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If your business operates in an industry where strict protections may keep digital dis-ruptors from growing too fast, then you should use that competitive advantage to move up the Stairway, as you closely monitor the evolution of the market context. Remember, markets can suddenly pivot, so you also have to anticipate the future. To this end, executives should regu-larly engage in scenario planning.2 STEP 2: ENSURE DIGITAL COMMITMENTUnderstanding market forces is a necessary first condition for digital transformation to happen – but it is not enough. The next important step 18FIRST QUARTER 2017 ISSUE 32This document is authorized for use only in Ted Katagi's Digital Transformation F2020 at NUCB - Nagoya University of Commerce & Business from Dec 2020 to Dec 2020.
3 Steps to Market-Driven Digital Transformationis for the executive committee and board of di-rectors to be unequivocally committed to the change. To achieve this “digital commitment,” we find the following factors help.LEADERSHIP.CEOs, with the support of their boards of directors, must be capable of commu-nicating their digital vision to their companies. In organizations where digitalization runs the very real risk of cannibalizing existing revenues, this may be a hard sell. For other organizations where the digitalization trend is not as pro-nounced, leaders will have to convince others of the need for change. One executive from a family-owned busi-ness told us, “The members of my board largely feel that the digital world will not impact our business. Why all this need to go digital when we sell industrial furnaces?” Yet this same ex-ecutive also felt that furnaces were digitizable, perhaps by connecting them to the cloud to measure their eﬃciency, and then starting to sell solutions instead of products. A good leader who understands market trends and can imagine the future will be able to set the direction and speed of transformation.STRATEGY.There is no universal digital strategy, but the digital dimension will inevitably affect any strategy. The CEO of a major seed producer explained how farmers were using new technologies to control their crops. They would get informa-tion about new varieties of seeds online, watch tutorials on YouTube, and monitor weather forecasts and control irrigation using their smartphones. Although these may seem modest changes, they have led the company to change its dis-tribution strategy, increasingly connecting di-rectly with end consumers rather than relying entirely on an extensive network of distributors. Even “small” shifts such as these pose signifi-cant strategic risks, illustrating how meeting the needs and demands of customers will involve some degree of redesigning existing strategies. INNOVATION MINDSET.