Advanced tech convergence that started in the digital business age continues to evolve at rapid levels. Through 2030, any product we use today will be reshaped by this technological evolution.
What we have learned in many years is that most businesses ignore the fundamental need to shift their business model to become a software development company; use technology to create new ways of delivering customer results.
Sadly, by the end of 2019 every tech services company claimed to be providing digital transformation expertise. Unfortunately, too many technology managers see digital transformation as modernizing the IT infrastructure to migrate into the cloud, and too many marketing managers see digital transformation as an exercise in channel marketing and delivery of customer experience.
Sure, these components are important, but they are not enough on their own. Digital transformation goes much further, fundamentally reshaping the way you create value for your consumers and driving growth in sales.
What I have found is that most companies are missing the fundamental need to change their operating model to become a software-driven business; using technology to create new ways to deliver results for customers. Instead of producing cars, automakers turn into a company that uses software and technology to help people get from A to B.
Instead of producing clothes, fashion companies are becoming technology firms that aim to help consumers fulfill their needs for comfort/food/clothing. Besides shifting the value proposition, several businesses have spent the last half of the last decade implementing new customer experiences that strengthen the old business model.
Usually, these improvements carry a degree of perceived value from customers, but only for a short time. The perceived interest wanes as customer expectations change. And, too long, new digital technologies will begin to look close to one another. That is why I expect that the next decade will see a more fundamental shift taking place across businesses of all shapes and sizes.
As the digital experience grows in organizations, there is a gradual shift in people's way of thought. We move from thinking "how can we use digital to sell more product," to thinking "how can we use technology to reconsider how we can help deliver value to our customers?
The shift allows designers, product owners, technology experts, professional customer experience and marketers to come together around a unique view of what is relevant to consumers. When that happens, employees start rethinking what's possible. You will move from designing new digital technologies to designing new digital products when you unleash this mindset within your company.
The great difference between digital experience and a digital product is that it sells a product. Both Facebook and Google have digital products on sale to advertisers. Netflix is available for sale to customers. Lyft (and Uber) is giving car owners access to its service as a way to monetize an unused asset, and to customers who need to get from A to B. Amazon will market Prime to consumers, because it provides them with a view Since goods compete for consumer dollars and resources, market forces push product managers to preserve the product's perceived value so as not to lose market share. While the Apple app store has several popular digital products, it still has more disappointing ones. Digital marketplaces (products in their own right) are now selling new digital products around ecosystems in the market.
One of the most difficult transformations for non-software companies to undertake is the shift to continuous digital product evolution. The way things are done always creates such inertia as to make change difficult. But change becomes near-on impossible in hitherto successful businesses. We have not seen this happen anywhere in the last decade.
While Jeff Immelt understood the need to become a digital organization, there was too much organizational inertia for the company to make all the changes it required. Even in businesses that we consider to be progressive we see this mindset pervading. The new electric Porsche Taycan, dubbed as a Tesla killer by performance car enthusiasts, was launched at the end of the decade without any over-design.
Because execs in many companies are already evolving in their digital maturity, I expect that in 2020 and 2021 we will see more awareness about the opportunities of digital products. But very few tech vendors that claim digital transformation expertise are really helping customers design and build new digital products for customers.
I imagine we'll wander by the end of the next decade how we've ever managed to design products without beginning with the apps. By 2030, I'm predicting that every successful business will be a software product company or a hybrid software and physical product firm.
If your business doesn't already design new software products around, 2020 is a great time to get the ball rolling. Invest in digital product development capabilities early in 2020 to get ahead of your competitors.