‘Digital transformation’ is the transformation buzz-phrase of the moment but how
different is it to initiate, design and execute versus any other form of transformation? In this blog we consider whether Digital Transformation has changed any of the transformation fundamentals and offer some thoughts as to how you can make it successful.
What is Digital Transformation?
Digital transformation explores the art of the possible regarding new and emerging technologies and how they can be used to enable your business operations, reach customers and automate processes. Primarily, it should directly reflect how you wish to engage with, and deliver value to, your customers. It is about meeting changing business and market requirements with a revisioning of the ways we work, with our evolution and adaption being empowered by a Digital Strategy. And this is key, a Digital Strategy is not an island in a sea of business activity, rather it is an enabling component which oils the wheels of your operating model and its end-to-end processes.
Digital transformation offers the potential to integrate your operating model with customers, suppliers, regulators, employees and other stakeholders to create seamless digital interactions. In business terms, digital transformation allows you to reach more people, more comprehensively whilst doing so at lower cost. Readers who are old enough will remember something called ‘ERP’; you may recognise very similar positioning of those solutions in the nineties and noughties, to those of digital transformation solutions today. What’s different in the new digital world is the technologies: mobile apps, the Internet of Things, social media, Blockchain, big data, machine learning and artificial intelligence are at the vanguard of digital transformation.
As with any change enabler, companies use digital transformation as an opportunity to ask whether they are doing the right things, before they consider whether they are doing them in the right way. New technologies allow us to consider whether there is something brand new we can take advantage of, or some different way of thinking which may prompt us to act in new ways or become more efficient or effective.
Why is Digital Transformation different to Business Transformation?
In short, with the emphasis on the word ‘transformation’, it isn’t. Business transformation has always embraced the potential of technological gains to enable improved business operations and customer interactions. It has also constantly required business leaders to define expected transformation outcomes, working with technology teams to identify the art of the possible and the business benefits, potentially resulting in some of:
opening up new revenue streams, channels to market and commercia models
new or updated customer experiences with new ways to reach, engage and serve customers
ways to innovate and accelerate the development of your business: developing new products or services, reaching new markets, developing adjacencies, coordinating your supply chain
new, enhanced or automated business processes and enabling systems
changes in organisation culture required to compete, challenge, evolve and improve,
opportunities to reskill and reformulate your workforce
ability to improve regulatory / statutory compliance through improved control frameworks, automation, reporting and interrogation
The idea that digital transformation suddenly bring new or different thought processes to the table is debateable; many argue that it merely brings a new set of technologies which businesses can leverage in order to transform themselves. If one accepts that argument, it suggests that you should approach digital transformation with the same business outlook, rigour and disciplines that are used for other transformation programmes.
What Digital Transformation won’t help you with?
The French say ‘plus ça change, plus c'est la même chose’ – the more things change, the more things stay the same. This is especially true of all things transformation, digital or otherwise. The fundamentals you must get right for a digital transformation to be successful are the same as those required for any transformation success:
If you are doing the wrong things and you use digital transformation to make them more efficient, they remain the wrong things. Your operating model and transformation road map should be in place and demonstrate the need for the right outcomes to be produced as a result of digital transformation. Tip: align digital outcomes to transformation needs before you invest the technology
If your business strategy or operating model is poorly defined, a digital transformation will give you exactly what you’d expect – a poor result. It might paper over some cracks, but any transformation is likely to expose cracks before they can be fixed. Tip: like any transformation, the building blocks of strategy, operating model and business case still apply; don’t eschew for the shiny and new
Unless you have defined customers and clear business benefits which result from employing a new technology, think twice before you adopt early. Tip: let others do the piloting of new technology to absorb the risk and learn the lessons, particularly if your budget doesn’t extend to expensive write-offs
If you lead a transformation with technology as opposed to business need, you carry a major risk related to acceptance and adoption. Tip: business sponsorship for technology with a defined purpose is far more likely to succeed than technology for technology’s sake
Successful transformations are ultimately about people, irrespective of the technologies employed. If you can marshal the right people to do the right things you will be successful. Tip: strong transformation expertise is required for any digital transformation – success is not about making the technology work, it is about making customers happier and taking stakeholders to a better place.
Irrespective of which business function you are transforming, it is crucial to possess a complete understanding of your customer’s goals, the end game, and your transformation objectives. A digital transformation requires the same fundamentals as any other, the song remains the same.
How to make a success of Digital Transformation?
Given the technology-centric impression one might form about digital transformation, it is important to step back and ask yourself what your customer / stakeholder needs or wants. Their objectives should be your objectives. This is one of the building blocks you must get right before you can be confidently set up for success. Some of the others include:
Customer-centricity: strong sponsorship and accountability from the business function that is leading, should be coupled with excellent technology ownership for delivering change. Strong collaboration between the business and technology is critical. Tip: agree shared goals and principles across your digital transformation programme
A strong business case: should demonstrate clear points of business value, allowing key stakeholders to buy into the transformation and support it even when the going gets tough. Tip: challenging the case and the technology will drive out robust answers
Visualise the transformation road map, and socialise it widely to gain buy-in. The programme plan should show each phase, illustrates its value, call out the benefit realisation milestones, and identify the end point of the transformation. Tip: if there are uncertainties around a new technology, call them out and illustrate the risks to the roadmap to generate buy-in to doing something innovative
User pilot programmes: where new technologies are speculative or unproven before taking the plunge. Tip: time-box a pilot initiative and limit the exploration budget, requiring the team to report back findings before additional budget is released. If it easy to kill an initiative early, you probably should.
Change management: assess the cultural, customer and people impacts of digital transformation and produce a Change Management Strategy and Plan to implement organisational and cultural shifts. Tip: a Customer Engagement Plan is essential for managing and communicating with customers/users outside your organisation
Acquire the right skills: an experienced delivery team with the ability to challenge you and your team to do the right things is essential. Tip: as digital transformation is relatively new it is important to have people with broad business transformation experience alongside you to provide perspectives on good practices and risk management
Strong contracts with third parties: are required in order to ensure that everyone understands the plan, their deliverables and their commitments during the transformation and beyond. Digital solutions offer long-term flexibility and may require extensive support contracts, so it is important to select suppliers carefully, contract well, and have flexibility to change without major penalties. Tip: hire transformation experts with significant expertise in commercial contract negotiations to write favourable agreements
Effective governance: large, complex, risky transformations required an empowered transformation Programme Management Office to run and oversee the transformation on a day to day basis. Some say that Agile means that governance is less important but that view typically comes from software developers, not the customers of major transformation. Tip: governance is as important as ever and right-sizing/skilling the transformation management team is essential to success
One final observation is that digital technologies and accompanying methods, such as Agile, are geared to providing long-term flexibility. Whilst this provides opportunity to extend and promote the technology, it risks constant change and never-ending transformation. Change is a constant in business life, however perpetual transformation tends to morph into monolithic programmes which lose focus and forget why they existed in the first place. Tip: keep your transformation road map tightly aligned to business goals, ensure every phase or change genuinely adds value and, above all else, know when to stop.
Above all, it is important not allow digital transformation to become about technology for technology’s sake. There is nothing wrong with trialling emerging technologies but be careful not to invest in expensive technology that is searching for a problem to solve. Tip: ensure that business partners with the technology team to co-select the right digital technology, being aware of the opportunities afforded by new technology and the art of the possible.
Conclusion
Digital technologies might be emerging and moving more quickly than ever but the fundamentals of making business transformations work for you remain the same. If you can successfully disrupt yourself and implement well, at pace, there’s a high probability that you will generate game-changing results. To do so, digital transformation requires the basics - a strong strategy, well-defined outcomes, a great team, and superb execution……..as well as the technology which enables it.
Contact Claverton
To talk to us about your transformation needs please visit our website (www.clavertonconsulting.co.uk) or email us at info@clavertonconsulting.co.uk.
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