Written by Sven Van Hoorebeeck
Digital transformation is everywhere. But what do people actually mean with it? What is digital transformation, really? What key areas of change need to be considered? Projects everywhere in an organisation are hyped-up under the stamp of "digital transformation", while they are often not at all related to the topic. And let's be honest, it's not (only) investing in AI & mobile apps that defines your digital transformation!
The basic question!
Let us address the basic question first: “how do we define a digital transformation for an organisation?”. Based on our combined decades of experience at BrightWolves, we see the following 5 areas being addressed within digital transformation:
1. Customers & Sales Channels: opening up new ways for customers and businesses to connect to each other
2. Business Models: enabling new business model possibilities for incumbents
3. Next Gen Operations: making operational and back-office activities much more efficient
4. Organisation Agile Transformation: the pace of change is so fast, that companies need to be able to reorganize themselves to respond quickly
5. Technology Transformation: the IT function should be an enabler of change and a driver for innovation
Customers & Sales Channels
The first area we will discuss is all about new ways for customers and businesses to connect to each other, thanks to digital transformation. For us, three focus points are essential here:
1. "Customer is king". Every change should have the customer in mind. Digital channels can only grow when customers increasingly use it to explore, compare and make purchases. One way to cope with this is building ecosystems with other companies, in order to offer a one-stop shop for customers to ‘get the job done’.
2. Know what the customer values. Get to know your customers and optimise the way you approach them. Many organisations claim they are doing this, but few really do. Concretely this means adopting design thinking approaches, and building the capability to better capture, analyse, and utilise customer data & feedback.
3. Omni-channel collaboration. Let the customer experience your company as one to create a superior, value adding customer experience. Stimulate collaboration between sales, marketing, operations and service teams.
Business Models
Business models are all about enabling new business model possibilities for incumbents as well as start-ups. According to us, these are the three focus points you will need to look at to succeed:
1. Adopt lean start-up practices. Apply lean principles to develop new businesses/products/services. Take the people working on it outside of the normal functioning of your organisation. Do not do it all by yourself – it’s impossible to keep up with the pace of change for all kinds of technology – but form partnerships. The idea at the core is to continuously balance the level of investment with the level of risk as an innovation is explored.
2. Manage the organisational immune system. It is human nature to resist change, and this is one of the most difficult factors to manage in developing and launching new products, services, and associated business models. Ensure the right emphasis on what you want to achieve and demonstrate value to overcome change.
3. Go data driven. Building a capability to quantify, measure and act upon data (reflecting true business performance) is critical to the success of new business models. Be clear on your business objectives, identify the drivers behind those objectives and then define the appropriate metrics to ensure you are accurately measuring success. Establishing a KPI framework will help you formalise and embed the process into your business system.
Next Gen Operations
This part of your digital transformation is all about making operational and back-office activities much more efficient through the use of (innovative) technologies. Here, the three focus points to take into account and that will largely define your success are the following:
1. Drive business adoption. Managing business change is the crux of internal digital transformation. Start with concrete and expandable use cases to quickly prove value, providing exponential benefit as you scale them.
2. User-centric design. Just as the customer is king within the customer & sales channel area, the user is king for internal business change. Think about all your users, even the ones further up or down the chain.
3. Business and IT collaboration. As employees become increasingly tech-savvy and digital technology becomes more intuitive, we see ever-greater configuration options at the control of end-users. Think about RPA and Intelligent Automation as an example. The temptation of business users is to go at it alone with the technology. However, this is a grave error. Roadblocks will pop up as you attempt to scale; security issues arise, data silos develop, and the true potential of new technology is not captured. Do not make this mistake. Get IT involved from the start! The additional time it takes in the short-term will be more than rewarded in the long run.
Organisational Agile Transformation
The fourth area we will discuss is all about making sure your organisation can follow (and lead) the pace of digital change in your sector. Again, let’s look at three focus points you shouldn’t forget if you want this to be successful:
1. Ensure leadership understands and lives the change. Being agile is absolutely not about putting new delivery processes in place, it is about creating a new culture of collaboration, accountability, continuous improvement and value delivery. Leadership needs to truly understand this to stop reinforcing old behaviours!
2. Reorganise and resource teams properly. An agile delivery team is built around defined key roles, with each role constructed around the goal of that team. Besides these roles you will also need dedication. Without it the team will be challenged with context switching and mixed priorities which will only slow them down.
3. Practice, practice, practice. Agile sounds great, and is common sense in a text book, but like most things it is a craft that takes time to learn. So start small, rather than planning big things. The whole point is that you run in short iterations with effective retrospectives, so that at the end of each iteration you learn something new — and apply it next time.
Technology Transformation
Finally, technology transformation is all about how IT can be an enabler of change and a driver for innovation within your organisation. Let’s look at the three focus points that will be essential to make it work:
1. Fix the basics first. In order to become a strong partner for the business, the IT basics must be in place first. Ensure that service delivery is strong, and that day-to-day operations run like clockwork, delivering well within SLA's. Earning a seat at the table to discuss strategic topics and drive innovation & growth starts with being credible — reliably delivering on the fundamentals.
2. Start with people. Technology transformation is ultimately about being able to deliver fantastic technology, but the starting point is with people. Identify where the business is going, what capabilities it will need in the future and how people will use them.
3. Customer first and business-led. Technology is an important catalyst for change but never starts with the solution first. Value is only created by technology when it solves a real customer or business problem. Don't build AI solutions because it sounds cool, but build it to solve a business problem!
After reading this article, digital transformation might seem so much bigger than you thought but don’t let that scare you! You don’t need to do all at once. We’re here to help you navigate through this, so don’t hesitate to reach out to us for an open conversation.