Is the Digital Brain the Future of Digital Transformation?
More than ever, enterprises need to embrace digital transformation to stay competitive and prepare for a more volatile business environment.
In the face of a global pandemic that shut down many production sites, enterprises were not prepared for the unprecedented supply and demand challenges 2020 and 2021 thrust upon them. It’s not surprising that many organisations are left questioning their current capabilities. Many have found large gaps in their planning and decision-making systems which only serve to highlight the need for a renewed emphasis on digital transformation.
There are many recent examples of this, one of the most prominent of which is the recent semiconductor chip shortage. These chips are in many appliances such as computers, devices and vehicles, we buy and use them every day. A shortage affects the supply chains of companies across many industries - electronics manufacturers, computer manufacturers, automotive companies, not to mention the OEMs and parts suppliers for all these and more.
Unfortunately, many companies still view digital transformation initiatives primarily in terms of their internal operations. Most enterprises—like so many departments within them—look at their own silos and the data within them to make decisions. However, as the current chip shortage shows, today’s businesses don’t operate in a vacuum. Making decisions using a limited internal view is never optimal—especially when supply chains are involved. Companies are interconnected operationally, and their data is also interconnected.
Just as the human brain automatically makes connections between various facts and information, the enterprise needs the ability to make automatic and often hidden connections between its own data and all sorts of external data. Otherwise, how can we ever make optimal decisions? Digital transformation requires turning massive amounts of data from all possible sources into knowledge and action—and that requires a “digital brain.”
What makes a “digital brain”?
Again, many businesses still operate as a silo and therefore base their decision-making only on the information available within that silo. The decisions they make and actions they take, however, can (and usually do) have repercussions far beyond their four walls. They may know this intrinsically, but because their operating models do not have the capabilities to show them the external impacts, it can be easy not to recognise this fact.
Digital transformation for enterprises is no longer about analysing internal data and automating internal processes. It must incorporate external data from as many sources as possible to provide you with the larger picture. Decision-making and planning processes need to transform into digital operating models in the future, where they can absorb real-time data from your business initiatives and those of others within your enterprise. Then and only then can you use analytics, AI, machine learning algorithms, and other technologies to power the digital brain— which finds the connections between the data, makes sense of them, and allows you to optimise your supply chain and financial planning to handle all contingencies.
Transitioning to the “digital brain”
How do you transition from the mode of introspective planning and decision-making to the more all-encompassing “digital brain”? By sourcing and analysing as much external data as possible, you can get a true ‘big picture’ and the insights you need to make better decisions. The reality is that it will be a lot of data that will be of use once it is turned into actionable knowledge. The transition can seem overwhelming, but the result will provide you with advanced data decision-making models that will enhance your customer engagement and your operations, not to mention helping ensure you aren’t at the mercy of an iffy supply chain.
The first step is to look outwards, not inward. Looking only inward does not show you the driving indicators in the market, leaving you ill-prepared when challenges arise. You must eliminate the tendency to use only your data, your orders and shipments, and your historical data to make decisions. The customer product industry is leveraging external data to ensure their forecasting and planning processes allow them to spot risks and opportunities to respond to consumer behaviour, market constraints or supply chain needs in an agile way. Looking outward provides the data you need to accurately model your market and supply chain with real-time data. Discovering this external data and creating knowledge about driving demand is your most significant asset for continued growth.
Consumer product industries are starting to make this transition by getting more external data about their consumers. They're incorporating information about purchase behaviours, micro conditions at local markets, and how the demand has and will continue shifting based on the pandemic. The results are allowing them to build a competitive advantage and stay agile during difficult times. By integrating a “digital brain” approach, each company was able to make informed decisions using real-time data to find risks and opportunities within their supply chain. This allowed employees to find better solutions, and ultimately focus on delighting customers and meeting the business objectives that move the organisation forward.
The “digital brain” requires a new mindset for digital transformation
Disruptions to business are simply a reality; the pandemic and the chip shortage are just two recent examples. It's time for organisations with traditional siloed operating models to pivot to digital operating models with a more global and real-time view of their business. It's not about adapting to new systems but rather adopting a completely new mindset. A mindset of rapid, iterative innovation. A mindset that seeks to better connect with suppliers and customers alike. And a mindset that leverages all the available data to make better decisions, ultimately making the business more resilient and profitable.
Companies who have made this mindset shift are already putting out innovative new products and services on a regular basis because their digital model operating systems allow them to do so—despite the recent market challenges. By embracing a “digital brain,” they can better understand their customer's wants, needs, and desires so they can make decisions based on them, not just their own business needs. In return, their customers will show them the loyalty that every company needs for long-term success.