The Mechanics of Digital Transformation

The Mechanics of Digital Transformation

Digital transformation undoubtedly is on the front burner for most businesses today. The question is no longer whether to undertake digital transformation; the question is how to get it right. The pace of change in the business environment is on the increase. Indeed, customers expectations are changing and market dynamics is radically changing; hence, businesses must respond timely and adequately to remain relevant and valuable. 

Digital transformation involves re-inventing your business to deliver value, leveraging digital technologies to understand the customers, and deliver what the customers need, and the way the customers want solutions delivered to them.

According to 9senses.com “Digital transformation is about changing the way processes, people and technology work to create efficiencies, new sources of innovation, and new insight that was not readily available previously. More importantly, digital transformation is most effective when putting the customer at the center of the digital ground swell”. 

Most businesses have embarked on some form of digital transformation efforts, unfortunately, many are not getting the desired results. According to a McKinsey Global survey, less than 30% of digital transformation projects succeed.   

A Harvard Business Review report identified the following as top barriers to successful digital transformation: Lack of a corporate vision for digital, Inability to experiment quickly, Legacy systems, Inability to work across silos, Inadequate collaboration between IT and lines of business, Risk-averse culture, Change management capabilities and Lack of talent/skills required. 

A close review of successful digital transformation stories shows that digital transformation requires a holistic approach that proactively addresses these barriers across the entire organization. Four core elements were seen as major drivers of digital transformation; these are business vision, organizational culture, processes and digital technology.

GETTING IT RIGHT – THE AYOKS DIGITAL WHEEL.

Ayoks Digital Wheel is a framework to guide businesses to get their digital transformation right. It recommends a holistic and coordinated program of change. It presents four elements as the core drivers of digital transformation, which must be strategically coordinated to achieve successful digital transformation.

It infers that successful digital transformations are centered on inspiring business vision, nurtured by the right organizational culture, follow iterative processes and are powered by one or more digital technologies. These are captured as different layers on the Ayoks Digital Wheel. 

 At the center of the wheel is the vision which presents the desired business outcome that the digital transformation project is geared towards achieving. The next layer around the vision captures cultural values, practices and beliefs required to achieve the business vision. The third layer from the center shows the series of activities/processes that form the strategic road-map for the digital transformation project. The outermost layer of the wheel represents the different digital technologies that organizations can deploy in their businesses.  

These technologies provide the platform (power) to enhance operational efficiency and fulfil customers’ needs. The technologies provide the interface with the customers and the outside world; they are the most visible component of the transformation story and may be the reason why some businesses erroneously focus on technology alone; but without the other elements inside the wheel, success is elusive.

VISION – THE FULCRUM OF THE DIGITAL WHEEL

At the center of every successful digital transformation is a clear and compelling vision. Technology is an enabler. It gives you power but it does not tell you what to do with the power. Your vision tells you what to do with the power that digital technology offers you.

The businessdictionary.com defines vision as “An aspirational description of what an organization would like to achieve or accomplish in the mid-term or long-term future. It is intended to serve as a clear guide for choosing current and future courses of action”. 

Creating an inspiring and compelling vision for your business should be the starting point of your digital transformation journey.  Your business vision is a picture of the future for your business. It is where you want your business to be in the future (5 years, 10 years, 20 years, etc.) This vision determines your goals, guides your decisions and focuses your actions.

CULTURE – OILS THE WHEEL OF TRANSFORMATION

 According to McKinsey & Co. Research, culture is one of the main barriers that hinder organizations’ digital transformations. In a Gartner’s press release, it stated that 46 percent of CIOs identify culture as the largest barrier to realizing the promise of digital business. 

Developing the right organizational culture therefore is critical in achieving digital transformation of your business. Organizational culture includes an organization’s beliefs, expectations, philosophy and values that guide interactions within the organization and with the outside world. The right organizational culture in today’s digital world will as a necessity include the following; 

Customer centricity – This means making excellent customer experience the focus of all decisions and actions. It involves having a feedback mechanism that ensures customer needs are always captured and addressed. This also means that an organization focuses on what the customer wants or needs instead of what the company offers. 

Cross-functional collaboration –  This is the practice of having effective collaboration across different teams as against a situation where different teams work in silos. This involves creating an atmosphere that encourages sharing of knowledge and insights; it’s an atmosphere that encourages team achievements above ‘key-man’ syndrome. 

 Informed and empowered workforce –  This is a system that empowers employees with the right information, skills and insights. This implies employees are regularly informed and engaged about what the organization is doing and the employees are also empowered to contribute to what the organization is doing. Letting your people know what digital transformation means for the organization and how it will impact the workforce will encourage employees to embrace it.   

Reasonable risk appetite – This is a culture where people are comfortable trying new things; where employees can take calculated risks and are not punished for adverse outcomes. This is important as digital transformation requires challenging the status quo. 

Agile and Innovative culture – A system that allows people to think out-of-box, think big, fail fast, learn and improve. This involves building a system that rewards success and also encourages creative failures and learning from failed attempts. 

PROCESSES – THE MOMENTUM OF THE DIGITAL WHEEL

Digital transformation of your business is a journey that consists of several iterative processes. The following are five iterative processes that can guide a business to successfully reinvent and offer more value to their customers;

 Determine Your Minimum Viable Product (MVP) –  MVP is your value proposition (that is the problem you solve or service you render) packaged as a product for the market in its basic form. It is important you define this with a focus on the real value that your customers get and what they are willing to pay for.

 An understanding of the value you offer is important in transforming your business, as it enables you to rethink your products while improving on the value. Value is not disrupted; it is products that are disrupted.

Determine Your Business Model –   Your business model is how your business operates, creates and captures value for stakeholders in a competitive marketplace. It involves how you structure your cost and revenue streams. Some business models you may use (or modify) include marketplace, freemium, subscription, lease, auction, pay-as-you-go, franchise, affiliate, and razor blade.  You need to redesign your business model to leverage digital capabilities.

 Design Your Digital Awesome Product (DAP) – Your DAP is your product in a form that gives your customers an awesome experience. You can achieve this by embedding digital values into your minimum viable product (MVP) and addressing pain points on your customers’ journey. This involves making your customers journey seamless and giving them great experience consuming your product. Designing your DAP is important for digital transformation of your business.   

Deploy Your Digital Awesome Product  –   Implement your digital awesome product (DAP) preferably using agile methodology. It affords you the opportunity of deploying in phases and going through rapid iterations based on customer feedback. The principle here is to deploy fast, fail fast, learn fast and improve. Continue until you achieve that product that gives customers a ‘wow!’ experience.

Build A Sustainable Ecosystem –  An interesting point in the digital transformation journey is building a digital ecosystem – an interdependent group of enterprises and people who interact on a digital platform for mutual benefit. This enables a business to leverage resources and innovation from outside the organization, hence making it more sustainable. Top tech businesses like Amazon, Uber, and Facebook. have successfully built digital ecosystems and are reaping huge benefits from these ecosystems.

 TECHNOLOGY – THE POWER OF THE DIGITAL WHEEL

Digital technologies provide the power that drives digital transformation of businesses. These emerging digital technologies include social, mobile, cloud, artificial intelligence, internet of things, data analytics, robotics, augmented reality, etc. Businesses need to determine how one or more of these technologies bring values and capabilities that enable them to deliver to the customer what the customer wants, the way the customer wants it. 

Social Media – There has been an increase in social media platforms like Facebook, Twitter, Instagram, LinkedIn, etc. These platforms dedicated to community based input, collaboration and content sharing have provided businesses new opportunities to engage their existing customers, prospect and acquire new ones. 

Mobile – Mobile technologies used in smartphones and wearable have significantly changed how people communicate, shop, work and do business. The adoption of mobile is on the increase. According to Statista, in 2018, over 50 percent of internet traffic came from mobile devices. This is of great importance to business – hence smart businesses are now using a mobile-first approach in their digital transformation projects. 

Data Analytics – This enables businesses to understand customer experience of their products and services, it gives business insights to how, when and where their products and services are consumed. This is of great importance in understanding what the customers want. This is a major driver for digital transformation of businesses. 

Cloud – Cloud computing offers businesses on-demand availability of computing resources to implement their transformation initiatives. This enables businesses to respond quickly to changing market conditions and demands. It catalyzes innovation as businesses are able to quickly test their products or services, reducing time to market and capital investment required to deploy solutions. 

Internet of Things (IoT) – This emerging technology creates a system where internet connectivity is extended to everyday objects like electronic devices, mechanical devices, people and animals. IoT is set to provide a turning point in the world of business. As the number of IoT devices continue to increase globally, businesses can take advantage of this in the transformation of their businesses. 

In conclusion, the core elements of vision, organizational culture, processes and digital technologies (captured as different layers in the digital wheel) are the major drivers of digital transformation of businesses. These must be strategically orchestrated and managed to successfully transform a business to remain relevant, viable and profitable in a fast changing business world.

Share this post

Post Comment