Digital businesses are rapidly taking over the world, just look at the industry shakeup Koala Mattress is causing. In fact, a lot of these digital businesses have chosen to operate exclusively online, taking advantage of lower overheads, identifying competitive advantages fuelled by change and technology, and there is a growing trend of these businesses outgrowing some industry veterans. But how have we reached this point where digital businesses are growing at astronomical rates, and how can existing companies share in the success?
What is a digital business?
A digital business is one that operates by seamlessly integrating digital technology with traditional tools and processes, for optimal efficiency and customer experience. These businesses leverage digital technology to gain competitive advantage across internal and external operations. Through intrinsically linking operational departments and harnessing internal data to drive smarter decisions, they are more primed to innovate over slower competitors. Digital businesses also have different mindsets, methodologies, and approaches to growth and change, incorporated into organisational structure.
What a digital business is not
A digital business is not a business that simply plugs together digital technologies, it takes an agnostic approach to the management of and development of the business. A digital business is not:
Hesitant to experiment
Digital businesses recognise and embrace the ability to experiment, they do not shirk in fear of the unknown and approach every external threat as a new opportunity to grow. Waiting to see who does it right does not fit into the mantra of a digital business mindset.
Reactive to change
Digital businesses do not let internal policies slow down evolution or change, rather they embrace it. They champion change and ensure their company is structured in a way that can quickly adapt to changing environments.
A technology-first business
Not every digital business is heavily invested in technology, many instead look for opportunities to leverage technologies to enhance how they serve their customers, or improve their products, as the customer experience is top of mind for their business-level decision making.
Characteristics of a digital business
So what characteristics would typically define a ‘digital business’? It is not the approach to technology, rather, it is in the mindset and approach to customers, innovation and organisational structure.
A Customer First Mindset
Digital businesses adapt quickly to changes in consumer behaviour, whether it is their buying and media habits, or their broader interests that the business can tap into. It takes an agnostic approach to ensuring that whatever the business does, it aligns with the consumer’s interests (on a macro level). By constantly challenging ideas with thoughts such as “is this what the consumer wants?”, a business obtains a better understanding of how to connect with and serve their customers.
A true digital business doesn’t stay in one place for long. In fact, a core part of their operations is figuring out how to get to the next stage of evolution. Through dedicated teams that embrace change and see the unknowns and the new knowns as opportunities, digital businesses are constantly scanning the horizon and looking for the next iteration of their business as a whole. McKinsey’s 3 horizons framework gives a good overview of how to go beyond the usual focus of fixing innovation for the present, and instead, plan ahead in multiple horizons of organisational evolution.
Digital businesses utilise the opportunity to converge departments that have traditionally been isolated or segregated, and achieve unification through technology. One big pain point of traditional businesses is the slow pace of rolling out change with many different departments and stakeholders. However, by unifying the data, processes and operations by creating a sense of transparency and unification, digital businesses can adopt and adapt to change more quickly than larger corporations.
Example of a digital business
There are a few businesses that have undergone significant digital transformation. For example, when Sam Zivot joined Lorna Jane in 2010 as the company’s Digital Strategist, he took on the responsibility of developing an online community that helped shape and transform the business’s approach to digital. Now, Lorna Jane has a heavy focus on unifying digital marketing, suppliers and agency relationships to improve the brand’s ecommerce channels and conversions, drive traffic and revenue, and explore new and emerging marketing opportunities. Jessie Dean, the current Digital Marketing Manager for Lorna Jane, has said in a past interview:
“I think the most exciting part about working in digital is all of the opportunities. There’s constantly new technology coming to market and I’m very fortunate to work with a brand that’s so open to trying new ideas.”
This highlights Lorna Jane’s new approach to digital, which is to constantly scan the horizon and look for new opportunities.
Stay tuned for our next article as we further examine digital businesses and how they are better leveraging digital marketing channels to drive action by expanding their scope of strategy.