Not all companies are set up with the goal to expand, grow, and dominate a market space. Many small-to-medium businesses (SMBs) on the “smaller” end of the spectrum are lifestyle businesses―companies that are set up with the goal of providing a particular level of income for the founders and owners. Now, this does not mean that the lifestyle cannot be large. Many lifestyle SMBs bring in millions in dollars of profits.
Scalable businesses are established to move beyond their founders. These are companies that started small and developed a strategic growth model that was able to replicate and expand without limitations. These companies have quickly adopted cloud-based systems, built revenues based on digital commerce platforms, utilize emerging technologies, such as the Internet of Things (IoT), and view data as a second language. In other words, they undergo constant digital transformations.
“Lifestyle” and “scalable” are both relevant and practical business strategies.
The Role of Digital Transformation to a Scalable Business
Almost 75 percent of growing companies realize that digital transformation will impact their business, but only 17 percent are harvesting benefits from any digital transformation efforts.
Digitally transforming your business is not a “one and done” exercise. Benefits can gather momentum slowly, but, once that momentum is gained, there are exponential benefits regarding costs, efficiencies, and expansion. And that allows scalable growth companies to compete in a variety of ways, all while keeping their costs in check.
However, digital transformation does not need to be a process of “ripping and replacing.” There are plenty of opportunities to deploy digital technologies into your traditional strategies.
Here are three suggested lessons from today’s market realities to help you see the possibilities:
- Support your market instinct with data and analytics. A midsize east coast research company recently undertook projects to understand why their customers were—or were not—renewing contracts. Up until that point, management had emphasized on-site, in-person customer visits. Through surveys and a detailed multi-variate study of customer engagement data, the company discovered that the most inexpensive and frequent customer interactions (such as downloading content off of the customer portal and attendance at company-hosted regional events) were highly correlated with contract renewal. New programs were launched to drive content and event participation—leading to a 14 percent contract value growth the following year.
- Trust the cloud. SMBs have plenty of opportunities to adopt lower-risk cloud-based applications. And company leadership is beginning to understand that. SMB purchases of cloud and hybrid-cloud application deployments are surpassing purchases of on-premises software applications for collaboration, BI, e-commerce, and IT infrastructure. Further, security fears over public cloud deployments are not as much of a concern as they have been in the past. Cloud service providers can update security measures faster and more thoroughly than individual firms. In fact, many of these fears may be exaggerated. Recent research has discovered that through 2022 at least 95 percent of cloud security failures will be the customer’s fault, resulting in lost opportunities and inappropriate spending.”
- Reduce costs by optimizing operations with digital technologies. To deliver value with digital technologies, you don’t always have to replace/expand your primary source of revenue or re-architect your business. Even in manufacturing businesses, there are opportunities to reduce manufacturing times, delivery times, and increase worker productivity. A mid-sized fruit processing company recently installed digitally-automated equipment “without a single additional hire and increased production by 50 percent.” Now that is scalability. This connected technology provides real-time feedback to all 900 employees, providing the information necessary to make quick decisions and act accordingly.”
SMB executives can learn valuable lessons and trends from scalable companies who have embraced digital technologies. Through BI/analytics, cloud-based applications, and optimizing operations even the small-to-medium ‘old dogs’ that have been around for a long time can learn new tricks.