What is a digital business?

Exponential technology change is increasing the rate that digital disruption is impacting on  business models and organisations.
The impact on businesses that are not born-digital can be highly problematic, as I have written about before.
For medium to smaller organisations the challenge can appear overwhelming - where on earth do you start and how do you avoid joining the club of failed digital transformations?
A useful way to clear away some of the noise is to begin by defining how businesses respond to digital - and what that means for their culture & people, operating model and infrastructure strategies.

In this model there are three strategic transformation choices to respond to digital:

1. Engage with an existing or new customer base through a digital distribution strategy. The channel is often siloed and run by a "digital department" and exists alongside other channels and often supported by manual processes.
2. Allow digital to drive simplification and automation of the core business which in turn creates highly innovative customer experiences and Brand differentiation. Air New Zealand has been a digital pioneer in the airline industry and aspires to be leading digital airline globally.
3. Digital drives the business strategy. These are digital businesses where they operate a business strategy for a digital world, as opposed to a digital sub-strategy. Organisations currently succeeding in this have primarily been blessed by being born-digital and taking a tech company approach to previously non-digital markets, like Xero with accounting and Trade Me in marketplace and classified advertising, But the reality for businesses over the next decade is that to grow and thrive in a digital world they will need to transform into a digital business.