Digital transformation; it seems as if the subject has been dominating the pages of the Harvard Business Review and other publications dedicated to executive management for several years now. Granted some of the buzzwords have changed. In 2015, it was big data, while today the talk is about blockchain and artificial intelligence (AI). But the direction is clear – companies need to think of themselves as tech companies if they want to continue to grow.
It doesn’t matter the industry; in fact, those how resist the latest wave of digital disruption have unknowingly made the strategic decision to go out of business. On the other hand, millions of business – large and small – have embraced the change and for many smaller companies, they are winning the race to go digital and here are four ways they are making this happen.
Smaller = Faster
Sure, the grass is always greener on the other side and if you are running a small or mid-sized business, you would love to have the resources that your larger competitors have. But the reality is that most big companies have a difficult time achieving strategic initiatives unless they are in a crisis.
As such, smaller is often better as the leaders in a small company are not only closer to their customers but they are also better positioned to marshal the resources needed to make change happen. Contrast this with larger organizations which often require drawn out budgeting processes before an initiative can start and the advantage become apparent. Smaller is faster and in the world of digital disruption, this allows the Davids to beat the Goliaths.
The result is the ability to grab market share by either getting the attention of customers or delivering a new product or service to market. One example of how this is playing out is Wegmans. While company is widely considered one of the best supermarket chains in the company, it remains a family owned business with operations mostly confined to northeastern states.
However, that hasn’t stopped the company from taking on giants such as Walmart and Whole Foods by investing in data synchronization. This has allowed the company to share real-time information with its suppliers while dramatically increasing productivity. All of this will allow the company to continue to grow in an industry that is facing pricing pressures.
Small Setbacks Can Lead to Big Breakthroughs
Another advantage that small companies have is the ability to fail. This doesn’t mean going out of business. Rather it is the opportunity to make small experiments on where it thinks the market will go and then test out these hypotheses. Granted, for the owner of a $100 million business, spending $1 million on a new initiative might as well be $1 billion. But the point is that smaller companies can take these gambles out of the spotlight of shareholders and wall street analysts.
While sometimes the failure is getting to the market too early for most small companies, the opportunity cost of undertaking a digital transformation is much less than what it is for its larger competitors. In addition, a growing number of tech companies are focusing on working with small to mid-market companies and this gives these companies the added expertise they need to reach big breakthroughs.
One example of this is Infor, the company combines a start-up culture with the ability to help its clients achieve scale and it has recently brought Charles Phillips from Oracle to help bring it to the next level.
This has become a massive challenge for companies large and small and as the recent Equifax hack proves, many leaders have failed to comprehend what a breach can mean for their business.
For smaller companies, there are two lessons to learn. The first is that large databases chock full of valuable data is increasingly impossible to protect. The second is that the best way to handle a breach is to be out in front of the situation by working to win back the trust of customers.
Another way that small companies are winning when it comes to cyber security is that they are generally not as reliant on legacy systems which may be prone to breaches. This means that leaders can make security decisions based on what is best for their customers rather than what fits into their current networks.
Never Forget the Customer
Technology can transform our lives, but ask the leader of any small or mid-sized company and they will tell you that it is the customers who really drive the business. This is the fourth reason why smaller companies are winning the race to go digital as they haven’t forgotten the voice of the customer in everything they do.
Think about it, a large company can spend hundreds of thousands, if not millions, in developing a ‘digital strategy’ but if they leave the customer out of the process then they have ended up with an expensive solution which is looking for a problem. Instead, start with the customer and work their needs into your digital transformation. Not only will this enhance customer relationships but it will give you and your business an advantage over your competitors.