What is the Digital Transformation Chasm?

Jun 5, 2018

A little more than 10 years ago, a startup called Airbnb listed its first rooms and took its first bookings. Four years later, 10 million people had stayed at an Airbnb-listed property. By 2017, the company has hosted more than 200 million guests from properties in over 191 countries. Airbnb is now worth $31 billion—more than the Marriott group, and more than twice as much as Hilton Worldwide.

That a company can go from zero to mainstream almost overnight is both awe-inspiring and scary. But such is the reality today. As the adoption of digital technologies speeds up, so will the rate of disruption accelerate. And Airbnb is not alone. Every industry, from automotive to retail—and even banking—are being disrupted by tech-native companies.

Years ago, the appropriate response might have been to defend market share or focus on a niche, but this was only true when there were few major players in an industry. Today, however, you could be competing with the store down the road as well as the e-commerce giant on the other side of the globe. Technology is also turning many business conventions on their heads, like the notion that you have to lower service levels to cut costs. Not true in the digital age. Tech-native competitors can offer the lowest prices, fastest deliveries, and widest selections thanks to its aggressive adoption of digital technologies.

With digital, it’s winner takes all. Anyone else left standing would be fighting over scraps.

We know that digital transformation needs to start with IT, but unfortunately, many IT leaders have their hands tied. They’re too busy maintaining the status quo, they lack the resources to modernize and innovate, and they lack the expertise to implement best-in-class practices like agile.  The result is a toxic environment of low integration, low speed, low skills, and high run cost.

This gap of systems, skills, readiness, budget, and speed between a business’s digital future and its current state is what we call the digital transformation chasm. Crossing it, and becoming a modern digital business, is the only way to survive.

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