A Lookback at Digital in 2021

Welcome to 2022. What a year we have had! While it represented a crisis on many fronts, it also created once in a generation across digital from automation to digital supply chains to new digital customer experiences to blockchain and crypto literally everywhere.

I had so many learnings from this unusual year - I chronicled them in 30 episodes in my channel and in several articles in Forbes. Here are my highlights from a year that will go down as the most transformational in a generation.

Transcript

Welcome to 2022. What a year we have had! While it represented a crisis on many fronts, it also created once in a generation across digital from automation to digital supply chains to new digital customer experiences to blockchain and crypto literally everywhere.

I had so many learnings from this unusual year - I chronicled them in 30 episodes in my channel and in several articles in Forbes. Here are my highlights from a year that will go down as the most transformational in a generation.

I had no digital master plan. Things were moving too fast. In my posts last year I reflected on what was happening with clients, technology trends, and business results as they happened. So going back to those videos was a great way for me to review the year.

Here is the arc of my digital journey from 2021 as I experienced it. This is what happened.

Uncertainty accelerated digital transformation

It has become a cliche by now that COVID accelerated digital transformation for most of us.

What was profound about it is this. Any crisis increases our norm for the risk and uncertainty we are able to tolerate. Uncertainty raises the overall risk in the economy and therefore previously risky projects like digital don't seem risky anymore. Risk-free return plummets and risky projects become more attractive. So companies were more comfortable funding digital initiatives and they gained experience doing these projects well.

Businesses got better during the crisis 

With all the disruption of the last 2 years, the sick population, supply chain problems, government interventions, and transportation issues - businesses and the economy actually got better. Whether it is correlation or causation - digital transformation in the crisis coincided with a massive economic boom and unprecedented labor market. Surveys mid-last year showed that digital transformation played a key role in the great crisis response.

• 2/3 businesses were better off
• employee productivity increased
• 100s of billions invested in digital transformation
• Companies in one survey reported 15% growth in revenues
• and 24% reduction in cost
• massive economic and stock market boom, with unfilled job openings in the US reaching 10 million

With all the economic success, business focus also changed, Increasingly the back-office optimization gave way to better digital and mobile experience and more optimized and effective supply chain systems.

Companies Developed a Digital-First Mindset  (DIGITAL FIRST(

As digital projects got underway, businesses learned what worked and what didn't. Those that got the most success with their transformation realized they have a once-in-a-generation opportunity to leapfrog their competition. They adopted a digital-first mindset.

Many businesses realized that digital is not just technology. It is an opportunity to redefine their business model. How they interact with their customers and suppliers, the type of products they bring to market, how they adjust pricing and offerings based on market signals. Some companies got really good at this.

If digital is a business model then it was not enough to digitize existing functions but change the processes and scale the new capabilities. Under the pressure of the crisis it was easy to measure success. Digitized processes outperformed old processes. The C-suite often took ownership of the digital programs as one of the top initiatives for survival or outperformance. And those that missed the trend, an unprecedented number of businesses failed to innovate and were left behind.

The Crisis created a bigger gap between digital leaders and followers. Even in the same industries.  

This year was not business as usual. It was not a linear year. Things were accelerating. And due to this digital acceleration - leaders increased their lead and laggards fell further behind. There were companies that had subscribed to the fast follower mantra. Letting others take high-risk experiments and them follow once the path is clear. In 2021 the fast follower strategy collapsed. Fast followers fell far behind. Laggards lost access to the best talent in a tight labor market. Those people flocked to companies taking on exciting digital challenges, who were innovating, and yes, whose financial performance reflected their success.

Digital accelerated by 3-5 years by most surveys. That is how far laggards have fallen both in project results and talent acquisition. Many are experiencing a Netflix vs Blockbuster moment in their own industries.

All of this acceleration created a massive shift in the role of digital in many companies.      

Surveys showed that the majority of companies made digital transformation a top 5 strategic goal. They now expect these projects to create real business value. Digital transformation programs are evaluated like any other investment would on their impact on cash flow, profitability, revenues, and customer experience. Digital leaders no longer dabble with proof of concepts.

They also expect transformation projects to accelerate. One theme I heard over and over again from clients is that they expect COVID-related disruptions to continue in 2022 and they were ready to keep innovating further.

That includes innovating new business models and new digital products. They expect the fight for talent to solidify the leader's role, especially in a tight labor market. Laggards have a sense that they will have challenges hiring the talent to catch up.

Laggards however can catch up. Uncertainty is still high and so is risk tolerance. Now they have quite a number of proven transformation projects to emulate. Before the new normal truly settle is, everyone has a chance to make their mark and catch up. That window may close in a few months. Hard to tell.

Summary

2020-2021 have been the most impactful years of digital transformation. The old adage is still true. Crisis created massive opportunities. Some took advantage of them and others were hesitant.  The gap between leaders and laggards will increase further as the war for digital market share and talent continues.  In the next episode, we will look at my and other experts predictions for what that means for 2022 and beyond.

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