Decoding Digital

Understanding How Digital Giants Survive and Thrive with Ray Wang

By Ideas @ AppDirect / September 14, 2021

What does it take to compete against digital giants? The CEO of Constellation Research Inc., Ray Wang, shares the patterns and qualities that create leaders in the digital transformation space.

Ray is the Founder, Chairman, Principal Analyst, and CEO of Constellation Research Inc. His book, Everybody Wants to Rule the World: Surviving and Thriving in a World of Digital Giants, looks at what makes a digital leader and crucially, how to compete against them.

In this episode of Decoding Digital, Ray talks to Daniel Saks about the current landscape of digital transformation, what the challenges are, and how even struggling startups can follow in the footsteps of today’s digital giants.

Hit play to hear the podcast episode or read on to find out more.

Ray had big ideas about how trends around digital channels and businesses work and, in 2010, Ray founded Constellation Research. The aim was to fill the hole in the marketplace of research advisors to high-end, early-adopters of innovative, digital businesses.

At the same time, Harvard Business Press approached Ray to write his first book, Disrupting Digital Business. The key theme of the book was about how it takes much more than adopting digital channels, such as a website, to digitally transform your business – it requires rethinking the entire business model.

Ray says that businesses wanting to digitally transform needed to look beyond the channels they were using and see how other factors, like data, played into the equation. But Ray also noted that businesses needed to understand the humanity behind making this change and involve what he called “digital artisans” in the transformation process.

“Culturally, a lot of organizations just weren't ready. They didn't have digital artisans. They didn't have folks that could balance the right brain left brain capabilities. They couldn't figure out that science, tech engineering, math had to get paired with empathy and ethnography offers and design and creatives.”

Ray’s first book was published in 2015, in what he dubs “the early world of digital business”. He suggests that it wasn’t until three years later, that boards finally started to “get it”, and more successful digital transformation started to happen.

Why disruptive periods lead to an increase in entrepreneurship

Ray recalls the difficulties of founding Constellation Research during a recession but notes how a lot of companies who spotted and pursued an opportunity in that disruptive period went on to realize big goals.

He believes it’s the startup mindset – an almost cult-like self-belief – which drove success for many of these companies. They knew they were going to dominate the market or transform the space and had to think long-term because of the drastic uncertainty in the short-term.

Just like after the recession, Ray suggests that in 12-18 months after the pandemic, we’re going to see another insurgence of new companies making huge waves in the digital landscape. But what is it about these disruptive periods that generates so much creativity and leads to entrepreneurship?

Ray says it’s introspection. In periods of great change, people often look at their lives and revaluate where they want to be in the future. They then make decisions which set them on a new path, such as becoming an entrepreneur.

How creative acceleration impacts digital transformation

Ray believes that an important part of digital transformation is the exchange of ideas which can accelerate the movement from concept to completion. He calls this “creative acceleration”.

“Creative acceleration actually happens with a common set of ideas, the density of ideas and the random collisions that occur. That's kind of how this technology innovation has been built. It's just these networks of networks that get passed on.”

Pre-pandemic, creative acceleration happened when these “random collisions” took place at events, conferences, even parties. With the pandemic disrupting traditional networking events, it’s harder than ever to have these serendipitous moments. Ray says it’s putting people, and companies, at a “huge disadvantage”.

Ray does point out that now, because we’re less reliant on all being in one physical space to exchange ideas, new innovation centers are emerging across the US and the world. However, physical interaction is still as important as ever for innovation.

While this belief may seem contrary for a leader in the digital transformation space, Ray believes that in-person communication is best for generating ideas, creating meaningful relationships, and much, much more. Both digital and in-person communication can and should co-exist, but often one type is better suited to certain situations.

How to survive and thrive in a world of digital giants

In 2018, Ray started writing his latest book, Everybody Wants to Rule the World: Surviving and Thriving in a World of Digital Giants. Ray spoke to the top digital transformation experts to find out how successful their projects were and what others could learn from their experiences.

After speaking to hundreds of experts, some patterns started to appear. Although some companies possessed all the funding, governance, and technology they needed to digitally transform, executing their overall strategy was unsuccessful.

So Ray looked to the new class of digital giants. Not the typical ones like Facebook, Apple, Netflix, Amazon, etc. but instead the more agile leaders in the space like Airbnb, Roblox, Robinhood, and Uber Eats, to understand what these companies did that the others were missing.

Ray learned that there were five key attributes all digital giants possess:

“Digital giants do five things really well: they disintermediate customer account control, they compete for data supremacy, they build the largest networks, they understand digital monetization, and they're in it for the long haul.”

So how can startups compete against digital giants like these? One option, says Ray, is to partner with other companies. He suggests partnering with other likeminded businesses can help you leverage the capabilities it would take to compete against the big players in the space.

Ray sees four themes emerging when businesses come together in this way. The first is a desire to fight against a common enemy, the second is a drive to take the entire value chain, the third is expanding across industries and the fourth is finding a way to do good, such as sharing information and data to get better outreach and accomplish their mission.

Effective strategies for digital transformation

After analyzing so many digital giants, Ray discovered a life cycle that organizations follow in order to transform. This life cycle starts from the initial business idea, then figuring out your mission, your purpose, and hiring a team to support that. The next part is creating a minimum viable offering and building out the markets. From here, you go public.

Ray notes that after this stage, businesses can go stale, forgetting what they’re building. So you need “turnaround catalysts”. These are usually investments or people that allow you to bring new technology into the game, and digitally transform.

One company Ray suggests paying close attention to is Walmart. He notes how their huge shift from viewing their customers as just customers, to members, and part of something much bigger, means that they’re not just competing with Amazon for commerce, but are transforming into a successful digital business.

When it comes to being a transformative entrepreneur, Ray says there’s one quality that’s vital: empathy. There’s enough opportunity in the digital space to go around, and those who operate with an abundance mindset are more likely to succeed than those with a scarcity mindset.

“In a digital world, things are infinite. The possibilities are infinite, the opportunities are infinite, you know, the ability for inclusion is infinite, the ability to actually make money is infinite.”

Between change agents, digital artisans, and a business set up for innovation, digital transformation is primed to happen. For Ray, it’s all about putting the correct pieces of the puzzle together.

To find out more about frameworks for digital transformation, listen to the full conversation between Ray and Daniel Saks on the Decoding Digital podcast.

Check out the Decoding Digital podcast series for more insights from inspirational thought leaders and digital innovators. You can listen to the podcast on your favorite podcast app, including Apple Podcasts and Spotify.