How to Build Momentum with a Digital Transformation Strategy
For most people, digital transformation is much like the story of the six blind men and the elephant: different pieces, but no coherent overall picture. For some, it's like the sides of the pachyderm in John Godfrey Saxes' poem: a wall. For others, it's like the trunk, snake-like and hard to get a handle on. For yet others, it's like the elephant's tail, a rope that we are binding ourselves with.
Digital transformation can be an enigmatic issue within an organization. However, digital transformation is a major undertaking that no organization can ignore. Gartner predicts that by 2020, at least 75 percent of businesses will be a digital business or preparing to become one.
What companies should be doing to take advantage of the Digital Era?
From an IT perspective, many organizations have a generation of legacy hardware and software systems that they can’t just simply abandon, even though it may handcuff an organization in many ways. From a pure business angle, they see their established markets, and they are afraid to take risks with what has worked so well in the past. The companies also see competition popping up all around them at a frantic pace and know they can’t continue to do things the same way they always have, and get the same results long term.
They need to strategically think about how to transform their companies to being a digitally innovative company. The strategy should not just be to hire a Chief Digital Officer and assume things will happen. The Digital transformation should be treated as transforming the core business and business owners need to play an important role. It’s not a technology problem, it’s a major business transformation. They need to re-think all their business processes - how they interact with their customers and employees - and figure out how to digitally transform them.
With this major transformation, CIOs face a challenge of identifying what tools and technologies should be implemented which are most strategic to facilitate their digital transformation. Leading the list is:
• Mobile technologies for customer engagement
• Data mining and analysis
• Cloud computing
• Socially enabled business processes
• Connected Experience
• Artificial intelligence
While each has its place, companies may also focus on the "connected experience,” which is aimed at providing consistent and uniform customer information across all touch points aiding customer conversions, retention and higher sales. This is achieved through an Omni-channel view of customers and their journey across all contact points with a company. That includes voice calls, chat support, web inquiries and social media.
Additionally, as the Internet of Things evolves, consumers will interact with brands on a multitude of devices with differing capabilities, from conducting initial research on a computer to receiving a reminder on a wearable device to making a purchase in store. As the Internet of Things gains traction, firms are seeing its future potential from established technologies such as RFID and machine-to-machine and robotic communications. Technology advances are deceptive and will make amazing things possible. They will also create major disruptions in every industry.
There are many stories of using effective tools and channels in the Digital transformation. One which immediately comes to my mind is Virgin America, which uses Twitter to help customers answer common customer service questions, and now sets the new bar for how airlines can engage and service customers.
How to make the transformation happen?
As digital transformation takes hold, companies must go through specific steps to ensure they are fully prepared for the change. We have helped several companies in their Digital Journey and what my experience suggests that this internal transformation is operationalized along three specific dimensions:
• Culture change
• Customer focus
• Data analytics
“Organizations must empower CIOs in their digital push as the highly powerful tech stack Mobile, Cloud, Big Data, and Social Media is driving business, reconstructing customer service and helping companies innovate”
First, company culture can be a big hurdle to digital transformation. If we choose not to change, we are taking an enormous risk. But that doesn't help us define what changes are the good changes to make and what changes just look like chaos. That's why it is imperative to have the digital framework in place. The crux of the change is a strong emphasis on collaboration within the organization. Multidisciplinary teams of software engineers, product managers and designers have to work together on specific applications and solutions to drive digital transformation. The transformation is across borderless platforms. It's not so much about saying “I work in the marketing team in Atlanta or business division in Germany” but instead, ensuring collaboration across borderless platforms, boundaries of the organization and geographical time zones.
Second, whether it's a car maker or financial services firm, customer focus is at the heart of digital transformation. By taking a leaf from Herbert A. Simon's book "The Sciences of the Artificial," we should engage in "design thinking." In essence, design thinking is based on a deep understanding of what customers do and what they really want, using tools such as iterative prototyping and exploration. To succeed, the transformation has to be customer-centric. It has to hinge on creating new products and services for customers or improve processes and productivity for internal operations. The ability to provide a satisfying, unique and consistent experience across all channels drives the difference between customer retention and attrition in this digital era.
The third dimension of digital transformation is data analytics. Firms are looking to access current data to drive decisions. Data analytics and visual dashboards are helping executives make smart decisions on the go, and support sales or customer service decisions more intelligently. Firms are also gaining customer insights through data analytics and using it to drive personalization. Digitally enabled firms are streamlining operational processes, optimizing supply chain and inventory through predictive forecasting. While agile processes govern the way the organization moves, the underlying platform is strengthened through cloud technologies, mobility and software defined networking techniques.
If all three elements are combined, the operating paradigm focuses on the business model, collaboration, customer engagement, seamlessly delivering products and services online and boosting the value chain across all customer contact points.
What’s the Approach?
There are various approaches to making Digital Transformation happen in a company. According to Gartner, companies struggle with how to deal with fundamental changes required to cope with Digital transformation and thus it recommends a bimodal approach to IT. That means one part of IT remains unchanged and continues to deal with existing systems, working deliberately to install enterprise-grade solutions with long purchase and implementation cycles, just as they have traditionally done. In addition, Gartner recommends creating a second separate unit that thinks fast, acts quickly, and reacts to changing market conditions without the constraints of traditional IT. This model may not fit all the companies as each company has a different DNA and approach to business, but still worth trying with variation. It may be possible to start with a two-model approach, but I don’t think these two models can stay separate for long with the pace at which Digitalization is happening.