Ann Xiao Peng, Vice President of Ali Research Institute: An article talks about eight key issues of digitalization.

"I would rather transform and upgrade to death than live in the old way", which is a sentence from Diao Zhizhong, chairman of Guanglianda. To some extent, this represents the true voice of many entrepreneurs who are exploring digital transformation.

A great change is going on: "Digitalization" and "Digital China" are listed as one of the cores of the Tenth Five-Year Plan. The digital economy has swept all walks of life, and the gunfire of a new round of commercial marathon has sounded. Invisible innovation reshapes the business environment and endows us with rich imagination. Whether it is digital or digital intelligence, it has become a compulsory topic for almost every enterprise after the epidemic, and it has also brought many puzzles to entrepreneurs: Do enterprises have to be digitally transformed? How to digitally transform? What are the difficulties and pits?

This topic tries to attract more attention and show a silhouette in the digital tide. We specially invited an Xiaopeng, an expert in the industry, to explain the key issues of digital transformation in detail. We look forward to the emergence of excellent management samples and the opportunity to export China's management ideas and voices to the world.

(Note: The original title of this article is "Eight Key Issues of Digitalization of a Text", which was taken from the April issue of Zhenghe Island Decision Reference. )

Author: Ann Xiao Peng, Vice President of Ali Research Institute.

Logical starting point of transformation

Today, people talk about a series of concepts such as intelligent manufacturing, industry 4.0, industrial Internet, and digital transformation. The first question to consider is: What is the logical starting point of transformation?

Intelligence is the ability of the subject to respond to changes in the external environment. This subject can be people, machines, equipment, organizations, enterprises, etc. The core problem to be solved in Industry 4.0 and Intelligent Manufacturing is how to adapt to the changes in the competitive environment and customer needs. How to keep up? How to better meet customer needs? This is the logical starting point of digital transformation.

In the past, consumers pursued more functional requirements such as cost performance, product function and durability. Nowadays, young consumers not only pay attention to functional needs, but also pay attention to experiential needs such as content, service, participation, social experience, sharing and communication. The needs of consumers have changed. Can our supply keep up with the changes in consumer demand?

Coping with the rapid changes in demand is a challenge brought by the epidemic and a basic problem that must be solved in digital transformation. In the next decade, the major challenge facing enterprises is how to face the rise of consumer sovereignty. More than a hundred years ago, Ford said, "No matter what consumers need, the cars I produce are all black." In 20 19, during the "Double 1 1 See China" activity, the president of L 'Oré al China said, "When I entered China 22 years ago, there were a thousand faces in the beauty industry, and now there are a thousand faces." This is the change of market customer demand we are facing today: personalization, scene, real-time, interaction and content.

For an enterprise, the core problem of digital transformation and its solution is: how to meet the massive, fragmented, real-time, multi-scenario customer needs.

The essence of digital transformation

There are many new concepts about the digital transformation of enterprises in the industry. Sometimes there are too many new concepts, which also causes "new concept smog". We need a "smog purifier"; We need telescopes to see the overall situation of digital transformation; We need a microscope to see the details of digital transformation; We also need a CT machine to see the essence of digital transformation.

For entrepreneurs, the problem to be solved in the face of epidemic situation and digital transformation is essentially a problem, that is, how to face uncertainty.

Only by deeply understanding the uncertainty can we deeply understand the essence of digital transformation. Uncertainty comes from people's limited cognitive ability under information constraints. Dealing with uncertainty is an eternal challenge for mankind. The essence of digital transformation is to solve the uncertainty of complex systems through the automatic flow of data, optimize the efficiency of resource allocation and build a new competitive advantage for enterprises in the world defined by data+algorithm.

Regarding the digital transformation of enterprises, both the United States and Germany have new concepts of "new technology" and "integration of real economy". The National Institute of Standards and Technology (NIST) put forward intelligent manufacturing, which solved three basic problems: customized service with greater differences, smaller production batch, and unpredictable supply chain changes and interruptions. These three problems boil down to one problem, that is, how to face uncertainty and make real-time response.

The concept of Industry 4.0 was put forward by Hof Institute in Flawn, Germany. The logical starting point of Industry 4.0 is to adapt to the rapid changes in the competitive environment. The initial intention of digital transformation is how to deal with change. The market has changed, users have changed, products have changed, and technology has changed. How can enterprises adapt to the rapid changes of market+users+products+technology?

This epidemic is a review of the digital transformation process of enterprises. In essence, both coping with epidemic situation and digital transformation are aimed at solving the same problem: how to make decisions in an uncertain world. During the epidemic, entrepreneurs such as Liangpin Shop, Red Dragonfly and Lin Qingxuan found a breakthrough in adversity, which reflected the core elements of digital transformation, namely consciousness+platform+tools+organization.

Enterprises should have the consciousness of digital transformation, establish the concept of consumer operation as the core, and establish new concepts such as omni-channel marketing, online and offline integration, and digital drive; The challenge for enterprises to effectively cope with the epidemic lies in the cloudization of business and the establishment of data centers and business centers; Enterprises should also have digital tools such as nailing; It is necessary to realize organizational online and collaborative online, and to create a self-organizing mechanism.

A question that all organizations should think about.

In the face of uncertainty and digital transformation, all organizations should think about one question: how to switch from the organization in the industrial age to the organization in the digital age?

Many times, in the face of the ever-changing market, it may not be wrong for enterprises to operate according to their original working methods and ways of thinking, but in a highly uncertain environment, mistakes are inevitable. The inertia of organizational behavior based on certainty is the chief culprit in dealing with unexpected events. There is a key in the internet competition strategy: high frequency plays low frequency. The difference between an organization's normality and emergency is that the normalized low-frequency decision-making mechanism cannot meet the high-frequency decision-making needs in emergencies.

How to construct an organization's high-frequency, multi-center and short-link decision-making mechanism is the only way for an organization to switch from the industrial age to the digital age.

How to rebuild new organizational cells in the digital economy era? Behind the emergence of new organizations are value orientation and interest orientation. As Zhang Yong (Chairman and CEO of Alibaba Board of Directors) said, most of the coordination problems are not attitude problems, but the design of production relations is not in place; It is against human nature to expect everyone to work together in a distorted production environment.

Rethinking the Motive Force of Digital Transformation

In 2003, Nicholas Carr, former editor-in-chief of Harvard Business Review, started a big debate in the United States. The core issue of this debate is whether IT technology is useful to enhance the competitiveness of enterprises. This problem will appear every few years. Facing the reconstruction of global digital infrastructure, we need to rethink the driving force of digital transformation.

We see behind data centers, business centers, micro-service components, industrial apps, etc. , is the starting point of our understanding of digital transformation-the first is cognitive transformation. We say that "technology is the primary productive force" and "system is more important than technology", but the most important thing is cognition and concept. Secondly, the difference in our understanding of digital transformation today lies not in whether we are willing to embrace change, but in the speed and way of embracing change. Do we have long-term thinking, do we trust young people, and do we have the determination to promote cultural change? Furthermore, digital transformation is a marginal revolution. For an enterprise, what matters is not what it has done, but what it has done compared with its competitors, what customers really feel and what new capabilities it has built.

Before talking about the driving force of digital transformation, entrepreneurs' thinking angle is: how high is the input-output ratio of digital transformation? Is there any risk? How many risks are there? If the risk of digital projects is too high or the industry is uncertain, the pace of investment will slow down.

Today, let's think about the problem from another angle: if we don't transform, what will be the loss? In the absence of digital strategy, the risk is certain, which can be summarized as the following five aspects: market out of focus, marketing aphasia, management imbalance, system failure and growth stall.

Basic contradiction of digital transformation

Entrepreneurs are facing all kinds of puzzles and challenges in the process of promoting digital transformation.

According to the survey organized by Harvard University, the challenges of digitalization are legacy systems (52%), information/data islands (565,438+0%), insufficient cooperation between IT and business lines (49%), risk-averse culture (47%), change management ability (46%), lack of digital corporate vision (39%) and lack of talents/. Germany put forward Industry 4.0, and the core problem is three integrations (horizontal integration, vertical integration and end-to-end integration). However, the China Municipal Government has put forward the deep integration of industrialization and informatization, and the core challenge is how to apply it in one direction. The question is, what are the reasons behind these challenges?

The report of the 19th National Congress of the Communist Party of China pointed out that the basic contradiction we are facing is the contradiction between the people's growing need for a better life and the unbalanced development. We throw this question to digital transformation: what is the basic contradiction of digital transformation? We think it is the contradiction between the demand for global optimization of enterprises and the supply of fragmentation. There is no parallel line between digital input and income of enterprises. Only when the digital input exceeds a certain critical point of integration will the income increase exponentially.

The Fifth Discipline once said, "Today's problems stem from yesterday's solutions." Looking back on the development history of IT in the past 60 years, we can see that it is a fragmented supply history, and these solutions are all aimed at solving a point problem. But today we need not only the main points, lines and areas, but also an ecology, which is a problem we are facing in digital transformation today.

Transformation from enterprise digitalization to digital intelligence

Digital transformation is not a new topic. From the perspective of long-term technology, enterprise transformation can be divided into two stages: from digital transformation stage to digital transformation stage. Digitalization is a process of business data. Enterprises in China started in 1990s, and experienced two stages: traditional software installation period and online consumers. At present, enterprises are entering a new stage of digital intelligence transformation. The cloudization, centralization and mobility of infrastructure will promote the transformation of enterprises from business dataization to data business, from single-wheel drive to two-wheel drive, and finally realize the digitalization and intelligence of the whole link.

The first stage: IT stage

Keywords: installation

By installing various information software such as office automation (OA), enterprise resource management (ERP), supply chain management (SCM) and customer relationship management (CRM), enterprises build a single-point business link information system, comprehensively optimize the enterprise's R&D, production and business processes, improve management efficiency, and lay a solid foundation for further digital transformation.

The second stage: online stage

Keywords: online

The revolutionary changes brought by the popularity of the Internet to the business world mean that the business system has entered a new era-online era, and the business world has realized large-scale and multi-scenario closed-loop service optimization. With the iteration of 3G, 4G, 5G and other mobile Internet and Internet of Things technologies, new services such as e-commerce, social networking, mobile payment and online car rental are constantly emerging, which promotes the online of consumers and shops, commodities, organizations, management and services.

Phase 3: Cloud-based phase

Keywords: reconstruction

The intelligent technology community represented by cloud computing, Internet of Things, artificial intelligence, 5G and digital twins is building a new commercial infrastructure, and the next 5 10 year will be the "installation" and service delivery period of the new digital infrastructure. IT infrastructure and enterprise application software are accelerating cloudization, and a large number of cloud native technologies are constantly emerging. Accelerate the construction of data centers, business centers and AIoT centers, eliminate data islands, promote data services, and promote the sharing of resources and capabilities within enterprises.

Stage 4: Two-wheel drive stage

Keywords: operation

With the help of the traditional IT infrastructure based on cloud, AIoT, intermediate platform and mobility, the enterprise continuously opens up online and offline, internal and external, consumer and supply-side data, and intelligently reconstructs the supply system and value chain system of supply-side brands, marketing, R&D, channels and manufacturing based on consumer-side data to build a total factor operation system of people, goods and markets.

Stage 5: Full Link Digitization Stage

Keywords: innovation

Taking consumer operation as the core, we will realize the data intelligence of consumers and suppliers in all factors, all scenarios and all life cycles, establish an enterprise intelligent operation and decision-making system, constantly promote enterprise product innovation, business innovation and organizational innovation, and build a strong competitive advantage. In short, if the enterprise digital transformation is based on IT technology, architecture and PC, then the enterprise digital intelligent transformation is based on DT technology, architecture and mobile. The core of digitalization is business data, and the core of digital intelligence is data business. From digitalization to digital intelligence, it is the reconstruction, migration and switching of new digital business infrastructure, and it is also the ecological reconstruction of digital business with consumer operation as the core.

Ultimate digital version

Imagine what the development trend of information and communication technology will be in the next ten, twenty and thirty years. Or let's think about a question: what is the ultimate digital version? From the future, the technologies we see today, such as the Internet of Things, big data, cloud computing, artificial intelligence and industrial software, are all fragments of the ultimate digital version of the future. The process of development and application of ICT technology is the process that we constantly put this fragmented module into a complete version. We are all puzzles.

10 years ago, Musk published an article: Why America Can Beat China: Facts about spacex Cost. Today, Musk's space exploration technology company has reduced the launch cost per kilogram of rockets to 1/7 20 years ago. Today, the development cycle of aircraft, high-speed rail, cars, tanks and other complex equipment is half that of 20 years ago. This is because the methodology of human society to understand the objective world has changed from theoretical reasoning of "observation+abstraction+mathematics" and experimental verification of "hypothesis+experiment+induction" to "simulation optimization" based on digital twins.

The future world is a digital twin world, that is, the orbit of atoms is reconstructed in the Wang Yang of bits, which will drive the digital twin in cyberspace to approach the real physical space infinitely, and the optimal allocation of resources based on "physical entity+digital twin" will become the basic form of digital economy.

The significance of the digital twin world lies in the construction of the operational framework and system of the material world of the bit world and the new system of large-scale cooperation of human society. This process will be from atoms, devices, machines, buildings, cities to the earth, from genes, cells, organs, human bodies to the biological world, from digital twin hearts, digital twin planes, digital twin buildings to digital twin cities. We are all on the road of building a digital twin world, which will lead enterprises to the road of zero-cost trial and error.

Three changes in enterprise thinking

In the face of the great changes in digital transformation, how can enterprises transform? Enterprise thinking needs to realize three changes:

1. Deal with all kinds of uncertainties with the strategy of constant response and constant optimization. Enterprises need to use the strategy of data+algorithm to deal with uncertainty, abandon redundant thinking and static thinking, and move towards precise thinking and dynamic thinking.

2. To build new capabilities by incremental revolution and digital transformation of enterprises is to finally transform software, equipment, process optimization and management changes into new capabilities of enterprises. This is the starting point and destination of digitalization.

3. From product manufacturers to customer operators, manufacturing enterprises should become industrial product suppliers, establish a "strong relationship" with customers through products, and become "customer operators" who can be online 24 hours a day to understand, predict and meet customer needs.

Today, for most enterprises, digital transformation is not because they like change, but because they have to make transformation. In the era of digital economy, what entrepreneurs should do is not to exclude new things, not to blindly follow, and to actively embrace the new digital world.