Digital transformation in the world of startups and SMEs

In recent years there has been a real revolution involving the world of start-ups and small and medium-sized enterprises. This revolution has, in its genesis, the advent of increasingly sophisticated and efficient technologies that have completely changed the way people not only think and act, but their needs and expectations as well.

In this constantly changing and evolving context, a key role has been played by the so-called digital companies, i.e. those companies that have undertaken earlier and better than others. A process of digitization of services and/or processes has led them in a very short time to become leaders in markets that did not exist before or overcome competition in sectors where market shares have remained unchanged for decades.

“Digital transformation is a process of using the latest technologies to do what is already being done, but better” (Deloitte, 2018). Digital companies therefore see innovation as a real opportunity for transformation rather than a mere technological challenge. Instead of aiming for an incremental adaptation of current practices, the goal has been to transform the way business is done within companies from the beginning.

The consequence of this is the digital economy has radically changed the way businesses are structured, from how they interact with each other to how consumers use goods and services or obtain information. Thus it undermines the traditional way of understanding businesses (Deloitte, 2008).

In 2015, TechCrunch, a well-known digital economy news site, noted: “Uber, the world’s largest taxi company, has no vehicles. Facebook, the world’s most popular media owner, does not create content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, has no real estate… Something interesting is going on.”

Bloch and Segev (1996) in their pioneering work “Leveraging electronic commerce for competitive advantage: a business value framework” anticipated the three ways in which the digital economy would transform the businesses of our millennium:

  1. improving direct marketing, taking advantage of customer targeting strategies and campaign optimization techniques such as growth hacking, which, unlike traditional marketing, focuses on generating revenue rather than creating brand/product awareness;
  2. transforming organizations, forcing people in them to adapt quickly to new technologies, products, services and business models, demanding greater flexibility from them;
  3. redefining organizations, their mission and the way they operate, through the implementation of the “lean start-up” methodology that favors experimentation over planning, customer feedback over intuition and iterative design over the traditional development of the “big design up front”.

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