Is Digital Transformation Hype or Reality? - Part 4 of 4
In the previous parts of my blog series about Digital Transformation, I put up those 4 key questions for debate, and answered the first three:
Why do we need to innovate by transforming our business at all?
Where does it make most sense to start the transformation process?
Which technologies are most promising for effective transformation?
How to implement digital business transformation?
Now it’s time to look into the last question (the how) and wrap-up.
How to implement digital business transformation?
As mentioned earlier, always start with the people (your customers and your employees). The process and the technology will have to follow. Ask yourself how you can add value to your customers and employees?
My recommendation is to start by implementing a culture and an environment that enable innovation and allow it to prosper. This will also foster change and risk taking among your employees. Managing change is the biggest challenge in a digital transformation endeavor. You need to manage the valid fears of your employees and sell them the vision and benefits, in short give them a strong purpose to come to work every day even without pay.
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“If you want to build a ship, don't drum up people to collect wood and don't assign them tasks and work, but rather teach them to long for the endless immensity of the sea.” - Antoine de Saint-Exupery
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Where do you see the biggest business challenges (reactive) or opportunities (proactive)? Choose an area of the value chain or of the competitive advantage with highest impact & rewards and start there. If you don’t know, then why not start with customer intimacy (marketing & sales)?
Select one or several technologies that can accelerate your innovation. In case you opted for digitizing marketing or sales, then the Nexus of Forces (Mobile, Social, Cloud, Big Data) would suite perfectly.
Start your transformation journey by applying creativity techniques and innovation processes to either:
create new ideas internally (invention)
borrow or adapt existing proven ideas from other industry segments or countries (cross innovation)
source ideas externally by embracing crowd innovation & co-creation (open innovation)
purchase proven ideas through licensing (patent, franchise) as Steve Jobs from Apple did by licensing the mouse and GUI technologies from XEROX PARC (Palo Alto Research Center Incorporated)
Digital Transformation gives you the opportunity to innovate boldly – not just incrementally – so you can create enough value for your customers and your corporation. Remember...
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"The electric light did not come from the continuous improvement of the candle!"
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Another nice quote presumably associated to Henry Ford
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"If we had asked people what they wanted, they would have said faster horses and we wouldn’t have any cars today!"
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Finally you can use the Minimal Risk Innovation model to create great profitable innovations whilst controlling & mitigating the risks. Risk mitigation possibilities can be summarized by the ARTSS acronym and include:
Avoid: Avoid the risk by eliminating its root cause
Reduce: Reduce the likelihood of risk (by using customer centered design thinking process, which guarantees desirability) or the risk’s impact (by dividing things into smaller chunks like the 30-day agile development sprints)
Transfer: Transfer the risk to others (insurance)
Share: Share the risks with others (strategic partnership or joint-venture)
Spread: Spread the risk to reduce the dependency on one single source (portfolio diversification)
Figure: ARTSS Mitigation Options
A useful checklist for digital transformation to be used by small & medium businesses (SMBs) follows the German acronym DIIVAA (see also my German blog about DIIVAA), which stand for:
Digitalization
Innovation
Internationalization
Vernetzung or Interconectedness
Automation
Auslagerung or Outsourcing
Figure: DIIVAA Checklist for Digital Transformation
SUMMARY
Coming back to the 4 key questions:
Why do we need to innovate by transforming our business at all?
We need to innovate and use digital technologies because new type of competitors are already doing so and disrupting our industries. We need to fight back with the same weapons. On the other hand the consumers - our bread & butter – are constantly confronted with digital innovations and expect convenience, value and excellent service from us (the enterprises).
Where does it make most sense to start the transformation process?
Generally we should have a holistic end-to-end view of digitization within an enterprise in order to use synergies of interconnectedness, compatibility & standardization. We should also have a holistic view of the complete customer journey from awareness through purchase, use and recommending our product. The low-hanging fruits yielding quick results in almost every industry segment, can be found in the areas of digital marketing & sales automation.
Which technologies are most promising for effective transformation?
The 4 technologies representing the nexus of forces (as defined by Gartner) are the most promising and readily available enabling technologies: These are Mobile, Social, Cloud and Big Data Analytics.
How to implement digital business transformation?
Start with the human needs of People in mind: Your customers and your employees. How can you add VALUE to them? Innovate products, processes and even business models in order to create a heap of unprecedented value, by invention, cross-industry adaptation, open innovation or licensing. Larger companies should become agile, lean and risk-taking like startups, and startups should be less “naïve”, be more realistic and mitigate some obvious risks. In short, a Minimal Risk Innovation approach is recommended when implementing digital transformation.
A recent article by Die Presse and stating a study by EY shows the current status in Austria:
50% of the companies think their business models are not future-proof
61% of the companies don't have a sound digitalization strategy
75% of the companies show a low level of digitalization
Jacobs Edo says "Digitalization is here to stay" and presents in his book DIGITAL TRANSFORMATION: Evolving Digitally Enabled Nigerian Public Service very nice examples of digital transformation implementations in the public sector (Chapter 3: Digital Transformation Lessons, p41 ff) from Austria, Estonia, France, Kenya, Singapore and Sweden.
So the chance is here, lets grab it!
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Image credits Pixabay and Wix
