Business World in Digital Innovation
Welcome to the business world in the 21st century. It has been established that a lot of businesses are now adopting various technological innovations in their operations to have a competitive advantage and improve their customer satisfaction through digital Innovation. In this article, I will be discussing the following objectives:
- What is business?
- What is digital innovation?
- Business and Digital Innovation Alignment
- AI as the core innovation
- Why is the business digital transformation stage necessary?
What is business?
According to Investopedia, business is the structure of an individual to produce and sell goods and services for profit. It is recorded over time that human beings have always been involved in transacting with one another by either paying or buying a product or rendering or paying for a service. We have different forms of business, such as sole proprietorship, partnership, cooperation, and limited liability companies (LLCs). It should be noted that the various forms of businesses above have their strengths and weaknesses. Business owners have long been known for prioritizing cost-effectiveness and maximizing profits; this is the fundamental goal of any business. Over the years, we have always seen competition arising from various businesses, for example, Pepsi & Coke, Walmart & eBay, Gmail & Yahoo, Google & Microsoft, etc., where a lot of strategies from marketing, corporate social responsibility (CSR), human resources, etc. have been put in place to always gain an advantage over their competitors by creating necessary values for their consumers. Most businesses operate either as brick-and-mortar or an online presence or both. For example, most restaurants and supermarkets operate as brick-and-mortar (face-to-face) to sell their products and render their services. The likes of Bolt and Uber operate mostly through online presence for selling their products and rendering services. It should be noted that almost all businesses use these methods simultaneously, but they tend to focus more energy and effort when their target audience is clearly defined.
What is Digital Innovation?
Digital innovation is a strategic process in which businesses solve their challenges using modern digital technology. From the word innovate, it means finding a new way to scale their business to gain a competitive advantage against their competitors, improve customer satisfaction, optimize business processes, and attract cost reductions for their business. In recent years, we have seen many technological innovations adopted by various businesses. For example, a restaurant has a chatbot to help customers book their foods faster, an artificial intelligence system for personalized content, machine learning to help customers know their expected time of arrival (ETA) when they order a ride, big data analytics for effective financial advice tracking, mobile apps for savings, financial transactions at the comfort of our homes, a recommendation engine on our favorite websites, and other various forms of digital innovation. According to Deloitte’s 2023 report, businesses that use automation and AI reduce their operational costs by 30%. It should be noted that digital innovation is an integral part of digital transformation for any business.
Business and Digital Innovation Alignment
Business can be created without digital innovation, but in the present world, where there is a major shift in demographics, especially Gen-Z, which are part of the larger demographics in the world now, they account for about 30% of the whole world population according to various estimations. Most Gen-Z shopping behaviors revolve around online shopping, such as ordering food, purchasing their favorite outfits, and expecting quick responses to their questions on websites. Major businesses are now facing the dilemma of attracting Gen-Z as part of their customer base. We have seen over the years that a lot of companies go into extinction because they can’t rival their competitor's digital innovation pace. We have seen how ChatGpt by OpenAI, which was released in 2022, has reduced a lot of business revenue from StackOverflow, Chegg, and many other businesses. We can also look into the perspective of the e-commerce website Amazon having a competitive advantage against its competitors like E-bay and Walmart because of digital innovation. Recently, it has been established that most businesses are driving digital innovation with the help of artificial intelligence (AI), machine learning (ML), and big data analytics.
AI as the core digital innovation
In recent times, we have seen various businesses embracing the impact of generative AI and co-pilot agents to improve their business operations. The fact is that over the years before the discussion about generative AI, businesses had been using AI to scale their businesses and optimize their operations. AI is a big word where, under its branch, we have machine learning, deep learning, big data analytics, Automation, Robotics, etc. AI is becoming the core of digital innovation because of the vast amounts of data that are available to be processed to understand customer's challenges and solve their problems. According to Exploding Topics, 402.74 million terabytes of data are generated daily, which is massive. Data can be collected in a traditional way, which may be through face-to-face interviews, questionnaires, phone calls, or the modern way through online surveys, social media posts, transactions, etc. Data can be structured or unstructured; we can see structured data as a relational table database and unstructured data like the content, photos, and videos we post on social media. Over the years we have seen how Google usually classifies emails sent to the Normal Email and Spam folder, how Facebook recognizes our faces in a group photo, how Facebook recommends a friend request based on our followers on the platform, supermarkets giving discounts, price fluctuations on our favorite rider app, YouTube movies and content recommendations, supermarket grocery arrangements in good orders, loan acceptance and rejection, cross-selling of products from our favorite companies, Instant response on our favorite shopping website, Constant email reminders, telemedicine, health records accessibility, etc. All of the various use cases in this field are powered by AI. It should be noted that some AI applications rely on data availability, while others focus primarily on automation and embedded systems. Various methods like predictive modeling, market basket analysis, natural language processing, computer vision, object detection, recommender systems, and chatbot automation are some of the applications of AI to businesses. According to the KPMG survey, it is reported that 80% of business leaders recognize that generative AI is important for gaining competitive advantage and market share. It has been established that AI is crucial for businesses to scale and innovate quickly to satisfy their customers and gain a competitive advantage. This raises an important question: should every business invest in generative AI, predictive modeling, deep learning, and similar technologies? The approach to digital innovation is not one-size-fits-all, leading us to a broader concept known as the digital transformation stage.
Why is the business digital transformation stage necessary?
Digital transformation is a process in which companies scale their business operations using digital technology for business and customer engagement efficiency. Digital transformation requires company leadership, culture, people, and their business strategy. According to McKinsey Research, in 2024, an estimated 90% of companies are currently undergoing digital transformation. A lot of businesses can get swayed away by the success of AI adoption for their digital transformation, which may not be the best start for their company. Businesses must understand that there are stages of digital transformation, which are digitization, digitalization, and digital transformation. It should be noted that the three major stages are related because they are technology-driven, productive-driven, efficiency-driven, and data-driven. Digitization is known to be the major first stage of businesses achieving digital transformation because it causes them to convert their analog data to digital format for easy integration and accessibility. Digitalization helps businesses improve their operations and processes to optimize their businesses and enhance their decision-making. Digital transformation is a strategic shift in how an organization operates to create a new product or service to improve its brand identity and remain competitive against its competitors. Digital transformation includes people and technology. A company that is ready for digital transformation must be ready to walk the path with its internal and external stakeholders for successful transformation. In recent times, the impact of generative AI has driven a lot of organizations to start implementing it in their various businesses, but the reality is that not every company has matured to that stage. It should be noted that to efficiently use AI, especially the likes of machine learning, data analytics, deep learning, computer vision, and natural language processing, such companies must be data-rich. Some businesses just need a good automation pipeline to improve their business operations; others just need a good analysis of their historical data to make informed decisions. Businesses must understand that a company can only be data-driven if it has a robust data architecture strategy integrated into its daily operations. Businesses must be aware of their digital transformation stage to successfully apply digital innovation, ensuring competitiveness and optimizing profitability.
Conclusion
Businesses must strive to embrace digital innovation to enhance their operations, ensuring efficient customer satisfaction and optimizing profitability. At the same time, they should align digital innovation with their digital transformation maturity stage to make informed decisions. As the saying goes, ‘If you have a hammer, everything looks like a nail.’ This mindset does not apply to business transformation. A business must be prepared to embrace the potential of digital innovation concerning its people, resources, and financial strengths.
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