Digital is real and requires companies to undertake a set of fundamental changes to ensure their long term survival. But be warned, digital transformation projects are nearing a period of intense scrutiny.

According to Gartner’s global head of research Peter Sondergaard, digital 12 to 18 months away from the ‘trough of disillusionment’.

“It is highly likely that 12 months from now — if not that then 18 months from now — we will go into the trough of disillusionment regarding digital. Because large parts of your organisation will be frustrated with the speed of how things have changed and will start to argue, ‘There’s nothing to this’,” Sondergaard said during a speech at an Australian Institute of Company Director’s lunch in Sydney last week.

The trough of disillusionment is a phase on the Gartner Hype Cycle which all technologies pass through. It represents the disappointment that follows the ‘peak of inflated expectations.’ On the other side of the trough is the ‘plateau of productivity’ when the tech becomes mainstream and starts to pay dividends.

The challenge for digital leadership is to pre-empt this doubt and manage through a period of their strategies and choice being questioned, Sondergaard said.

“Digital is real. Digital is actually something that requires a set of fundamental changes,” he said.

Sondergaard recommends focusing on five elements: the technology platform, user experience, integrating physical and digital assets, putting data at the core of what you do, and understanding your operating model in a digital ecosystem.

“If you do nothing, I can promise you that five years from now Google, Amazon, Facebook, Baidu, Tencent, will end up owning at least 20 per cent of all digital transactions globally,” Sondergaarden said.

“That’s all digital transactions and not just the financial transactions. The customer interactivity that happens, they will own it. Meaning, if you do not have an approach to what you want to be, you’re already starting to fall behind because you will now be governed by what they want you to do.”

Although the technology exists to change almost anything you want, organisations should focus on leadership, culture and attracting talent, Sondergaard said.

“Digital is about leadership, culture change and the right talent.”

Sondergaard argued the ideal leadership is going to be “schizophrenic” — individuals or teams that can manage secure, scalable operations at the same time as being innovative, creative and agile.

“That is rare and that is something that I believe we need to look at developing in organisations in the next five years, because it is going to be the most valuable part of what you will be able to do from a change perspective as we go into this,” he said.

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