The Problem With Digital Transformation
Digital Transformation is on everyone’s lips these days, from cool new start-ups, to the mastodons of the corporate world. The business models of yesterday are changing, and disruption is happening in all industries, across all markets. The disruption is driven by new competitors, new ideas, new technology, new mind-sets and new cultural shifts that are making it more and more challenging for companies to stay connected with their customers and to just keep the business running as usual. ”Usual” doesn’t exist anymore. Almost every tech company, every consultancy firm and every digital agency talks the talk on Digital Transformation. But very few companies actually manage to walk the walk. So, what is the problem? Why is Digital Transformation taking so long? Well, let’s look at some of the problems that we encounter when discussing Digital Transformation.
- Inaccurate Definition
People and organisations (even the various consultants who sell Digital Transformation) have an unclear or vague understanding of what Digital Transformation is. It simply means different things to different people. To some, it means organising your data in a more efficient way within the company. To others, it means using digital as the main platform for marketing communication. Or perhaps it means implementing new technology first and fastest, or using IoT devices actively, or creating disruptive start-ups like Uber or Airbnb. And they’re all sort of right. Digital Transformation is a strategic process. The outcome will vary from company to company, industry to industry, market to market and strategy to strategy. Digital Transformation is the process to get to wherever your business needs to go in this new multi-facetted world, where linear strategies are doomed to fail. Digital transformation is about trying to find new ideas to drive tomorrows business, finding ways of creating a culture of ongoing innovation and creativity that is fully customer-centric. This sounds easier than it is, as it requires focus on truly understanding the customer, having people that really believe in change as a vehicle for driving growth, and top management that fully understands that in tomorrow’s world, standing still is equal to going backwards.
- Unclear roles and Responsibilities
Many organisations find it difficult to place the responsibility for Digital Transformation with the right person or department. Some believe it’s an IT responsibility (after all, it has the word “digital” in it.), others assign it to the CMO or a Digital Director within the marketing department, others again have a Chief Digital Officer (which still centres around digital marketing more than digital as a product and/or service), or they find someone else who understands digital, and assign the process to them. But like any change process that is of significance for the future of the business, the CEO must own the process, together with the rest of the C-suite. That doesn’t mean that the executive team has to come up with all the input and ideas to drive the change – quite the contrary – getting input and ideas from the customer-facing end of the business is crucial in a customer-centric process. Plus, many senior executives lack the cultural and technological understanding crucial to using technology as a growth driver – but when decisions must be made, the C-suite has tot take charge.
- Regressive culture
Most organisations don’t have a culture that embraces disruption and innovation outside the “designated innovation departments”. This is a huge mistake. Engineers. product developers, designers etc., are great at coming up with new product ideas, but the truth is that many products fail, as they are not rooted in an actual problem the consumer faces. And this is where Digital Transformation has to start – by looking at real customer problems, and solving them. That’s why disruptive players are successful – they have seen these problems and solved them. Don’t forget that ideas can literally come from anywhere. I’m not saying that any idea from anyone is the way to go. I’m saying that you need to create a culture of creativity and acceptance in the entire organisation. Employees (and customers even) should feel empowered to make suggestions to how the business can better adapt to the challenges of the future. Make harvesting ideas a core value of the business, and make sure others are exposed to the ideas, because as anyone who’s worked with ideas knows, a nugget of a small idea can become a huge idea if the team collaborates, and builds on each other’s input.
- Solution pushers
All companies that work in Digital transformation have something to sell you. They sell advice on how to solve your business problems for the future. But if that includes selling specific technologies, software, service contracts etc., you should be VERY careful moving forward. How can a consultancy possibly give unbiased advice, if they have an off-the-shelf solution in their inventory? They will always, every single time try to sell that specific technology – no matter what your actual needs are. Product pushers, are the biggest problem in the Digital Transformation industry, as these players lock clients to costly contracts, without necessarily finding the best solution for the problem they are facing. Its smart for the consultancy to do it, of course, but don’t make their battle for increasing their margins come at your expense. Keep your consultants and systems/software providers separate. You won’t regret it.
- Too much focus on technology
Digital Transformation is not primarily about technology. Sounds counterintuitive, I know, but it is a cultural and strategic process, where technology plays an important part. Don’t develop a strategy that is dependent on one platform, one set of technologies or a specific software solution. Create a strategy that is flexible enough to leverage the right technologies at the right time for the right purpose. If you need to improve your responsiveness, and that’s best done through AI, then use AI. If your industry is being disrupted by a new app, don’t just copy that app, and think you’ve solved it, develop a strategy that makes the most of your advantages. Make sure that the focus remains on solving customer problems, service challenges, and making life generally easier for your customer. This will keep changing over time, and you can’t be stuck with a strategy that locks in a specific technology or platform. You have to be adaptive, and your tech platform needs to be the same.
- Fear, Uncertainty and Doubt
Many business leaders hold back on Digital Transformation, as they fear it will detract from their core business. And to some degree, they’re right to be cognisant of this. Keeping the business (and current revenue streams) running, is crucial to get an effective Digital Transformation process through (especially with the board of directors). Investing in innovation and new technologies doesn’t mean that you give up everything you’ve built over the years. A good Digital Transformation strategy builds on what you already have, and devices additional revenue streams, rather than shifting out the old ones immediately. Transforming your business is not a one-time event, it’ an ongoing process. Many businesses have gotten the message already, but find it hard to develop the right strategies to meet the disruption they are facing. To create the right strategies, businesses must realise that a traditional 5-year plan is not enough anymore. Instead, Digital Transformation Strategy must make change part of the company’s DNA, so that the company become the disruptors themselves, instead of waiting for others to disrupt them.
Many people believe that if you don’t know what to do, it’s better to do nothing than to do the wrong thing. So, that’s how they operate. They become stuck in the fear of making the wrong move. This sentiment is truly what separates the old businesses from the new. Cultivating an environment where experimentation and failure I not just accepted, but celebrated, will create the most fertile ground for success. Of course, there are areas where taking risks is not an option, but in most businesses, there are areas where you can and must continuously change the model in order to find the right formula for success. Your strategy must allow for that, and consider the different scenarios that may play out. Let people feel they can suggest almost anything, look at the potential consequences and give it a try. If it’s not successful. shut it down as fast as possible, and develop a new idea.
These challenges with Digital Transformation are not real problems, of course, they are simply excuses and reasons why some processes fail. By fully understanding what Digital Transformation can, and should mean for your business, there really is no downside. The most important thing is to take charge, lead the change rather than letting the change lead you. The meteorites are coming, the question you have to answer, is do you want to be a meteorite or a dinosaur?
This post was originally published on Trinity P3’s blog on March 1, 2017
Erik Ingvoldstad is the Founder and CEO of Acoustic Group.
Follow Erik on Twitter @ingvoldSTAR, follow Acoustic at @AcousticGroupSG
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