Digital Transformation Myths and Trends in 2020

 

You have been hearing about Fourth Industrial Revolution. It's probably the hottest topic for businesses, thought leaders, policymakers, scientists and of course technocrats.

 

Klaus Schwab, the Founder and Executive Chairman of the World Economic Forum, who coined this term, writes - "The First Industrial Revolution used water and steam power to mechanize production. The Second used electric power to create the mass production. The Third used electronics and information technology to automate production. Now a Fourth Industrial Revolution is building on the Third, the digital revolution that has been occurring since the middle of the last century. It is characterized by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres."

 

He makes a very important, pertinent point - "Neither technology nor the disruption that comes with it is an exogenous force over which humans have no control. All of us are responsible for guiding its evolution, in the decisions we make on a daily basis as citizens, consumers, and investors."

 

While Digital Transformation as a term is still misunderstood, today, digital transformation as a business imperative is widely agreed upon. What then is a digital transformation in practice? Is it an IT project? Or the introduction of a few cool tools in the company? Or the addition of a mobility is driven customer relationship management (CRM) initiative to engage customers better?

 

As an organization, if you are looking to embark on the digital transformation journey or trying to stay away from it, there are still a few myths around digital transformation that you need to steer clear of. If you want to lead your organization through digital transformation, the first step is understanding the realities of digital transformation - rather than getting carried away by the hype.

 

In this article we use excerpts from a few, prestigious industry reports/white papers to dispel a few myths.

 

The reports/white papers that we quote from include:

 

World Economic Forum's (WEF) White Paper on Digital Transformation of Industries: Digital Enterprise, developed in collaboration with Accenture

Forrester's Report, The Digital Business Imperative, co-authored by Martin Gill and Nigel Fenwick

Digital is a fad; a trend that my business need not think about

digital transformation process

Digital has transformed the market context for every business, and the pace of change is accelerating.

The WEF White Paper says - There is widespread recognition among leaders in most industries that the role of digital technology is rapidly shifting, from being a driver of marginal efficiency to an enabler of fundamental innovation and disruption. Digitalization is the cause of large-scale and sweeping transformations across multiple aspects of business, providing unparalleled opportunities for value creation and capture. Business leaders across all sectors are grappling with the strategic implications of these transformations for their organizations, industry ecosystems, and society.

 

Digital Transformation means exceptional customer experiences powered by new technologies

 

Digital has impacted not just channels and customers. It is disrupting organizations from within - changing the way they do business. Digital brings new opportunities for organizations that can embrace the technology fast enough. It speeds time-to-market, reduces costs, and unlocks new revenue streams.

 

Forrester Report says - Digital business isn't just about customer experience; it's also a way to drive operational agility. Digital operations can increase speed-to-market, make employees more productive, promote leaner processes, and maximize asset utilization.

 

Let me build an app. My digital transformation is done.

 

Digital transformation is not about the introduction of a few tools that are geared to change a particular facet of your business, be it employee collaboration or customer transactions.

 

Forrester Report Says -

 

Digital fundamentally changes your relationship with your customers. You can't address this change with a bolt-on digital strategy that adds an app here or a site there. To remain competitive, you must re-engineer how your business creates value for your customers in the digital age.

Re-envision your business not as a set of products and services but instead as a part of the personal value ecosystems that your customers assemble according to their needs and desires. Learn to increase value by expanding your company's role in your customers' personal value ecosystems.

Digital Transformation can only occur through disruptive technologies

 

Every digital transformation exercise need not take the examples of Uber and Airbnb in terms of the use of emerging technologies. The technology stack that you would use depends on your business context and technological leverage is just one part of the digital transformation. Sometimes, you may achieve significant enhancement of productivity, agility, and customer-centricity through the use of tried-and-tested operational technology (networking and databases) and strategic technology (enterprise resource planning or customer relationship management) or mobility.

 

WEF White paper says - A truly digital enterprise stands for more than just using new technologies for the sake of it. Rather, what truly distinguishes and gives a digital enterprise its competitive advantage is its culture, strategy, and way of operating. Digital enterprises strive continuously to enable new and leaner operating models underpinned by agile business processes, connected platforms, analytics and collaboration capabilities that enhance the productivity of the firm. A digital enterprise relentlessly searches out, identifies and develops new digital business models, always ensuring that customers and employees are at the center of whatever it does.

 

Digital transformation: I need to get this done this year so I am not falling behind

 

Digital Transformation cannot be and need not be a sprint. It is a long journey with multiple touch points and milestones; dependencies and synergistic endeavors.

 

Forrester Report says - You need to transform your business by applying digital thinking across everything you do - how you win, serve, and retain customers; how you operate your internal processes; and how you source business services.

 

For example, your answers to the below questions alone will help you craft a roadmap that takes digital transformation beyond the realm of IT.

 

Digital transformation business success

 

Have you identified areas in your business where automation is most relevant?

Is your existing workforce consistently improving productivity and quality?

Which steps have been taken to convince your investors about your digital vision and the long-term value-creation of your digital transformation journey?

How much of your revenue is coming from new sources of digital business?

Do your company leverage analytics around customer data, operational data, and compliance?

Do you have a digitally literate leadership team?

Have you established training programs to overcome the digital skills gap and reskill your existing employees?

How are you empowering employees through digital channels to enable faster decision making and encourage greater agility within your organization?

These are just a few myths we have tried to address. We invite you to share your take on these as well as other myths.

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Why It's Important To Digitally Transform Your Business

 

"Digital Transformation" isn't just a buzzword. It's a core concept of my business model, and I hope by the time you're done reading this you'll know why it should be a core concept of your own business.

 

In essence, digital transformation is the process of transitioning your entire business from an old stale platform to a new digitally efficient and exciting model. There are so many different things that go into this but let's look at how it works for sales and marketing.

 

Digital Transformation many times can bring your sales and marketing from the physical world of phone calls, fliers, and mailings to the Internet. These older "analog" techniques are still valid, but they are becoming much less effective over time. Why is that? E-commerce technologies have reached a point that they're blowing physical advertising out of the water.

 

People are still buying things more than ever though, but where are they doing it? They're buying on the web instead of walking into a store. Have you heard of "showrooming"? This is a term that retailers use for people who go to a store to get an experience with a physical product then search for the best price online. Best Buy in particular had this happen so much that they've made this part of their business model, hoping to push people to buy the product in the store through the Best Buy website. (Smart thinking Best Buy, way to digitally transform instead of continuing to fight it!)

 

What if you have a service business instead of a retail business? You're still in trouble. Customers aren't letting their fingers do the walking through the Yellow Pages anymore. Instead they're turning to Yelp and Angie's List. Yelp and sites like it have a big advantage over older methods of service advertising. They not only can display more information, but they provide the social proof of customer reviews.

 

Customer reviews are the major force in demonstrating reputation in the online world. We used to call this word-of-mouth advertising, but now sites like Yelp allow a single person's voice to reach your entire market (at least the ones who check Yelp, 132 million monthly visitors in Q1 2014 according to the site) and color other people's perception of you for good or for ill. We like to call this "digital-mouth" advertising.

 

Basic Online Presence Is Not Enough

 

Perhaps you think you're ahead of the curve. You have a website and some social media presence. Isn't that enough? Sadly to say it isn't. Many business websites don't have much more information than a standard Yelp page. Social media is treated more like a billboard than a customer interaction platform. Worst of all, if a visitor wants to convert they have to go back to things like the telephone or basic email to get in touch with you. They violate one of my four pillars of digital transformation, the digital hook.

 

The mobile web has made it so easy to convert visitors that websites shouldn't be called web sites anymore. Instead, I call them "customer acquisition engines."

 

The key shift is that your online presence needs to move from a purely marketing standpoint toward both sales and marketing. Not only that, but customer data should be tracked over time to generate an ongoing relationship with an individual visitor, urging them to convert again and again until they become loyal customers.

 

Impossible you say? I assure you that with today's technology it is quite possible. You may have seen some of the tactics yourself. If you use Facebook and don't have an ad blocker on, try visiting a few business sites or talk about a topic a few times. Notice what ads you get on the side bar. Most of the time, you're going to start seeing ads that relate to what you saw or talked about.

 

In fact, by merely visiting a site, companies can now start to get marketing data on you immediately. Technologies like tracking pixels can trace an individual visitor as they come and go from a site. This allows you to push ads about your business to them on other sites. When they come back, that information can be read and let the visitor pick up where they left off in the sales cycle.

 

Digital Transformation is Vital Now

 

With decreasing retail sales, more people buying online, and new sales and marketing tactics smashing competition through the digital space, the old business models can't compete for much longer. If this article has sounded a chord of panic in you though, don't worry because knowledge is power. Get started today and start the transformation now before you get out-transformed by your competitors!

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Impact of Digital Transformation and Trends

 

How companies will transform by adopting these technologies:

 

A digital transformation strategy is to create capabilities to fully leverage the possibilities and opportunities in new technologies and to make a faster and better impact. This is a strategy which businesses should adopt if they want to evolve and survive.

 

Digital technologies like cloud computing, analytics, mobile computing, social media, and IoT, 3D printing, drones, artificial intelligence, and robotics are creating a huge impact on businesses.

 

Companies need to adopt these technologies in their operations by engaging their customers and empowering their employees with the necessary skills. Companies like Facebook, Amazon, Apple, and Microsoft have used digital transformation to grow faster and to improve their productivity.

 

It is a once in a lifetime technology shift to transform every industry and business in the world by evolving faster and by investing in new business models on the latest technologies.

 

Design thinking as a Tool:

 

Design thinking is one of the key tools for digital transformation. We can obtain practical and creative resolution to problems using this technique. It is a significant, different way of thinking with an intent on producing a constructive result considering the end-user.

 

Design thinking employs divergent thinking, which is a way to make sure that we explore many possible solutions while resolving a problem. Design thinking includes "building up" ideas during a "brainstorming" phase. This helps to reduce the fear of failure of the participant(s) and encourages comments and participation from a variety of sources in the "ideation" phase.

 

Design thinking takes into account user experience in designing a solution to a problem faced by end users. In simple words, Design thinking is nothing but putting yourself in the customer's shoes to gain empathy and awareness for their needs while designing a solution.

 

It is the way to go paperless and protect the environment.

 

Skills required for Digital transformation:

 

Employees must have skills like familiarity with new technology, data analysis, interpersonal skills and ability to learn quickly in a fast-paced environment, to adapt to digital transformation. Creativity and ability to execute and a customer-centric approach are also important skills required.

 

There is a big demand for people who have these skills and there are great job opportunities in the marketplace.

 

Conclusion:

 

Digital transformation should target at improving customer experience by digitization of operational processes, recreating new business models and by utilizing design thinking, to survive in a competitive marketplace.

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The Importance of Culture Change in Digital Transformation

 

More and more businesses are seeking to digitally transform their organisations to meet the ever increasing demands and expectations of the modern, technically sophisticated customer. But few are prepared for the internal disruption this causes throughout the entire enterprise, which is why culture change and change management is so important.

 

For digital transformation to be successful, businesses need to adopt agile methodologies, processes and working practices. Becoming an agile business requires a cultural change. Similarly, as digital transformation is largely driven by the changing demands and expectations of customers, customer-centric strategies are a must and successfully developing and implementing these new approaches requires a more integrated and fluid organisation.

 

Laying the Foundations of Digital Transformation

 

Businesses whose digital transformation projects fail are usually guilty of failing to lay solid foundations:

 

Agile

Customer-Centric

Omni-Channel Experience

Laying these foundation stones requires huge culture change within the organisation and managing this process is challenging. Unfortunately, if your organisation wants to be successful, it is unavoidable.

Culture Change

 

Due to the ever changing and ever evolving nature of the modern world, businesses need to cultivate a culture of perpetual revolution.

 

The days of businesses setting a strategy for the next 5 years, then waiting for the business execute that strategy, are long gone. Setting a 5 year strategy is still important, but the need to be able to rapidly pivot that strategy at will is fundamentally important to the long-term strategic success of the enterprise. Most businesses, especially big and established companies, are difficult to turn and this is why aggressive new market entrants are able to sweep in and digitally disrupt industries, markets and supply chains. Established companies are too slow to respond and by the time they have mounted a meaningful response, the new entrant has established a strong position in the market and is almost impossible to remove. Companies need to be able to pivot quickly to respond to new market entrants and changes in the competitive landscape.

 

Similarly, as new technologies emerge, customers and other major stakeholder group's demands and expectations change. The innovation roadmap you are following today could be redundant in weeks or months. Agility enables quick pivoting of development roadmaps, rapid transformation of customer-centric strategies and the re-engineering of omni-channel customer experiences.

 

All these cases cause enterprise wide disruption and with the frequency of these disruptions rising, a culture of change and constant revolution is a must.

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Digital Transformation - What It Means for Global Enterprises

 

Fundamentally, a business enterprise would exist in a 'going concern' to make profits and maximize the shareholders' value. To be able to deliver business results consistently then becomes most important objective. There could be a number of strategies, programs and policies that an enterprise would practice to deliver business results. Digital transformation is one such innovative strategy that an enterprise could look to practice in a structured and time bound manner.

 

Here is an important dimension that I would like to highlight, and to put it simply, digital transformation would bridge the gap that always existed when Digital (in business parlance this would mean Information and Communication Technologies) became necessity for efficiency, but remained a huge cost center and avenue of change inertia for a majority of times. It is all about getting closer to transforming this cost center to a revenue center, by consistently and selectively applying Digital to get closer to customers and stakeholders alike to make difference to the way they live, or do business, or collaborate.

 

For global enterprises what this means is that when its digital interests are driven by keeping its customers at large in focus they can be construed as making significant strides in their digital transformation strategy. Depending on what stage of technology adoption they are into (1st, 2nd or 3rd generation) the DT intensity would vary. For instance, recently I wrote an article on how GRC solutions can be revenue enablers - GRC then becomes a part of a broader digital transformation strategy.

 

A majority of new age business enterprises would have made substantial investments in implementation of most grass root enterprise systems. That is a whole reasons why from the technology provider ecosystem do we get to hear about mobile, analytics, social and cloud most of the times when it comes to digital transformation, which is a contemporary articulation. The fact remains that it is up to the CIO and other CxO executive team members to figure out what would be a right beginning of their digital transformation program and what would its life cycle look like in their company. In other words, an enterprise could really be ready for digital even if they aren't talking about social, analytics and mobility, similarly, even if a relatively new enterprise (such as a start-up) can still be talking of massive investments into DT even if they do not use large enterprise systems, for instance an ERP. As we said, the key to remember, and hence to derive most benefits of amazing digital transformation program, is to know how and if digital investments made by an enterprise are taking it closer to a customer to make difference to the way they live, or do business, or collaborate.

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Why Digital Transformation Is Private Equity's Sharpest Tool

 

Private equity groups are always looking for the sure thing - it's part of their culture. It's not surprising they've been so slow to embrace Digital Transformation, but money is usually pretty conservative. So here's a wake-up call for anyone in private equity - you need to take Digital Transformation seriously and make it one of the tools of your trade.

 

Private equity has to create value in its acquisitions. That's pretty obvious and we know the common strategies. In the past, a private equity firm would acquire a business with the intent of growing it and hopefully acquiring another, putting them together and building greater value for both companies. Part of that process would involve creating efficiencies within the new company through economies of scale and instituting better practices for sales, marketing, supply chain and operations.

 

That's what Digital Transformation is all about - creating greater efficiencies and best practices - but for the digital age - not the steam age. Private equity has to realize scale is not the only efficiency - from customer management systems (CMS), to building out robust e-commerce engines, to exploding a brand, Digital Transformation can turn around an undervalued company and absolutely smash competition with just a bit of digital vision.

 

Digital Transformation affects all aspects of a company - and each aspect represents another potential growth point for private equity. Think about this: private equity firms always worry about losing key employees after an acquisition. A well executed Digital Transformation always includes a clear digital vision delivered to the company first - and always considers how to improve its employee's work experience by utilizing every chance to supercharge internal processes and efficiencies. Think how that will affect morale during a take-over - and help improve ROI.

 

In fact, private equity firms would all be wise to initiate a Digital Transformation within their four walls. You can't just pound your chest like a gorilla - you have to rip the antiquated doors off your own walls. Sure, hedge funds are computerized out the yin/yang but private equity firms struggle. In addition, how well do they manage their own digital presence and their public digital profile - their leadership casting? Are they active on the social media front? Are they providing opportunities for top talent to share their vision - and build their digital profile? Everyone in PE firms know a sharp suit is important for first impressions - so help your firm, and your people, look sharp on the web.

 

These are just a couple of examples of how Digital Transformation can affect both the efficiency and culture of a company - before it even addresses creating greater revenues and new markets. Every PE firm in the world should be making Digital Transformation part of their tool set before they are the ones that get out transformed!

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Digital Transformation: Critical Success Factors

 

Digital transformation is key not only in-terms of short-term growth and market share, but also to ensure their long-term survival and relevance. Digital platforms and ecosystems can drive efficiencies, and through new and unexpected collaborations, create new value for businesses and for customers. Digital maturity across industries have been classified into personas such as: beginners, conservatives, fashionistas& digital masters with digital and leadership capability driving their business transformation.

 

The digital age has brought about a new way of thinking on process and operations. Smart devices with digital capabilities are seamlessly offering direct benefits to industries around productivity, efficiency, innovation and decision making.

 

Today's millennial enterprise CEO priorities are innovation, speed to market, public trust and human capital which leads to initiatives around digital and data driven business. The CIO priorities are to manage both innovation and operations. While on one hand it is to increase transformation, efficiency, security, on the other hand it is to cut costs & time for new service, maintain, simplify IT models & infra and improve business process.

 

The business outcomes of a digital transformation program decides its critical success factor or value proposition. These could be around customer experience transformation or enterprise user efficiency. People, process and technology are critical factors for success of any transformation program.

 

It is imperative that a digital transformation is applied to the end to end process and not in a piecemeal manner. An extremely jazzy and digital customer acquisition front end with a manual / semi manual process at the back office or vice-versa will never lead to the desired business outcomes. So a complete digital process automation leads to innovation, efficiency and trust and that becomes one of the critical success factor for the transformation program.

 

Change management is another critical success factor for a digital transformation. People / resources directly or indirectly involved in such a transformation determine the fate of any such initiative. Concerns around perceived loss of control of a manual / semi-automated process, push back on any change, adaption of any innovation should be managed by a structured change management process comprising of clear communication, management direction, creating collaborative environment to address organisational cultural challenges.

 

Technology plays a key role in the success of an adaptable digital transformation. However instead of technical knowhow or features of a software or hardware, it the ease of implementation, design thinking, smooth transition and program management with a finesse that stands out and results in an acceptable digital transformation which gets applauded both externally and internally.

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