At a time when people were torn between the material and the ideal world, alchemists were searching for the means of the means, the philosopher’s stone. It should draw the ignoble by transmutation out of base metals and diseased creatures and thus pave the way for gold or the eternal life. However, even under torture, the alchemists did not manage to produce real gold. Nevertheless, many are still looking for a way to turn the world for the better. Currently they speak of the digital.
Like the Philosopher’s Stone, hopes are raised among today’s decision makers, hopes which, above all, offer special benefits for today’s alchemists. Despite this, the digital transformation means dramatic changes in the flow before anything else.
Delays affect stronger than before Those who couldn’t get a hold on unpunctuality will have additional difficulties with the digital transformation. Processes that take too long, piles of orders that are growing steadily, and delivery dates that are not fulfilled result now faster in problems. As long as parts of the process take place outside of computers, different processing speeds, unnecessary additional activities and extensive reworking burden a reliable flow – even with a high degree of digitization. In the future, the participants expect results that are almost immediately available.
Error sources create more serious consequences Today’s complexity offers a variety of error sources that are difficult to trace back to the root cause. If a delivery does not reach its destination because the address is incorrect or if the wrong articles are delivered, the customer gets frustrated. First of all because the order does not arrive on time and secondly, above all, he feels badly served – of course because of missing personal appreciation. Digitization offers an improvement by automating simple routines. However, this requires that you know your processes. The launch of IT systems always had been difficult. With digitization, clear processes become even faster and more important and thus the implementation becomes more difficult.
Shortcomings harm more intense Particularly unpleasant are the little quirks that interfere with the process, such as a less intuitive user interface, products and services which have small defects, and an uncomfortable way to fix deficiencies. Bad response times of the website, excessive entry validation or unclear contact persons spoil the customer for further businesses. Digitization will increase the share of IT in the value creation and accelerate everything. If you do solve these flaws, the customer is gone – forever.
Foresight does not work anymore The good news is that in the future potential customers can be found everywhere – globally. All are just one click away and expect prompt delivery. This changes the entire previous thinking – ten hour hotlines are no longer enough; many new regulations and laws have to be taken into account; one or two languages are no longer sufficient for the user interface and the hotline. The list can be expanded as desired. Digital transformation needs a new look at the customers – How big is the target group? Where are the customers of tomorrow? When are you active? How fast do we have to deliver? A forward-looking planning becomes impossible, especially because there is no time left to react.
Customer loyalty is gone with one click In the absence of personal contact it is also increasingly difficult to adjust to the customers. As a result, they remain loyal only until the next click delivers a better result. The digital transformation requires a new form of customer intimacy. For example, completely new services can offer customers added value that motivates them to come back. Examples are the history of past purchases or personal referrals depending on your own buying behavior. Additional services such as access to an exclusive network or the provision of special information are imaginable. Thus, the digital transformation has a fundamental influence on the existing business model.
Bottom line: As in the earlier centuries, it turns out that the philosopher’s stone, the digital, still produces a false shimmer. In all this it would be possible today to benefit from the digital transformation with an appropriate preparation. Delays, errors, shortcomings, the lack of foresight and the crumbling customer loyalty can be improved by overhauling the business model. The digital transformation not only requires IT systems for this, but rather involves all areas of the company. That way the digital becomes the Lapis Philosophorum of the 21st century.
With the Z1 of Konrad Zuse in the early forties of the last century, the first electronic computer was created. However, the fifth Kondratiev that announced the information technology as a disruptive change in the economy and society started not before the 1970s. The access to the global network is possible anytime, anywhere with mobile devices of all kinds. Together with the gigantic computing power of today’s computers, a big wave to implement well-known concepts is being piled up: the automation of processes, embedded systems in all moving and unmoved objects, data management in the cloud as well as the processing of unimaginably huge amounts of data with Big Data. But what do all these approaches mean for the commercial Canvas ?
Every business can be depicted on the Business Model Canvas. In the following bullet points, the momentum of the digital transformation is considered.
Already in the course of e-business more than twenty years ago, three customer areas were identified: business, consumer and government. Business describes the commercial enterprises, consumer the private customers and government the state/public institutions. In the beginning ventures should explore the digital reality of their own clientele. How digital are the customer areas? Where and when are the customers active? What do the customers want?
Customer relationships E-business already elaborated the possible customer relationships at an early stage: namely, all possible combinations of the axes business, consumer and government (i.e. B2B, B2C, B2G, C2B, C2C, C2G, G2B, G2C, and G2G). For most fields famous examples are available, like Amazon (B2C), eBay (C2C). A look at one’s own relationship structures and the degree of its digitization provides initial starting points for the digital transformation. What relationships exist or are possible? How, when and where does the customer wants to get in contact with the provider? What kind of digitization is needed?
The path through which the participants get in contact with each other is determined by the previous routine. These channels range from personal visits, telephone calls, publications, trade shows, to the Internet. It is an advantage to use all possible channels. Which media is already used? Which channels should be developed?
The proposals are split into two groups. 1) Physical products and on-site services as well as 2) digitizable products and remote services. While the second group comprises purely digital propositions, the first group can be extended with digital building blocks, e.g. the remote maintenance of a machine, the 24-hour hotline, online training. The digital opportunities of the propositions are often not clear. Which parts of the assortment can be digitized? Which new digital services fit into the product range?
Revenue streams In addition to the core business, the accumulated knowledge and contacts provide additional sources of revenue. The digital transformation opens up these information-rich opportunities. Which digital sources of income are available in the field of the propositions? What else can one earn with the existing knowledge? What can you do with the contacts?
Activities It is always surprising how far or how little the internal possibilities of the IT are used. Thus, value creation continues to take place with traditional, paper-based practices. At the latest when the customers are no longer satisfied with the slow, manual processes and if a closer involvement is desired, nothing else remains but adapting digitally. The affected activities can be derived from the digitizable proposals. Which processes are partly or fully automatable? How does the transformation take place?
Digital companies have virtual resources, i.e. the IT with its networks. A look at the degree of internal digitization, the already automated processes, the data landscape and the applications quickly shows the need for action. Which processes are already IT-based? What data is available? Which applications have a digital future?
Partners The participants in the provision of deliverables are the internal and external co-workers. They need new skills in the digital world, such as strong customer focus, lifelong learning, teamwork, change management as well as IT-specific knowledge of computer literacy, data security, data analysis, the Internet, etc. Who are the internal and external partners? Which skill profiles are there or are required? Which skills are missing?
Cost structure The digital transformation is not free of charge. The savings in expenditure and the increases in sales can not be realized overnight. Looking at Amazon, sales are growing steadily, but profits are not developing in the same way. Before you start with the digital transformation, you need an honest commitment concerning the costs. Where do the expenses arise? How long may the digital transformation take? What is the cost of not digitizing?
Bottom line: The complete Business Model Canvas is affected by the digital transformation. The already achieved digital penetration and readiness of all components determine the expected effort. The first step into the digital future is the conscious decision of all involved people for the necessary efforts. The Business Model Canvas provides the required overview.