What Is Digital Business?

Let's look at how some expert analysts define digital business.

"Digital business is about the creation of new business designs by blurring the physical and digital world," says Jorge Lopez of Gartner. One thinks about digital supply chain management, context-aware mobile experiences, and IoT using Gartner's definition.

"You must think of your company as part of a dynamic ecosystem of value that connects digital resources inside and outside the company to create value for customers," says Nigel Fenwick of Forrester. While this definition also conjures images of supply chain, Nigel's more critical point is that digital business must "deliver a greater share of value to customers" to be competitive. In other words, customer experience and the value customers perceive through your channel must win a disproportionate market share versus direct and indirect alternatives.

McKinsey adds to the critical elements of digital business. "Being digital requires being open to reexamining your entire way of doing business and understanding where the new frontiers of value are. For some companies, capturing new frontiers may be about developing entirely new businesses in adjacent categories; for others, it may be about identifying and going after new value pools in existing sectors." So, digital business impacts the business model and business practices and enables growth in new categories or sectors. But they add: "Digital's next element is rethinking how to use new capabilities to improve how customers are served. This is grounded in an obsession with understanding each step of a customer's purchasing journey--regardless of channel--and thinking about how digital capabilities can design and deliver the best possible experience, across all parts of the business."

Many analysts focus on and some equate digital business with customer experiences. They instruct organizations to develop customer journey maps that define the end-to-end customer experiences as they exist today, then look at the impact of digital channels and capabilities, then add the impact of new technologies to analog (physical) channels.

Putting a customer lens to help define a digital business and digital transformation is certainly a good place to start, but I would argue is not sufficient. If the taxi commission deployed a mobile application enabling me to hail a taxi anytime and anywhere, would that have prevented Uber from entering this industry in such dramatic fashion? If banks were the first to enable mobile payments, would that have stopped Apple from developing this capability? Before Airbnb, there were other large sites like HomeAway that enabled person-to-person home rentals: Why was Airbnb more successful growing their brand and reach when they weren't first to market with this model? Finally, I would argue that Craigslist offered one of the poorest user experiences when it came to market, and EBay wasn't that much better, but both platforms won over consumers against traditional newspaper platforms and over richer experiences available in competing digital platforms.

Excerpted from DRIVING DIGITAL: The Leader's Guide to Business Transformation Through Technology by Isaac Sacolick. Copyright © 2017 by Isaac Sacolick. Published by AMACOM Books, a division of American Management Association, New York, NY. Used with permission.

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