Forbes names Bain term Digical top 10 trend for 2015

16 January 2015 Consultancy.uk

Earlier this week, Forbes released its top ten business predictions of 2015, including ‘digical’ on #2, a term recently coined by consulting firm Bain & Company. But what is being digical? Consultancy.uk delved into Bain’s report, finding out that ‘digical’ is the phenomenon of a merged digital and physical. According to the consultants, the phenomenon is expected to have a massive impact on diverse industries and businesses across the globe.

In a recently release survey report, titled ‘Leading a Digical transformation’, covering 300 diverse businesses, Bain & Company explored the growing fusion between offline and online. Bain found that it is no longer a question of only digitalisation or only the traditional “analogue” modes of engagements, but that the future transformations of businesses and product innovation will require offering users a joint physicaldigital experience; the combination of digital and physical elements create wholly new sources of value. The phenomenon dubbed ‘digical’.

Leading a Digital transformation

Business transformations
Human beings are active experiential beings, engaging with things, touching and playing are part of an engagement with our environment and other people. Digital technologies often have a passive element, they present information and while allowing us to play with the information, the concepts are not tacitly grasped; the other is not seen. Bain, in their survey of the fast paced digital “revolution” that has swept many segments of social interaction, note that care must be taken to not overstep one or the other domain – an element of both, electronic information and physical interaction, needs to be part of the innovative spectrum businesses develop in their engagement with people.

According to the advisors, the demand for the phenomenon they identify will intensify over the coming decades, and digical products and services are already spreading throughout a number of industries and changing the landscape in which competition occurs. Bain finds that the demand on transformation toward digical innovations and engagements may follow some key trends:

• The impact ranges widely: Industries occupy remarkably different points on the transformation curve. Change has been more than three times as extensive in media, technology and telecom industries as in oil and gas, mining and construction. Other industries are spread out across the curve.

• The biggest change is yet to come: The next several years will bring far more innovation to most industries than they have seen in the past. Automotive, insurance and many other businesses are poised on the verge of far-reaching Digical transformation

• Wild cards can affect the pace of change: Some industries—but only some—will be held back by external factors such as regulatory measures.

Projected Digical transformation by industry through 2020

Mastering the game
Of the 300 companies surveyed, digical innovation struck few as a surprising development. However, for 80% of those businesses, little enough attention had been placed on transforming their products or services into digical innovations. Bain’s analysis explores the way companies are responding to the digital physical development, finding that Digical innovators in virtually every industry pass through three quite different stages of development.

Beginners
Most companies are just getting started and come in different shapes and sizes according to the report, with pioneers in slow moving industries as well as those behind the times in quickly developing arenas. Beginners are still figuring out how to experiment with new Digical fusions while maintaining their core business. They are still trying to identify their customers’ needs and frustrations. They may be slow to innovate, and they are likely to have a lot of money invested in older technologies. Their organization is probably siloed and their culture conservative. 

Intermediates
Typically companies in the Intermediate stage have already launched some Digical initiatives. Instead of merely responding to threats from rivals, they are out to beat the competition. If that requires making big investments in new technologies or seeking out new customers, so be it. The future may be scary, but in an Intermediate’s view, it can’t be avoided. Though many Intermediates still have only average infrastructure capabilities, they are testing and learning aggressively. Organisationally and culturally, they view Digical goals with enthusiasm, though individual units may be protective of their unique skills in this area. Executives of Intermediate organisations often create new performance metrics (such as loyalty or market share of the most attractive Digical customers) to focus the efforts and build confidence in the new direction.

Your next steps depend upon your companys situation

Experts
Companies that have reached the Expert stage have usually been at it awhile. They perceive the possibilities of the Digical revolution, and they have moved from competitor benchmarking to customer path breaking. They have the integrated systems and tools required to enable change, and they invent new capabilities as they go. Organisationally, they are one team, with a unified culture and few skill gaps. Typically, experts don’t rest on their laurels—they realise that their own innovations face constant threats from newer ones. As a result, they constantly test new approaches and push the limits of what’s possible. Digical is no longer an add-on; it is part of the way they do business.

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