Digitally-native Companies and Digital Transformation

What is a Digital-Native Company and Netflix & Canal+ Follow-up

In a rare and record-breaking event, Hurricane Lorenzo is the first Hurricane in recorded history to be as strong at such a Northern Latitude. Threatening parts of Ireland, the UK and possibly even mainland Europe, Lorenzo is not likely to remain a hurricane, but it is to bring much disruption to those areas in the next few days. Think The Great Storm of 1987. Stay safe.

Lorenzo is almost certainly one of the many side effects of global warming and is a subject I’m currently researching, especially the link between digital technologies, power and CO2 output. I’ve not finished… but it ain’t looking too good for Cryptocurrencies! 🏭

On to the news.

What is a Digital-Native Company?

I asked myself a fundamental question:

Can digital-native organisations do Digital Transformation?

I ask this question as it seems that the ultimate aim of Digital Transformation is to drive organisations to become digitally native.

In answering that question, I need to define what a digital-native organisation is. My attempt is the following:

A digital-native company is an organisation that extensively uses digital technologies throughout the entire value chain, from supply, design and development, innovation to distribution and marketing to the ultimate end of life of its products and services.

Looking at one extreme, a trader in a local market, we can reasonably conclude that the trader is unlikely to be digitally native. Sourcing and the supply chain are handled manually, often by getting into the van and driving around the various suppliers to purchase and collect goods. Stock handling too is a manual exercise when a storeroom/warehouse is involved; zero stock is not always possible at the end of trading. 

Marketing, if any, is additionally more of a human to human communication process, most often done in the form of handwriting today’s prices on a chalkboard propped up by a fruit box somewhere visible for passers-by. Selling too is unlikely digital as so many cash-based businesses are.

Distribution and delivery are also a manual process handed off to the buyer; it is his or her responsibility and charge to receive, check and transport the goods to their ultimate destination.

On the other extreme, if we look at a company like Microsoft, we could conclude that the fact that Microsoft was and is primarily a software development business selling digital goods that are distributed almost entirely by digital methods, it is therefore by definition a digital-native organisation. Microsoft’s products are by nature almost all digital, with some hardware mixed in, Xbox, Surface amongst others.

Most structures fit somewhere in between these two extremes. They have mostly implemented some digital tools to help in productivity, or for the financial management of the company, however consideration about the entire value chain and where digitising is helpful is not something that systematically performed.

What we all see is that there is much scope for non-digital native organisations to introduce digital transformation as a process to improve outcomes.

If we look at the previously cited local market trader, the opportunity to develop digitally is there — many potentialities to improve results to his or her bottom line. For example, the deployment of an internet-connected payment terminal linked to a cloud-based accounting SaaS app would allow the trader to spend less time in data-entry in the accounts system, which would likely be a significant gain in productivity. Not only are the gains visible in the prominent areas, but access to detailed data about sales might reveal, with some simple statistical analysis, facts about the buying patterns of clients’. Possibilities such as allowing the trader to manage stock levels and stock age may allow adjusting for seasonal or event-based peaks and troughs in sales. Waste management can be better accounted for and hence, healthily managed. We should all strive for that!

Microsoft itself is not immune to this tendency either. Since Satya Nadella took the helm of the company, he has implemented sweeping changes in the internal organisation emphasising the importance of Digital Transformation in what is mostly a digital organisation already. 

However, as I’ve highlighted before, Digital Transformation is not just about installing a new accounting system and saying you’re now digital. It’s about changing the culture of the entire organisation to think about productivity and the value chain from a perspective that allows the use of digital technologies in more innovative ways, solving for the jobs to be done, if you will.

Canal+ and Netflix follow-up

Following on from an agreement between Netflix and Canal+ to allow the latter to distribute the former’s content digitally, Canal+ is going all out with a massive over-the-air publicity campaign cycling many times per hour on its properties.

It is a tacit admission that the Netflix model is the one that is winning in the battle for eyes in France and Europe, Canal+’s new advertising campaign quite literally says:

“Canal+. Ca se regard comme <BLEEP>.”

Alternatively, in English:

“Canal+. You can watch it like <BLEEP>.”

If you hadn’t guessed, BLEEP is substituted to avoid saying “Netflix”. No attempt is made to hide the lips, so lipreading such a renowned brand name is child's play.

To me, the strategy is likely to ultimately devalue the Canal+ brand and possibly even contribute to a substantial demise forcing Canal+ into a content-production-only firm — it is very good at that too. Moreover, to make matters more complicated, presumably, the contract allows Netflix to stream Canal+ content!

Why would you pay (more) for Canal+ over an antiquated system that is only just getting to grips with the job to be done, whereas directly through Netflix you’ll be able to get the same content, assuming the bilateral agreement is accurate.

Remember, Canal+ is only offering a Netflix Standard Subscription bundled, which is limited to 2 devices simultaneously and HD streaming. Netflix offers more screens but also higher definitions for those cinephiles amongst us.

Microsoft’s October Hardware Event

At 10 am ET, Microsoft is set to announce a slew of updates to its hardware line mostly offered under the Surface branding. We already know a lot of what is going to be announced — with an unsurprising leap to CPU designs other than Intel’s — but there are still some unknowns. I am especially looking forward to their Digital Transformation story and how the new generation of devices helps businesses and individuals develop digitally. I may comment on what happened in a future newsletter, we’ll see.

In circling back to the initial question, — can a digital-native do Digital Transformation? — if it is not apparent to you now, the most critical part of Digital Transformation is not “Digital”; it’s Transformation…

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Thanks for reading, have a great day.

Matthew Cowen @matthewcowen