The Decreasing Costs and Advantages of Digital Transformation: Strategizing Prio

Posted by MPH Group on December 26th, 2020

There is a curve in Digital Transformations that most people are aware of but never think about, and this curve is in our opinion very important in designing a tailor made and effective / efficient digital transformation strategy.

The curve we are talking about is the costs and advantages curve. You see, as costs decrease, more people jump into the bandwagon and less advantageous is the adoption of new technologies for differentiation and marketing purposes.

Having said that, we know this topic isn’t one where a couple of paragraphs can be what describes it and its complexity to its fullest, so we decided to have these three paragraphs be just the introduction to this matter, which we will approach more in the content below.

If this sounds like a good read, then continue with the post.

As Time Goes By: Understanding The Time Sensitive Component of Digital Transformation.

To understand the concept of the curve of time in digital transformation and fully grasp the fact that as time goes by the advantages get reduced, you need to understand the concept of “barriers to entry” and “differentiation benefits”.

Differentiation is having something your competitors don’t, and this gives you a competitive advantage.

On the other hand, the barriers of entry concept is the obstacles or risks that stand between potential adopters and the adoption of something, in this case a digital transformation plan and process.

As more and more time goes by, more and more people adopt as the entry barriers decrease.

Having said that, as more competitors evolve or adopt a certain piece of technology, the less competitive advantages you’ll have because your competitors start having that differentiating technology as well.

It’s quite simple when you grasp these concepts.

As Costs Decrease, So Do the Advantages Reaped:

At the same time, costs of new technologies usually decrease, but this means even less barriers of entry – in this case the financial barriers.

Again, less barriers means more competitors, and more dogs to the same bone means less advantages being reaped.

This happens unless the thing you’re after isn’t marketing points or competing advantages but productivity increases.

If you’re just looking to increase productivity, then you will get them as well, but even so these mean less because you won’t be producing faster than your competitors, you just won’t be producing slower.

Bear this in mind when considering digital transformation and when to jump at a new plan or technological device / practice.

More Players Means More Risks: Increasing Number of Adopters

Increasing the number of adopters means that more risks come up into the picture, and this is mainly true for risks of not taking the leap.

If people all around you are adopting a new technology or method that you still don’t have the means to achieve, then you’ll start getting obsolete, and nobody wants that.

You’ll start running the risk of being the slowest, of being the least innovative, of being the least productive, and so forth.

This is something straightforward and we don’t thing you need a more detailed explanation, although if you think we were too vague you can ask us any questions down in the comments section and we’ll answer as soon as possible.

Priority is Efficiency? Is it Marketing? Is it Positioning?

One of the most important things you need to gauge to decide when to jump at the bandwagon is deciding on your company’s priority.

Why are you planning on making a digital transformation strategy? Is it to get more efficiency out of your supply chain? Is it to be positioned as an innovator or just to get some marketing advantages?

This influences the time frame in which innovations need to be adopted.

For example, you can’t decide to be a late adopter to a certain technology if you want to be perceived as an innovator on that area, and this is something worth considering.

The Adoption Curve: Don’t Jump in Before You’re Ready, Don’t Jump in Too Late!

Of course we don’t endorse you jumping into adoption before you are ready, as you can end up discovering you made a mistake as you don’t have enough funds or structure to support such an early change.

Of course jumping in late is also harmful so we must stress it all comes down to planning.

Plan by yourself or hire experts to do it for you, but make sure you try to have a comprehensive plan that adapts not only to your company but also to your company’s priorities.

We now hope you have a better grasp on the timing variable of the digital transformation plan and how time influences the impact such a plan can have in your business or even in your personal life.

If you have any questions, don’t forget to ask, and if you think planning is too much for you, then know there are a lot of companies willing to take that part out of your hands. It’s never a bad thing to hire an expert if you can afford it.