as your potential competitor?
Amazon is bulldozing digital markets, retail giants, niche markets and international markets with the complete monopoly of low-cost high-quality goods with unheard-of return policies.
How can one compete with Amazon?
Digital Transformation!
And a little more — visionary leaders who have a picture of where they want their companies to be in a couple of years’ time, who are also aware of the latest technology trends and are creative and think beyond conventional wisdom.
To beat Amazon, do what Amazon and Netflix and Google are doing.
There is no other way.
And if you do not — you end up extinct and out of the race.
But first — what the heck is digital transformation anyway?
What is Digital Transformation?
Now, I have read so many different viewpoints on what Digital Transformation is that left me with a sense of abstract uncertainty. An example was:
“The realignment of, or new investment in technology, business models, and processes to drive new value for customers and employees to effectively compete in an ever-changing digital economy.” — (Prophet.com) Altimeter
But I came across one article (a free ebook, the original link is given below) that was the clearest and the most cogent view I could find over ten different sources. It said:
“However, there is no common definition of digital transformation aside from ‘changing things.’
The term digital transformation is sometimes used to mean new architectures, like microservices, or new processes, like DevOps, or new technologies, like containers and applications.
When something can mean anything, it effectively means nothing.
Digital transformation isn’t a specific thing that you can get.
It is a thing that every organization has to define uniquely for itself.”
Red Hat, Teaching an Elephant How to Dance
The best way to define digital transformation by far is to see what companies that have embraced it are doing now, currently.
Here, we continue from the second definition. Now this is the best viewpoint I could find of Digital Transformation from over ten different sources. Continuing from the previous excerpt:
“There is no single architectural pattern or technology platform that works flawlessly in every single environment.
The organizations that win at digital transformation are the ones that have the clearest understanding of their own goals and culture, and it looks different for each of them.
For example:
• Walmart deployed code on Black Friday while 200 million people were online.
• Amazon deploys code updates every second (50 million per year) across hundreds of applications and millions of cloud instances.
• Etsy does 60 deployments per day with a monolithic application.
Netflix deploys hundreds of time a day on a complex distributed architecture, with a single code change going from check-in to production in 16 minutes.
Each of those enterprises is working with wildly different team structures, underlying technologies, code bases, and architectures.
The point isn’t that they focused on this one pattern or this one technology and everything worked.
They all started with assessments of their teams, their current technical debt, and their business strategies — and then intentionally and coherently moved their enterprises in the direction they wanted to go.
And then they got results.
Wherever your enterprise is now, you can move it to where it needs to be (technical debt, design flaws, and all) — with intentionality and a clear strategy.
Meaning you have to have a clear understanding of what you are trying to accomplish and how far that is from where you are today.”
From the Red Hat Free eBook on Digital Transformation — Teaching an Elephant How to Dance by Burr Sutter & Deon Ballard
The Six Stages of Digital Transformation
How do we assess digital transformational status? When do we know that an organization has embraced digital transformation to the fullest (other than complete market disruption and record-breaking profits)? Altimeter this time provides a very holistic and integrated view.
“The six stages of Digital Transformation are as follows:
1. Business as Usual
Organizations operate with a familiar legacy perspective of customers, processes, metrics, business models, and technology, believing that it remains the solution to digital relevance.
2. Present and Active
Pockets of experimentation are driving digital literacy and creativity, albeit disparately, throughout the organization while aiming to improve and amplify specific touchpoints and processes.
3. Formalized
Experimentation becomes intentional while executing at more promising and capable levels. Initiatives become bolder, and as a result, change agents seek executive support for new resources and technology.
4. Strategic
Individual groups recognize the strength in collaboration as their research, work, and shared insights contribute to new strategic roadmaps that plan for digital transformation ownership, efforts, and investments.
5. Converged
A dedicated digital transformation team forms to guide strategy and operations based on business and customer-centric goals. The new infrastructure of the organization takes shape as roles, expertise, models, processes, and systems to support transformation are solidified.
6. Innovative and Adaptive
Digital transformation becomes a way of business as executives and strategists recognize that change is constant. A new ecosystem is established to identify and act upon technology and market trends in pilot and, eventually, at scale.”
From:
The Six Stages of Digital Transformation — Solis & Szymanski (Altimeter)
So, how do we do it? How do we transform a business running on legacy systems to a market dominating disruptive state-of-the-art technology entity like Amazon? We need to find out. But first, let’s see why digital transformation is so important today, and especially so in today’s worldwide corporate environment.
Why Do We Need Digital Transformation?
In a common thought process referred to as Digital Darwinism, we see that marketplaces and economies worldwide are constantly evolving and continually in a state of change. Which leads us to an uncomfortable conclusion — survival of the fittest. In business evolution, those that adapt to change the best and thrive in an atmosphere of constant change will be market disrupters. The others will die out — become extinct.
This following example is my own. When YouTube was established, you could hear the death row bells for companies like BMG Music which relied on physical methods for digital media business transactions.
But what if they hadn’t?
What did they need?
Vision. Those who were the leaders needed to use Digital Transformation to adopt agile strategies.
Suppose BMG Music had realized that the physical CD and DVD business had become obsolescent with the availability of free online Internet resources?
They could have converted their entire media collection to digital format and used a subscription strategy to earn.
Now you can say, wait a minute, Thomas. This is an entire enterprise. They require profits. They require money. They require sustainability. A total digital conversion of all their assets into digital form would cost too much in the short run and been a massive drain on their monetary resources. Also, they would have to be a prophet like Nostradamus to understand how the digital revolution would destroy their entire business model.
True.
But was the alternative of bankruptcy and insolvency a better one?
If they had good leadership;
After converting their assets into digital form;
They could have offered subscription services!
Like Spotify and Netflix!
Imagine!
The giant that is Netflix today could have been BMG Music many years ago if they knew anything about digital transformation!
BMG Music went bankrupt in 15th April 2015.
As on 12th August 2019, Netflix is worth 139.31 Billion Dollars according to MacroTrends.com.
What’s the difference?
Digital Transformation!
BMG Music could have become the Netflix/Spotify of today with the right visionary leadership.
Why am I bringing up this example?
The truth is, that in the global market today, there are many more companies that will soon go the way of BMG Music. And a few — the way of Netflix. Where do you want to be?
So now we know why we need digital transformation.
The obvious question is, now, how do we do it?
How Can We Implement Digital Transformation?
I could link some of the best stories on the Internet that deal with implementing digital transformation across the enterprise. And I have done that below.
So, for some classical Digital Transformation articles:
I would refer you to the Cognizant white paper, available on this location:
If you are an IT organization, please read:
And if you have an entire organization in mind, go to the following article:
https://www.prophet.com/2016/04/the-six-stages-of-digital-transformation/
And then we are going to walk through an implementation of a digital transformation strategy for a company facing competition from Amazon.
Which is a large percentage of the world’s businesses today (if not nearly all)!
Perhaps there is no better way to illustrate what Digital Transformation means than to show the practical side of it, how an SMB can reasonably hope to compete with an international giant like Amazon. Using Digital Transformation.
How to Use Digital Transformation to Beat Amazon as a Competitor
What we will do is to use two use-cases –
1) Book and eBook Seller
2) Computer Retailer and Mobile Phones Dealer
If you think I’m kidding and there’s no way to beat Amazon in these two areas — read on!
Book Seller vs. Amazon
The case for Amazon –
- Amazon is completely digital in its distribution centres. This minimizes cost and maximizes efficiency.
2. Amazon offers a variety of choice like no company ever before in the history of the world.
3. They have even incorporated second hand and used book sales into their business model.
4. The active and thriving community produces a constant source of revenue and new opportunities for new deals and attractive offers.
5. Worldwide reach on PC, laptop, tablet, and mobile.
So, what can a standard book shop do that Amazon can’t?
1. Specialize.
Amazon is a master at selling everything under the sun. The best way to counter that is to gain visibility in a particular niche of writing and/or authors and offers that are viral by design. (E.g. Rick Riordan books, or at the other end of the spectrum, copies of various translations of the Bible)
2. Customer Experience.
In Digital Transformation, the customer is king. The entire process of digital transformation is focused on offering quality products to customers and optimal customer experience, also known as DCX. If a customer finds a remarkable offer on your website, chances are that he/she will mention it on social forums like Reddit and Facebook. And that is the starting seed of virality.
3. Go Digital as You Can
Let’s take the example of a religious bookstore. First you could use carefully targeted posts on social media (ads are old hat and not always reliable as a source of viral income) to increase interest in a section or a topic that you sell books about. You also need to go digital.
Unless you have an app that targets customers internationally, on PC, mobile, tablet, laptop, and wearable, you have no chance of even rivalling Amazon. An app for the store is an absolute must -even for paperback and hardbound books.
4. Deliver Compelling Content
For a religious bookstore, there are many options. Some of the most burning issues of today are marriage and family, and of course, sex.
You don’t have to take a stand. By taking a stand, you automatically isolate a large percentage of your potential market. Instead use terminology and lingo that appeals to both sides of any controversy.
Jesus Christ said, love your neighbour as yourself. Showing love and openness is the path to cater to humanity, not to bigotry. I could dedicate an entire blog article on this topic and I probably will, in the near future.
5. Deliver Added Unique Value
For some customers, this could be a lifetime access to resources www.chastityproject.com. For others it could be resources on dealing with same-sex attractions. It could also be autographed copies of Rick Riordan’s books, or online material links about his next release exclusive to your platform. The only limit to the level of added value you provide (which is what will differentiate you from Amazon) is your imagination.
6. Use Monitoring, Analytics, Social Media, & Marketing Dashboards
The best companies are masters at this. This idea is taken from the Lean Process Method. Measure your success/failure. Maximize successful marketing strategies. Gently phase out marketing strategies that don’t work. If you don’t measure your performance, how will you know whether you are doing well of not?
7. Pivot, Pivot, Pivot
Netflix pivots its offers hundreds of times a day using real-time monitoring of customer interaction on its portals (to pivot means to change business strategies according to real-time data about the experiments gathered online during operations). If you try 1000 experiments, and remove the ones that don’t work, you may just end up inventing the best marketing method of the century.
8. Embrace Agility and Constant Change
This is the essence of Digital Transformation. Measure current operating metrics. Make a change in the system. Measure again. If positive — build on the improvement. If negative — switch to another strategy within a very short time frame. Rinse and repeat — several hundred times a week — at Netflix, its several hundred times a day. This is what digital transformation really means. Constant change, iteration, improvement, and pivoting if the strategy is not beneficial. Embrace change as your best friend, and you could be the new Netflix.
Laptops & Mobiles Shop vs Amazon
The case for Amazon is identical to the last section. But to prevent you from going back, I have reproduced it here once again.
The case for Amazon –
1. Amazon is completely digital in its distribution centres. This minimizes cost and maximizes efficiency.
2. Amazon offers a variety of choice like no company ever before in the history of the world.
3. They have even incorporated second hand and used device sales into their business model.
4. The active and thriving community produces a constant source of revenue and new opportunities for new deals and attractive offers.
5. Worldwide reach on PC, laptop, tablet, and mobile.
So, what can an electronics, laptops and mobiles dealer do that Amazon can’t?
1. Major in the Major Things
One big disadvantage that Amazon has is that it emphasizes quantity over quality. There are plenty of minor and not-so-great products on Amazon. A mobile and laptop dealer should identify the best of the best products available and be quick to offer them at the lowest prices possible. Even undercutting costs to keep up with Amazon is a move that will bring customers to your site and ensure brand loyalty.
2. Use Analytics to Drive Your Decisions
If its not being measured, it’s a liability (within limits). Every single move you make — your ads, your offers, your social media posts, and your sales after changes were made in marketing strategy — should be measured. This is why pivoting around analytics is called the centre of Digital Transformation. This leads us to the next point:
3. You will need a desktop, laptop, tablet and mobile app
No app = no chance in 100 billion to realistically compete with Amazon on a world-wide scale. You can reach foreign markets, get people to buy your products without ever seeing your store, minimize distribution costs — in fact, there are so many benefits that I would ask why you even have to think twice!
4. Create Compelling Customer Experiences
There are multiple aspects to this point. You could have extra digital features like try online before you buy for some products, follow up with customers from the beginning to the end and beyond of any transaction. Selling a Dell laptop? Tie up with service centres that maintain Dell laptops and offer reduced rates for spare parts, accessories and services. A two-year warranty wouldn’t hurt either.
5. Use ‘Inbound Marketing’
This applies to book sellers as well. The basic premise behind inbound marketing is that content that is remark-able produces more sales than any amount of money spent on ads and TV sports advertisement slots. Creating content that is genuinely engaging to the user is far more important than the best possible advertising strategy you could ever have.
6. Use Monitoring, Analytics, Social Media, & Marketing Dashboards
Do we even have to say, use social media? With 200,000 products in the market all trying to create attention for their own brands, social media is the new oil of today’s Internet economy. Do A/B tests (do a Google if you don’t know what an A/B test is). Try different strategies. Pivot, pivot, pivot.
7. Be Creative and Think Unconventionally
In today’s market, real creativity comes as a breath of fresh air. What creates real and lasting change? Unconventional thinking. Steve Jobs had the entire world blinking when he announced that future Apple phones would have a touchscreen only and no dedicated keyboard. And yet, here we are with every phone we have today working only with touchscreens. The best marketing strategies are the most creative. Think quality, not volume.
8. Embrace Change and Pivot, Pivot, Pivot
No one said that Digital Transformation was going to be easy. DT is pushing the performance of your entire enterprise into one digital integrated system that can change strategy and methodology at will, according to the current market conditions. And if your change doesn’t work positively, using an A/B test (Google it), change your strategy to one that works. That is the essence of pivoting. Pivoting basically means to completely abandon one side of a strategy and focus on a completely different solution to your problem. The best example of pivoting is when Uber started out, they had no mobile app! But they were alert to Digital Transformation. The rest is history.
Last Words
Perhaps this will be the most important idea you will take away from this article — Never Give Up. Man has gone to the moon, mapped the known Universe, sent space probes to the outermost reaches of the solar system, and (if Elon Musk has his way) will soon colonize Mars. Perhaps you work out of a garage. Perhaps your sales are in single digits. Perhaps you have a wonderful idea but you don’t know how to monetize it. And perhaps you have no experience in this field whatsoever.
Do you know another firm which, when they started, had every single one of these problems? Google.
Perhaps you’re starting small.
But believe in yourself.
Believe in your dreams.
Keep going and never give up.
Remember, there are no failures, only lessons.
The only failure in life is giving up.
There is nothing impossible for someone who just keeps trying.
To the enlightened entrepreneur, the world is full of opportunities.
“What the mind of man can conceive, the hand of man can achieve.”
Napoleon Hill, author of Think and Grow Rich
I salute your potential and your thirst to grow. In reading this article, at least you have come to one conclusion- “If you think you can do something, or that you can’t, you’ll be right either way.” (Henry Ford, the inventor of the automobile).
It’s all in the mind.
Cheers!
References
1. What is Digital Transformation? — by the EnterprisersProject.com https://enterprisersproject.com/what-is-digital-transformation
2. A Framework for Digital Transformation — Cognizant White Papers https://www.cognizant.com/InsightsWhitepapers/a-framework-for-digital-business-transformation-codex-1048.pdf
3. The Six Stages of Digital Transformation — Prophet.com https://www.prophet.com/2016/04/the-six-stages-of-digital-transformation/
4. A Step-By-Step Guide to Digital Transformation https://www.slideshare.net/niallmckeown/digital-transformation-45738266?from_action=save]
5. Teaching an Elephant How to Dance — Red Hat
6. The Automated Enterprise — Red Hat
https://www.redhat.com/cms/managed-files/cm-automated-enterprise-e-book-f8558-201710-en.pdf
7. Digital Transformation from Wikipedia https://en.wikipedia.org/wiki/Digital_transformation
8. 10 Culture Hacks for Digital Transformation — Gartner https://www.gartner.com/smarterwithgartner/10-culture-hacks-for-digital-transformation/
9. What is Digital Transformation — A Necessary Disruption — Clint Boulton https://www.cio.com/article/3211428/what-is-digital-transformation-a-necessary-disruption.html
10. A Definition of Digital Transformation by Salesforce
https://www.salesforce.com/products/platform/what-is-digital-transformation/
11. Statista — Net Worth of Netflix
https://www.statista.com/statistics/272545/annual-revenue-of-netflix/
12. Net Worth of Netflix in 2019
https://www.macrotrends.net/stocks/charts/NFLX/netflix/net-worthmore
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