Digital Transformation & Innovation

“Digital Transformation: The paradigm shift towards business as usual”

Where back in the days technology, techies, related people where seen as the weird people which every office needed for I(C)T development and maintenance, are we now looking with respect to all kinds of self-made billionaires of Silicon Valley. Compared to the pre 2000’s, technology is a hot topic. A lot of noise around different elements and types of new technology. Whether we talk about 3D-printing, Augmented Reality, Big Data, Social, Mobile, Analytics, Cloud, (SMAC) + Internet of Things (SMACT), Wireless Power, Robotics, Computer brain interfaces, Human Augmentation, Artificial Intelligence (AI), Digital Customer Experience (DCX), all these topics are in the marketing buzz machines of big industrial leaders or even made on kitchen tables by (as Chris Anderson called them) the makers of these days.

The title of this article: “Digital Transformation: The paradigm shift towards business as usual” is about the core of Digital Transformation.  It will explain what Digital Transformation is, how you can use Digital Transformation to create competitive advantage, enter new market segments and deliver new value to your client, customer and end-user through an excellent customer experience. On this page we will discuss the topic Digital Transformation in general. What is the phenomenon Digital Transformation is the red wire through the bottom of this page. We will look at the following questions to guide us in this much often heard techno buzz word.

• “What is Digital Transformation?”
• “How can I use Digital Transformation in my advantage?”
• “How to adapt/ implement a Digital Transformation Strategy”
• “How can I offer solutions that serves the client/ customer need in 2020?”
• “What is the relation between Digital Transformation & Digital Customer Experience?”

Let us start with the question: “What is Digital Transformation?”. To answer that question we will start with an overview of definitions of Digital Transformation by Industry & Business leaders:

1: Altimeter Group

“We defined digital transformation as a movement under a customer-centric lens: The realignment of, or new investment in, technology and business models to more effectively engage digital customers at every touchpoint in the customer experience lifecycle.”

2: Ashley Friedlein, CEO, Econsultancy

“Digital transformation is the journey from where a company is, to where it aspires to be digitally.” “A digital organisation is generally considered to be one that focuses on customer experience irrespective of channel, and has a digital culture. During the digital transformation process, the four areas typically focused on are strategy, technology, people and process.”

3. Capgemini Consulting/ MIT Sloan Management

“Digital transformation (DT) – is the use of technology to radically improve performance or reach of enterprises”

4. IBM

“Digital transformations, rethinking what customers value most and creating operating models that take advantage of what’s newly possible for competitive differentiation. The challenge for business is how fast and how far to go.”

5. Atos

“Digital Transformation is about the impact of new technology on all areas of our society”

6. Accenture

“Re-imagine from the Outside-in: Business success today requires a customer-focused digital transformation. It starts with prioritizing a superior and relevant customer experience, and aligning the organization, processes and technology to power it. There are three essential elements to deliver enduring customer relevance at scale”

If you ask me, Digital Transformation is:

“Digital Transformation is the collective noun of the movement which intertwine the physical and digital world to better determine client, customer and target audience needs to deliver excellent products & services with an excellent digital experience by the use of new technology.”

The reason  why I come up with this definition is as follows. Every company exist because it delivers some sort of value, in some sort of way, to some sort of audience. A lot of ‘some sorts’, you might say, and, you are right. But does your company knows, why they deliver what to whom? If you are thinking, on one of those point above I have no idea what I am doing, keep on reading. If you do this already, congratulations, keep that position. On the other hand, who says that you are doing this already? You, or your client? That is right, keep on reading as well.

Digital Transformation refers to the use of digital tools, new technology to better define customer needs. When companies can define customer/ client needs in a better way, they can provide a better solution. A better solution, whether it is a product or service. Defining customer needs has always been the key activity in marketing. And, even this core activity has changed to ‘hang out’ on digital for some brands, defining needs is key. Because delivering what your audience need is the reason why you exist as a company. To build upon that, customers are getting more and more familiar with digital concepts. Adoption of new technology is increasing by wearable technology and so there is a shift of channel choice on the client side. For that reason companies should make sure that they deliver in the new JIT method. In the right channel, on the right time, delivering the right solution for the customer need. That it, bottom-line, what every new technology is about. Increasing your company to identify B2C/ B2B needs to provide them with better solutions.

A research on Digital Transformation by MIT’s Sloan School of Management, and Capgemini Consulting shows us some interesting facts around Digital Transformation. An article, titled as: “Research: Digital Transformation Seen As Critical By 4 in 5 Execs” gives an overview of: “Some of the most interesting stuff deals with the barriers, ones people see in this space all the time:

• Defining an agenda;
• Developing a vision and direction;
• Lack of urgency;
• Attitudes of older leaders who don’t “get” digital;
• Fear of investing too early in technology;
• Politics;
• And innovation fatigue.”

Sounds familiar? I do have enough time right? Digital Transformation is not something which happens in one day. Looking to our market segment, industry and clients I do not really see the point of investing in Digital Transformation today, you might say. Seen the outcome of the following research, it is also ‘a kind of urgent’..

You might ask how did we got to the point of Digital Transformation? What drives us towards this digital era? The Guardians ‘s Howard King describes in his article called: “What is digital transformation?”  three key drivers of transformation:

“There are three key drivers of transformation: (1) changing consumer demand, (2) changing technology and (3) changing competition. These, of course, are an ecosystem and it is always a convergence of factors that brings about changes in a market.”

Interesting, right? Now let us look where you should start towards your own digital transformation. McKinsey sees six area’s where: “Digital can reshape every aspect of the modern enterprise”:

• Customer Experience
• Product and service innovation
• Distribution, marketing and sales
• Digital fulfillment
• Risk optimization
• Enhanced corporate control

According to a research Altimeter published: “The Race Against Digital Darwinism: The Six Stages of Digital Transformation”, Digital Transformation has six stages:

1. Business as Usual: Organizations operate with a familiar legacy perspective of customers, processes, metrics, business models, and technology, believing that it remains the solution to digital relevance.
2. Present and Active: Pockets of experimentation are driving digital literacy and creativity, albeit disparately, throughout the organization while aiming to improve and amplify specific touchpoints and processes.
3. Formalized: Experimentation becomes intentional while executing at more promising and capable levels. Initiatives become bolder, and, as a result, change agents seek executive support for new resources and technology.
4. Strategic: Individual groups recognize the strength in collaboration as their research, work, and shared insights contribute to new strategic roadmaps that plan for digital transformation ownership, efforts, and investments.
5. Converged: A dedicated digital transformation team forms to guide strategy and operations based on business and customer- centric goals. The new infrastructure of the organization takes shape as roles, expertise, models, processes, and systems to support transformation are solidified.
6. Innovative and Adaptive: Digital transformation becomes a way of business as executives and strategists recognize that change is constant. A new ecosystem is established to identify and act upon technology and market trends in pilot and, eventually, at scale.

Source: The Race Against Digital Darwinism: The Six Stages of Digital Transformation

Capgemini Consulting together with MIT Sloan did a research at large on Digital Transformation. “This: In-depth research with executives at a wide range of companies shows how managers can use technology to redefine their businesses.”

“We interviewed 157 executives in 50 companies to find out. These companies are large — typically $1 billion or more in annual sales — and spanned 15 countries. To provide balanced perspectives, approximately half of the interviewees were business leaders such as CEOs, line of business managers, marketing heads or COOs, while the other half were IT and technology leaders.

The companies we interviewed are moving forward with digital transformation at varying paces and experiencing varying levels of success. Some are transforming many parts of their organizations while others are still doing only the basics. Others are encountering organizational issues or other challenges that prevent them from transforming successfully.”

The research identified 3 key area’s with all 3 elements. These are the elements below:

• Customer Experience
  • Customer understanding
  • Top line growth
  • Customer touchpoints
• Operational Process
  • Process digitization
  • Worker enablement
  • Performance management
• Business model
  • Digitally-modified businesses
  • New Digital Business
  • Digital Globalisation

“In this interactive Harvard Business Review webinar, Westerman describes these nine key elements of digital transformation and shares case studies of companies that are transforming.” you can watch this webinar here!

Do you know the, lately, released book called: “Leading Digital, Turning Technology into Business Transformation”. The book, written by MIT’s Sloan Research Scientist George Westerman, Capgemini Consulting’s Senior Vice-President and Global Practice Leader Didier Bonnet & MIT’s principal research scientist Andrew McAfee gives an overview of the current digital transformation landscape. But it does not end there. Westerman, Bonnet and McAfee provided a 12 step roadmap that must support companies of the ‘old’ economy transform into real digital masters.

In this keynote session recorded at Oracle OpenWorld 2014, Dr. Didier Bonnet, Capgemini Consulting’s global head of digital transformation and coauthor (with MIT’s George Westerman and Andrew McAfee) of the upcoming book “Leading Digital,” highlights how large companies in traditional industries—from finance to manufacturing to pharmaceuticals—are using digital to gain strategic advantage.

So it is all about Transforming my IT right? No, most definitely not! In his very informative presentation with nice visuals and tables, Vishal Sharma explains: “Why Digital Transformation is not an IT Transformation”

Ok, so Digital Transformation is not an IT Transformation, I got it. But the, what is Digital Transformation? Digital Transformation is a mind shift towards the new normal. A paradigm shift from old, traditional, physical business models towards new, flexible, digital business models. In this way companies can better determine business needs, provide in a better, lean, approach what their customers need and deliver it according an excellent Digital Customer Experience (DCX). And that is the reason: “Why Businesses Must Embrace Digital Transformation”:

There is no such thing as disruption

If you ask me the thing that will be disrupted the most will be our minds, the way we look towards companies, industries and markets. The only thing we see today, in different market segments all over the world, is that companies will identify, produce and deliver their belief in a different way than they used to do. The reason for this is, that they need to… Customers, clients and target audience groups can no longer be found in traditional channels. Therefore, companies need to change the way they deliver their reason of existence in other, non traditional, channels.

PHY-gital

But, even if Digital Transformation is the fall of business as usual, it tells us something else: “Digital Transformation: The paradigm shift towards business as usual”. Digital Transformation is the mind shift to success in the near future. Be aware that you will not be the next Kodak or Nokia. Be prepared for a big change. A change from 100% physical towards an integration with digital. There always will be physical elements in your business processes, but there will be a more and more integration with the digital world. A new marriage within business model is announced, the marriage of PHY-GITAL.

“Are you the one who is going to disrupt, or are you going to be disrupted?”