Real competitive advantage from AI & Digital transformation requires end-to-end business model transformation and is rarely about just building apps.
We see this every day. A company builds an app for its customers, so it looks “digital” on the outside but is still very manual inside its core operations. In the corporate innovation space, we sometimes call this “Innovation Theater”.
Building apps for your customers is rarely a competitive advantage – it’s table stakes in the industry; it does not provide competitive differentiation. For example, almost all banks in emerging Southeast Asia have their banking apps.
The financial results from digital transformation that compound over time is when the frontstage business model (customer side and the value proposition) is connected to equally digitally transformed core operations in the backstage of the business model that deliver that value proposition.
We’re talking about advanced analytics to develop proprietary insights, automated repetitive tasks that reduce costs to serve and service delivery, and digitally streamlined operations that enable speed to go up and costs to go down — as examples.
Weave together a digitally transformed backstage and frontstage business model and you have your company, over time, real financial impact from digital transformation.
Leaders must be willing to undertake the organizational “surgery” to be able to rewire the “guts” of the company in the entire business model — not just building an app.
As one CEO said, “We should find digital everywhere in the company but the bottom line.”
