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Tuesday, October 07, 2014

Digital Transformation & Digital Advantage

On my flight to Boston, I came across this article titled: We Need Better Managers, Not More Technocrats from Harvard Business Review. This set me thinking for not many articles have touched the issues of digital transformation at its core, in so far what I have seen and so mentally egged me to draw this note. The part of the article that set me thinking started with the perspective: “digital technology is not the true story. Digital transformation is “and adds, “ Leaders need to engage their people in a process of redefining how they work and what their companies do. Digital transformation is therefore the key managerial imperative for today’s business leaders”. This implies that enterprises need more proactive technical and business leaders, willing to shake the tree and get deeper to challenge the established norms of doing business in their respective business. Transformation possibilities come out of beating the status quo and propelling powerful forces forward.

The article adds that those companies that get the greatest benefit are those that:

- Make smart investments in digital technology to innovate their customer engagements, and the business processes and business models that support them

- Build strong leadership capabilities to envision and drive transformation within their companies and their cultures.

To my mind, to gain advantage many things need to happen at the enterprise level to deliver sustainable results. It’s not just managers alone who matter, there are a whole host of issues that enterprises will need to focus on, besides leadership commitment.Let’s now focus on what this digital transformation is all about and the range of issues and opportunities that come into interplay.

What’s Digital Transformation?

Every transformation efforts brings along with it substantial degree of risk. Digital proponents leverage the fact that the business strategies that embrace. New process models and couple powerful new technologies are transforming the way we do business and the vibrant nature of the marketplace. It’s clear that yesteryears paradigm of economic and business models are too inadequate to secure future years success. New paradigms need to be created, starting with the vision to innovate and enormous energy and skills to stay the course and realize quantifiable benefits. The core ability needed to enable digital transformation rests around customer centricity and a focus on making their businesses different through technology but not per se on the technologies. No technology should be deployed without a fully thought through vision of how it advances business goals, addresses customer needs, or both. Beyond that, technology should be so tightly inter twined with strategy that the two drive and reinforce each other.

Seen at one level, transformation is a proactive process that begins with a large and bold vision centered around making customer linked processed and operations to be made global class and the drive in support of this to effect appropriate changes in the environment. At the highest level, this is the common denominator that enterprises strive to achieve – call out the objective, introduce the variables (exogenic factor) and focus on transforming this into new order of creativity and innovation. To me, digital transformation, for a company board or a transformation council could look like a large scale revamp, but in reality, it is a series of coordinated number of changes – on multiple dimensions - across various attributes covering some planned, known unknowns, unknown unknowns - the coming together of this creates a deep impact and effects change, leading into a converged advantage. One can say that the commonality across different true transformation initiatives would rest on ability to think differently about set ways of functioning and willingness and ability to revisit all known models and think and act on them to change to deliver different results.

Digital Transformation is not a silver bullet, as seasoned business executives would confirm – there is no permanent state of advantage in an enterprise’s digital transformation journey. The true meaning of this journey is that the exogenic factors enables new avenues of powerful possibilities of change and too often this in turn opens the floodgates of passion, creativity and innovation. In a typical digital transformation journey, such release of convergent forces produce massive doses of change on the enterprises model of delivering value, the underpinning culture leading to authentic and visible transformative ways of doing business.

To repeat the often repeated cliché, “Progress can’t be achieved by doing the same things we’ve always done and expecting different results”. It’s plain talk : Unless new, progressive models are employed, true transformation can’t occur. Yet in the real world, its only to be seen that lag metrics centered thinking hold executives to protect the past. An Amazon’s way of thinking and action on growth, investments and customer advocacy efforts would substantially vary with most other business today. But that level of challenging set ways of thinking and busting assumptions are needed to effect true digital transformation efforts that can bring in sustainable success. From incubation to creating a large digital platform at enterprise level calls for ability to both think big and small, deep and wide, create capabilities at scale and target narrow skills in some cases. A clear plan, well thought through investment, and a rigorously focused implementations involving cross functional units are key to rope in success.

Creating an operational blueprint centered around digital ops would become a key requirement to carry forward the journey, an area mostly underfocussed on early on in the digital transformation journey – a big mistake.. A digital operation framework ties in executives to work together across functions to demonstrate early success that enterprise can build on. The to-be state of operation should appropriately balance opportunity upsides, core execution strengths and leverage differentiated business models. As the scale and maturity of adoption of digital transformation inside enterprises increase over time, it will be critical to replace guesstimates with more directly captured metrics leading to set the stage for repeatable, measurable and scalable outcomes.

Why are digital ops so important? Because early success and quantifiable returns feed more momentum and so is important to think through early enough in the enterprise digital journey. A well-executed strategy of putting in place a robust digital transformation framework would enable enterprises to

1) Optimize ROI at an earlier stage in the funding lifecycle of each initiative, and collectively across the enterprise; self-funding models are also being demanded by enterprises;

2) Bring in linkages and transparency between strategies, funding model, execution model including digital ops

3) Relentless prioritization for improved performance, value, and sustainable growth.

True transformation entails transforming from outdated methods to new, more productive ways of conducting business to produce new ideas, profound change, dynamic innovation, and sustainable opportunities and all these are directed at enhancing customer experience provides lasting value.

Digital transformation is not a linear process where a step follows another in a predictable way. Parallel initiatives, competing attention needs will be the order of the day inside many enterprises. The advantage is going to be accrued by those enterprises, who envision, plan and execute well leveraging on the rapid advances in the marketplace and behold, we have not seen much here compared to what’s going to come with sensory and analytics technologies providing a whole lot of new perspectives about how much the digital transformation boundaries can be pushed. As I noted earlier, there is a need for enterprises to completely re-visualize the possibilities by becoming a digital enterprise. That calls for going beyond creating revenue by mere digital substitution. A digital strategy that focuses on specific business outcomes leveraging various forms of digital technologies can create an edge for the enterprise. It must be noted that a sustainable edge comes in where the inane physical resources mutate with the vibrant digital information to create new value. Winners in doing this get there by thinking big and small together transforming processes, creating/validating/rebooting business models and enabling new waves of customer experience. Any company large or small, old or new can use this digital technology to create a winning edge for its business and perhaps, its industry.

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