Beyond Marketing gimmicks: Digital Transformation and Internationalization
There is no doubt that digitalization has not just transformed the way businesses operate, but also in the way end user consume. This blog attempts to highlight that the approach to Digitalization should be different for different types of businesses.
Buzzwords always catch the fancy of businesses, big and small alike. SMEs and Entrepreneurs unfortunately, end up playing the catching up game, just in order to make the business sound more contemporary in literature. It is not uncommon from our experiences when we encounter business situations where SMEs or Entrepreneurs end up changing their narratives (pitch) to include buzzwords, just because the investors love to hear that. One of the many terms that has been popular among Investors is ‘Digitalization’.
The same terminology gets different versions and meanings depending on the motive and context. ‘Digital backbone’, ‘Digital Transformation’ are some of those terms. The inherent assumption behind Digital Transformation is that, it drives internationalization, eases scaling up and creates larger impact, which in turn improves valuation. However, there needs to be some introspection by SMEs, Entrepreneurs and Investors regarding the claim.
There is no doubt that digitalization has not just transformed the way businesses operate, but also in the way end user consume. This blog attempts to highlight that the approach to Digitalization should be different for different types of businesses. We broadly classify the businesses into a) Digital businesses and b) non-digital businesses.
If Digitalization drives Internationalization, then it is logical to conclude that all the businesses that operate digitally (eCommerce, travel portals, online tutoring etc.) are international by default. However, we know that is far from reality. Internationalization is much beyond digitalization and digital transformation.
Alternatively, we can also argue that multi-national presence necessarily calls for Digitalization. However, we also know from common knowledge, that many companies in the past (mostly) and present (to a smaller extent) still expand internationally, even without a strong digital backbone.
Maybe, in the dynamic international business scenario of today and future, calls for a much stronger digital backbone than before. Notwithstanding the business scenario, international value is created only when the value proposition is strong, and the consumers feel the need for the product/service. Our recommendation to the budding entrepreneurs and SMEs is, to approach digital transformation as a tool to improve efficiency of business, processes and speed. Approach ‘Digitalization’ as means to drive the business, and not the end by itself, because Digitalization per so has no meaning or value to the customer. It is the underlying product or service or experience that provides the value.
Remember, a digitally enabled company would be ahead of its competitors who are not enable digitally. However, the competitive advantage remains only till the others catch up. Some of the key factors that should not be ignored in the digitalized models are: value chain, internal capabilities, resource availability, delivery infrastructure, value creation methodology and customer interface.
We conclude by saying that social responsibility extends to digitalization as well. Therefore, businesses should pay attention towards digital responsibility as well while scaling up internationally.