DIGITAL BUSINESS

 Digital businesses use technology to create new value in business models, customer experiences and the internal capabilities that support its core operations. The term includes both digital-only brands and traditional players that are transforming their businesses with digital technologies.

Growth of the Digital Economy

Today, people are spending more money online, which has shifted business emphasis to digital sources of revenue and digital channels. The growth of the digital economy has made people more familiar with digital products and services, which has driven companies to seek new competitive advantages in the digital space.

But digital business has evolved into more than selling online; according to Accenture, “Digital businesses create competitive edges based on unique combinations of digital and physical resources. They do things that others cannot and in ways that build comparative advantage.”

Common Elements of a Digital Business

There are several views on the exact definition of digital business from industry experts. Gartner says that digital business is the creation of new value chains and business opportunities that traditional businesses cannot offer. McKinsey emphasizes that “digital should be seen less as a thing and more a way of doing things.”

Most digital businesses fit one or both of these points; they focus on creating value at new frontiers for their core business, or they use digital technology to drive growth, revenue and performance in ways that were impossible with traditional models.

It may be helpful for companies to review common elements of digital business and compare them against their own business models. These are some of the trends that differentiate digital from traditional processes.

• Use existing technologies to cut costs, gather data and provide a better customer experience. Digital businesses focus on the competitive advantages that technology gains them, whether that’s reducing overhead or providing new value to their customers.
• Embrace the concept of digital transformation and the cultural shifts that requires. The implementation and management of digital services can necessitate organizational restructuring, especially as new roles are created and IT is given greater input into strategic decisions.
• Explore new business models that put customer experience at the center of digital strategy. People are often willing to spend more for an exceptional customer experience, making it a key differentiator in the digital economy. Business models that align with this hyper focus on customer satisfaction will eventually center on digital services, since digital is increasingly the experience that people prefer.