What’s Hype and What’s Not in the Digital Age
How Companies Can Navigate New Technology
Before the internet, how a business operated and obtained customers was mostly through traditional means—opening a location and buying equipment, using print ads, radio and maybe television to advertise, hiring staff and networking locally. Companies used computers for information processing and storage. Since around 2008, we have ushered in the second wave of the information age, framed by the internet, satellites and mobile phones. These technologies connected us beyond our homes and businesses.
For the past ten-plus years, companies have been undertaking some form of digital transformation, which is critical to streamline operations and keep pace with consumer demand for products and services. Perhaps when we look back at this timeline in the future, our digital transformation will mark a shift from human innovation to computerized intelligence.
Digital transformation is the process by which companies embed technologies across their businesses to drive fundamental change. There can be many benefits, including increased efficiency, greater business agility, and ultimately opening up a global market, providing increased value for employees, customers and shareholders.
Technology is developing faster than ever before. With groundbreaking developments in areas like artificial intelligence (AI), blockchain, quantum computing, internet of things (IoT) and synthetic biology (synbio), it is becoming harder for companies to distinguish between the hype and reality of the next great advancement.
Do Digital Transformations Pay Off?
Digital transformations represent a huge expenditure for companies, making c-suite execs wonder if the investment is worth it. Sylvain Duranton, a global lead at Boston Consulting Group’s new tech build and design unit, says only about 30 percent of companies that are pushing hard on digital transformation are seeing positive impacts to the bottom line so far. But for those that are making major investments, the rewards are significant.
“In this 30 percent, a small subset is seeing massive impact or several percentage points of incremental EBIDTA (earnings before interest, taxes, depreciation, and amortization), or they’re gaining a much stronger competitive position,” said Duranton in a Wired interview. “Others are making some incremental impact.”
The data shows companies taking a shotgun approach, applying digital transformations to several areas at once, but not changing business operations to take full advantage of technology. Beyond the design and build of disruptive technology, a company must realize the time involved in integrating with legacy technology, and the even larger challenge of changing internal processes.
If a factory incorporates AI driven automation for specific functions, that can still have value. But a full digital integration touches all areas of business operations. Duranton suggests companies focus on one or two big areas that have the greatest potential for positive financial benefits, and fully incorporate the new technology end to end, rather than taking on a multitude of smaller initiatives that do not get immersed fully in operations.
How to Distinguish what is Hype
Keep in mind some technology is many years in development before it has a commercial application.
MIT computer science teacher, John McCarthy, coined the phrase “Artificial Intelligence,” in 1955. McCarthy held that, “Every aspect of learning or any other feature of intelligence can in principle be so precisely described that a machine can be made to simulate it.”
Research was well underway in 1982 for natural language understanding and voice technology, but the first voice assistant didn’t come out until 2011 when Apple incorporated Siri into smartphones. It took four years from the time they fully developed the technology to consumer introduction.
So how do businesses distinguish what is hype when incorporating new technology into their digital transformation?
One way is to generate a Gartner Hype Cycle report from research and data firm Gartner. The output is a visual graph intended to discern hype from what’s commercially viable, and on what time frame. The cycle projects the maturity and adoption of technologies and applications, showing how they might apply to solving business problems or exploiting new opportunities.
Decision makers can see when a technology is early in its process on a Gartner Hype Cycle. Quantum computing is an example of hyped technology that shows great promise, but is unlikely to produce anything of value in the near future. A company must evaluate how much risk, and cost, they are willing to bear. Jumping in early could mean backing technology that is not fully proven. Wait until there is a commercially viable product, and a company could face more competition.
As an Amazon Associate, Arvig earns from qualifying purchases.
Another option is to seek help from a digital transformation consultant. Businesses often do not have all the resources on staff to plan and launch complex integrations. The shortage of available hires to build new technology in-house may be the biggest barrier to digital transformations. An outside firm can fulfill this role. But before hiring a consulting company, there are a few factors to consider:
- Expertise relevant to project goals: Evaluate whether proposed consultants have the technical and process-specific skills, and have successfully completed projects within the industry and technology the business plans to incorporate.
- Revenue Model: Does the business prefer paying consultants hourly or by deliverables? See which revenue model fits the needs of the digital transformation and the company best.
- Cultural Fit: A consultant might look great on paper, but be a horrible fit for a company’s culture and values. Investigative interviews and spending time with individuals who would work on the project will help ensure a solid choice and smooth transition.
- ROI Evaluation: Early cost estimates regarding consultant fees will aid companies in doing a cost-benefit analysis. Digital transformation is expensive. Calculate fees into the budget and ensure the plan includes high-quality services that meet the expected goals before signing a consultant contract.
- Check Published Resources: Reading through thought leadership articles, whitepapers, and customer success stories will provide insights into the consultant group’s approach to digital transformation projects.
There is a significant amount of market pressure driving digital transformations. Consumers are demanding more sophistication from technology. Companies who have deployed advanced technology across their operation have an advantage, as we saw during the pandemic. These companies were better able to pivot, and not only survive, but thrive during a global crisis. According to Statista, organizations that have digitally transformed will contribute half of the world’s GDP (gross domestic product) in 2023.
It is anticipated that the drive to innovate will be stronger than ever in the years to come. Generations coming up were born with digital technology and don’t have the patience for outdated processes. However, even if companies implement broad digital transformations, there is massive upskilling of internal workforces required in tandem. In other words, a consulting firm cannot just build and implement a solution, the company itself must learn how to use and optimize the technology’s impact in order to see a favorable ROI.
Consulting firm McKinsey and Co., has an excellent article titled “Organizing for the future: Nine keys to becoming a future ready company.” A must read for any organization contemplating their adaptation in our rapidly evolving digital future.