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Digital Transformation

Creating new business models where digital meets physical

Digital transformation intensifies
People and businesses alike are embracing the digital revolution. Social media and digital devices are being used to engage government, businesses and civil society, as well as friends and family. People are using interactive mobile tools to determine who to trust, where to go and what to buy. At the same time, companies are undertaking their own digital transformations, rethinking what customers value most and creating operating models that take advantage of new possibilities for competitive differentiation. The challenge for companies is how fast and how far to go on the path to digital transformation.

The new digital era
Across industries, business leaders realize that customer expectations have created tremendous pressure to change the way they set their strategies and run their organizations. However, because they have to manage existing, often traditional, offerings and operations, new requirements to incorporate information and interactivity quickly increase costs and complexity.
Business leaders have long used information technology to improve productivity and efficiency,
reach new markets, and optimize supply chains. The news is that customer expectations have also changed. People everywhere are using social media to find jobs and restaurants, make friends and new partners, and, as citizens, to achieve common political goals. They are using the Internet for entertainment, shopping, socializing and home management.

  Start with an integration strategy
How can companies best respond to this change? How can they take advantage of the opportunity to innovate, differentiate and grow? And how can they do all this profitably, optimizing the newest information technologies as part of their overall physical operations? In our work with clients, we have found that companies with a coherent strategy for integrating physical and digital elements can successfully transform their business models and set new directions for entire industries. These companies focus on two complementary activities: reshaping customer value propositions and transforming operating models using digital technologies for greater customer interaction and collaboration. To do so, they are building a new set of capabilities that allows them to progress in both dimensions.

Forces for business change
The main forces for transformation are the increase in devices for mobile connectivity, such as smartphones and tablets, and the continued and expansive creation of social networks. Both developments are creating an exponential explosion of data, which, in turn, requires business analytics to make sense of and get the most out of the information. Companies have always considered new digital and information technologies in terms of what they can do for them, for example: greater profitability and greater customer reach through online shopping. Now, customers also have a range of new options, many of which are outside the company's reach.

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