The Case for "Digital Age Transformation"

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Most firms realize that 1) the Digital Age brings new challenges and 2) they need to transform to stay relevant.  However, most firms think that success in this new age is about “digital transformation.”  And despite the fact the everyone seems to be talking about digital transformation today, nobody seems to be able to put their finger on the reason that so many efforts are failing.  According to both McKinsey and Boston Consulting Group, the large international consulting firms, over 80% of digital transformation efforts fail. 

In many ways, “digital transformation” has become a euphemism for simply “becoming ready for the future.” In this respect, “digital transformation” implies a vast, endless array of levers for companies to change fast, become more agile, and orient to our increasingly digital future. In many ways its meaning has become too vague and too general. 

In other ways, “digital transformation’s” meaning has become too specific, implying a boxed-in scope limited to merely adopting new digital technologies. Companies who undertake “digital transformation” efforts might target implementation of software, application of new technologies, etc. to ostensibly improve their businesses. Actions might include topics like implementing modern ERP and CRM systems, or even more advanced topics like application of AI.

However, in the post-COVID Digital Age, the game itself is changing, with new rules and new strategies required to win. COVID dramatically accelerated the emergence of the Digital Age in general, but the transformation will be particularly relevant in the industrial products industry, which is traditionally a laggard industry in many ways.  How is the game changing? The industrial products industry is playing catch up with other industries, many of which are consumer-driven and which have seen dramatic changes already take place. Players in the industrial products industry are faced with existential long-term challenges and more acute short-term challenges that pose severe threats, especially to small-midsize businesses (SMBs), including both producers of products (OEMs) as well as intermediaries (distributors, integrators, etc.).

In the long term, success in the Digital Age is all about scale. Much like we’ve seen in countless other industries, like retail, automotive, or many others, big players will continue to get bigger, and smaller players will get squeezed unless they act.  To compete in the Digital Age, SMBs must begin to adapt to the new game and produce their own scale, largely through digital. However, beyond “digital transformation,” businesses must aim the totality of their business and strategy towards success in the Digital Age’s new and different game. 

Leaders who can holistically move their business forward, considering digital transformation itself as well as the transformation of key traditional functions, will create the most competitive organizations. Successful transformation requires a holistic approach, implementing digital transformation as well as reorienting the traditional business to the new and different game. 

We call this philosophy and approach “Digital Age Transformation,” and it’s critical that small-midsize businesses get this right.