Digital native startups are nimble in their approach to business. And this is getting larger and older legacy companies to rethink their strategies to be able to compete with their new rivals. Mario Faria, Vice President, Gartner Research Board, speaks with Robert Lutton, Vice President, Sandhill Consultants, about the coordination between digital and analyst capabilities, and the need for legacy companies to adopt a start-up mindset to compete.

Faria kicks off the conversation by highlighting various ways how digital data and analyst capabilities coordinate to bring about a truly transformational outcome. In his view, digital and data analytics are not two different things. He says that they are just different facets of the same topic and are important areas that organizations need in order to operate better.

“How can you transform anything today without digital technologies? And how can you look at problems or how can you establish metrics that you’re going to be tracking if you do not have the right data or the right KPIs to measure? It’s all about digital and data analytics coming together to make a difference,” Faria adds.

He goes on to paint the same picture in a different light, introducing them to ‘digital native companies’ — a term often used at Gartner. Unlike legacy companies, these were born and created with a digital spirit. And since they were born that way, they are driven by that mentality.

“What we are seeing now is that nondigital native companies, such as transportation, banks, and insurance, are trying to beat or emulate the behavior of a digital native company,” Faria says. “To do that, they think like digital natives and use the start-up mindset: test, and if you fail, you learn something new that you’re not going to do again. So, it’s about putting all things together on AI, machine learning and also data management, and looking at what technologies are going to be put together to promote the change.” 

He further breaks down the concept of digital native companies and organizations. He explains that these are companies such as the new fintech, insurance tech, and various other segments such as health tech and the smaller companies that are trying to find their foothold in the market. But since they are new, they were created and introduced to this world without the legacy mentality of the existing larger companies, Faria notes.

Sharing his experience working with many large enterprises globally, Faria discusses the digital transformation trends that are working and are currently being developed. He says that with the advent of cloud computing, even the smallest companies have access to the same technology as the large ones. Similarly, data is spread out and accessible, and there are a lot of new techniques to drive analytics, AI, and machine learning toward more public availability.

“So what companies do so well is first, they don’t start with technology. They look at customer issues as a first consideration. Also, they have a clear roadmap of what they want to achieve. They go into small steps first, but they have a larger objective that they want to achieve. They are so metrics-driven. It’s impossible for you to go on to become a digital native or triangulate that behavior if you don’t use metrics all the time,” he adds.

He however maintains that sometimes some of the efforts do not perform well or bear fruit because the organizations involved treat digital transformation as a technology project, there is no business buy-in, or there is a lack of executive support. Also, sometimes there is no change manager involved in the transformation.

Faria cites a recent example of Heineken where the company was able to transform the supply chain by installing sensors in the refrigerators at the venues where they sell their products. The data was then integrated with the cellphones of sales representatives. By doing that, Heineken was able to have an overview of the whole supply chain of their products, at scale.

“The project was driven by their IT organization. They are able to emulate the behavior. They thought about that initiative without any boundaries, they started it as a small proof of concept. It went well and they scaled it up. So any non-digital native can emulate the behavior if they are able to tap the right opportunities to drive that change,” he signs off.