Many organisations recognise the importance of digital and the need to change. Unfortunately there is a lot of confusion about what digital transformation is and how to carry it out.
2014 has been an encouraging year. I have seen a growing number of organisations realise how business critical digital has become. They are beginning to recognise the need for fundamental organisational change. Finally they understand that you cannot bolt digital onto the side of an existing business models.
Unfortunately amongst all this excitement there is also a significant degree of confusion. Organisations are unsure of exactly how to change and what they need to be changing into.
As I work with companies I see re-occurring questions over the nature of digital transformation. In this post I would like to address just some of them.
We begin by looking at how executive teams see digital transformation.
Digital Transformation is about integrating new technologies into the business
Many management teams see digital transformation as about integrating technology into existing business practices. This could not be more wrong.
Digital transformation does include re-evaluating the use of technology within the business. But it is more profound than that. Digital transformation also looks of the entire business and how it operates.
From procurement processes to customer engagement, digital is changing every aspect of business life. Digital transformation is not about throwing new technology at an existing business model.
Digital Transformation is about customer experience
A big aspect of digital transformation is looking at how digital has changed customer behaviour. It is this change in behaviour that has prompted many organisations to re-evaluate how they operate.
Some argue that at its heart digital transformation is about improving the customer experience. Something that we should be doing on an ongoing basis anyway.
Although I have a lot of sympathy with this position I do not believe digital transformation stops there. It should also make improvements to internal efficiencies and productivity. In short it shouldn’t just be about increasing revenue, it should also provide cost savings.
Digital Transformation happens from the bottom up
I meet many people who understand the importance of digital transformation. People who are not in management, but are endeavouring to bring about grassroots change. Their hope is that this kind of organic change will spread across the entire organisation. That this is possible without the need for top-down leadership.
This hope is understandable. Many senior management teams do not see the need for large-scale organisational change. Unfortunately, although some change is possible, executive support is incredibly beneficial.
These “digital evangelists” would be better off focusing their efforts on gaining executive support. Working to change things from the bottom is not enough by itself.
Slow and gradual progress will get the job done
When there is a lack of executive support many organisations resort to small incremental changes. Their hope is that they can gradually move towards becoming a digitally focused organisation.
Even when there is executive support a gradual, incremental approach is often preferred. The scale of the problem can seem so intimidating than a more gradual approach is preferable.
I would not recommend wholesale change overnight. But there are problems associated with a gradual process. Many of the changes required are interdependent. For example forming a digital transformation team is pointless if it has no authority to enforce standards.
Incremental change is possible. But there needs to be a clear vision of where the organisation is heading and an acceptance that some changes are interlinked.
Our organisation is different, we can’t learn from the experiences of others
People are resistant to change and digital transformation is no exception. A common barrier they throw up to resist change is the argument that their situation is unique. I even find this within a single sector. The argument goes that even if others have successfully adapted, this doesn’t mean they should.
Every organisation has unique qualities. But if this argument is taken to its conclusion no organisation could learn from any other.
Organisations as diverse as Starbucks and the British government are implementing digital transformation. Each has had to tailor the process to suit their particular circumstances. But there are many commonalities and much that can be learnt by looking at other organisations.
Our industry won’t be affected
When it comes to the impact of digital many organisations are in denial. They tell themselves that their industry will not be affected. Or at least this is not something they need to worry about yet.
In reality digital is changing every aspect of our world. It is impacting everything from the way we behave to the infrastructure that supports modern life. These changes are as profound as those introduced by the automobile or the arrival of electricity.
There is no longer a sector untouched by the changes brought by the web, social media and mobile. No organisation can ignore their influence and survive.
We should wait and see who does it right
Another common roadblocks thrown up by reluctant management is the “wait-and-see” argument. This suggests it is unwise to take action until the right approach is proven.
On one level this makes a lot of sense. Management teams do not want to invest a lot of time and money in a digital transformation project that proves futile. Instead they want to see an approach that is guaranteed to work.
The problem is that digital transformation does not take place overnight. These kinds of cultural and organisational changes take years to put in place. This means that nobody has yet completed the process. Even if they had, what worked in the past would no longer be relevant by the time another organisation implemented it.
That is the heart of the issue: digital moves too fast to wait. If an organisation waits until best practice is established it will be too late. That or best practice will already have changed. Organisations cannot wait. If they do they will be too far behind the competition and will become obsolete.