Im regularly approached on this topic of WHAT is DIGITAL TRANSFORMATION? HOW does it apply to me? WHAT are the implications? Should I be even worried about it?
Im also frequently asked in meetings and introductions that I have, with anyone outside the industry, and so felt that whilst there are many, thick in the process of transforming their business with new platforms, programmes and innovation workstreams underway, that it would be helpful to outline how I define digital transformation and what I believe it really means.
Its clear that there are still a number of clients and companies grappling and getting their heads around the term itself and whether it even applies to them, and well they might. This is well before any mention of blockchain, AI or AR.... all of which flare up any number of similarly and slightly white eyed glances and nervous shifts of the head.
So what is Digital Transformation and what does it really mean?
Digital in its very crudest and simplest sense is the bringing together of people through the use of technology to connect them to each other and data (content, stats etc) via machines (computers, mobile technology etc) in order to interact with data, products and services.
Transformations are driven via external (market) forces and customer need. (These are not the same as the constant evolution a business might take such as restructures or change to their business, which are a necessary part of growth and ongoing commercial focus.)
There are three core components to what drives transformation:
Consumer need and demand,
Market forces/ Competition.
Whilst all three are part of every business framework, when they converge the result usually entails significant impact on a business's operating model effectiveness and feasibility in its current state - thus reaching an immediate and urgent need for re-invention.
So - it is really the coming together of these two things that results in full scale and widespread change activity that impacts the fundamental workings of a business and thus resulting in business model reinvention from the top down (restructure, change and transformation and ultimately a need to innovate)
Businesses need to go through transformation when they have failed or are failing to evolve or not kept pace with their market, competitors or kept their focus on continually renewing their products and services. And not to forget also their process methodologies and investing in their people and teams! Or more simply = PEOPLE, TECHNOLOGY, PRODUCT.
They have recognised the convergence, by identifying associated issues or challenges in each area, and are approaching a critical tipping point.
Businesses at this stage often observe symptoms such as complacency or a major struggle in gaining new customers and growing the value of existing ones. Sometimes there is a mentality of ‘dont fix whats not broke’ or ‘thats the way we’ve always done it!’ But by failing to see that this is necessary, by not continuously reinvesting and adapting, the rest of market is now pacing ahead on all fronts.
The likely outcomes from this? - loss in market share, decreasing profits and a workforce that are lethargic, under motivated and frustrated. Add in lack of updated ‘fit-for-purpose’ tools and technology to serve both your internal and external customer needs, and you have the ingredients for a business that is rapidly descending to a point of critical failure.
The aim, of course, is to chart a route in preventing this situation from happening in the first place! So, by focusing a simple SWOT (Strengths, Weaknesses, Opportunities and Threats), conducting regular health / pulse checks against your business goals and vision, tracking trends (market and data), carrying out market research and fully understanding what your customers want, a business is able to adapt and change. The need to go through a full scale digital transformation is less likely to be required as you will be taking regular opportunities to concept, prototype, test and learn, already.
Therefore, "digital transformation" is when a business is approaching the tipping point; the 3 areas are starting to converge and hence an across-the-board restructure is needed to avoid tipping to a point of critical failure. It also means that all 3 component areas listed above will need significant investment in programmes, time and resources to achieve a state across-the-business that maps to the newly invigorated business model and therefore a business ready for its market.
image courtesy of small business.co.uk
See also my blog on ‘Bridging the Gap between traditional Change programmes and creating disruptive innovation within business models’
and building the digital foundations of a digital business