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A few firms—the digital giants—are achieving powerful competitive advantages and exceptional growth from implementing digital technology. But many other large firms that are also investing heavily in digital by recruiting IT specialists and introducing advanced technology—including artificial intelligence, cloud computing, machine learning and algorithmic decision making – are nonetheless finding the results disappointing.
Firms must realize that digital transformation is only partly about learning to adopt potent technology. The chief obstacle to successful digital adoption is the resistance to change the fundamental way a firm is managed—one requiring a transformation from industrial-era management to digital-age thinking and management.
The emerging digital age
Earlier this year Microsoft CEO Satya Nadella offered a panoramic picture of the emerging digital age.[3] He noted that the world’s digital economy is now equivalent to 16 percent of global GDP, and growing two and a half times faster than global GDP over the past 15 years, Nadella’s presentation showed that digital is not just “Big Tech.” It is infiltrating and transforming every aspect of our lives, our work and play, our organizations and our society.
“We are living,” he explained, “through a generational shift in our economy and society. Digital technology is the most malleable resource at the world's disposal to overcome constraints and re-imagine everyday work and life. As every company becomes a digital company, they need a distributed computing fabric to build, manage, secure and deploy applications anywhere.”
How digital and physical worlds intertwine
What does this mean to business decision makers? Nadella foresees that implementation will include “extending our infrastructure to the 5G network edge, helping operators and enterprises create new business models and deliver ultra-low latency services closer to the end user.”
He anticipates that, as the digital and physical worlds become integrated, artificial intelligence will increasingly direct the operation of smart factories, smart buildings and smart cities. This means digitizing people, places and things in order to visualize, simulate and analyze any business process.
This can enable “every organization to turn its data into predictive and analytical power,” according to Nadella. It requires “removing traditional barriers between enterprise data warehousing and big data analytics, so anyone can collaborate, build and manage analytics solutions.”
Nadella believes that it will enable “organizations to achieve a more complete understanding...