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I am very familiar with the sceptical gaze you are throwing right now at your screen while mumbling, “Yet another BS article about digitisation”. And I understand very well your scepticism as digitisation has become a buzzword often used and largely abused. Myself, as an IT engineer working for years for large companies, I have seen executives abusing this word without any actionable plan but rather a very ambiguous initiative which they believed will magically happen if they keep saying it over and again.
As said above, I have too often seen a lack of clear and practical digital vision to aim for, which had devastating results on the credibility of the digitisation efforts. Poorly synchronised and short-sighted projects were launched in a hurry under the label of digital with a blatant lack of strategic overview. Needless to say that these projects ended up very badly as employees did not understand them while being aggressively pushed to deliver something whatsoever close to technology.
Some of you might be concluding “Totally agree, digital transformation is BS, let’s get back to work, the good old days and ways”. To which I will answer, I am afraid this is not going to work neither. It is not because digital transformation is widely poorly executed that it is not of the utmost importance for your company and business. If you see someone driving a brand new BMW erratically, you are surely not going to blame the car for it, but rather think that something is wrong with the driver.
Moreover, digitisation is no more a choice, it can, in the best case, be an opportunity if properly engineered, planned and executed but will quickly morph into an imminent and existential threat for your business if not seriously dealt with. Do not take my word for it, ask instead taxis, movie producers, car manufacturers, media and movie theatres, brick and mortars, banks etc. The list of disrupted industries which have missed the train of digital transformation is very long, and they are all paying a hefty price for it. Also, I can only warn those who feel safe from the disruption that they should probably give it another look. Indeed, their settled complacency (along with their comfortable margins) will be soon attracting nimble digital challengers. These new entrants will turn digital technologies into THE ultimate competitive advantage that can put established businesses out of business overnight. Digital technologies for example can lower operational costs by simplifying complicated processes, allow new business models to emerge, create new distribution and marketing channels, lower entry barriers by circumventing regulations or all together at the same time.
BUT TECHNOLOGY IS BY NO MEANS AN END
However, most businesses handle digitisation by rolling up some pieces of technology, calling them PoCs and expecting to gather insights about their usefulness while playing around with it. The analogy that comes to my mind on this ‘strategy’ is like if a person knows her house is due for some serious repairing but before clearly defining what and where to repair, she randomly chooses a tool in the DIY store across the street and starts using it on the first wall. Even if this might punctually work here or then, it is totally doomed as a long term strategy and the person will quickly loose the stamina and energy for the task as she has no clear vision. The same way, the workforce loses its enthusiasm and faith when they feel the heralded digital transformation is not driven by any strategic overview.
If we look closer to the disrupting challengers we can notice that technology is used as a tool to build innovative business models and services, and not the other way around. They do not decide on a technology and then start looking for a business to target. Instead, they study a market thoroughly, understand its weaknesses, dynamics and competitive landscape before choosing the digital solutions that will allow them to challenge the status quo. Paradoxically, the incumbents whenever they think of digital transformation skip this first important step of strategic thinking and immediately jump into technology. This is often because they are wrongly overconfident on their business’ and market’s knowledge. This tendency to rush into technology when we talk about digital transformation is driven by the human cognitive bias which leads us to focus on something less abstract that we can easily picture. While the transformation part of "digital transformation" is not something we feel particularly at ease with, it is ambiguous and we know by experience how difficult it can be. Therefore, our reptilian brain takes over, and soothes our worries and fears by focusing on the technology and digital part of it. But one must remember that technology is only a means to the transformation itself, not an end at all. You will need to spend time reflecting on abstract concepts and strategies before asking yourself, “Is there any technology that could help me in executing this strategy?” I would rather advise that all digital transformations journeys start with a strong customer focus and a list of strategic questions as the following:
1. What services your customers are craving for and how technology can help bringing it to them in an easy, cost efficient and comfortable way?
2. Are there any innovative business models that could emerge by leaning on existing (or upcoming) digital technologies?
3. How is your data silo-ed in your company? How difficult it is to break these silos? And do you take enough advantage of your existing set of data by confronting different datasets to extract valuable market or R&D insights? How much data based evidence your teams and company use before taking a decision?
4. Can you completely build new services and/or products based on your existing capabilities by leveraging on new technologies?
5. What your competition and especially new entrants in the market are doing in digital? Why? What is the goal they are pursuing by leveraging on technology? Operational excellence, broader reach, new services, all together?
6. What are the old-fashioned and costly processes in your business? How can digitisation transform them into more efficient, cost effective, less cumbersome or even better automatic processes?
7. Do you have a robust and measurable digital marketing strategy that you rely on? How much data driven decisions are being made on your different marketing activities?
8. Can you increase the efficiency of your distribution and communication channels by using digital and new technologies?
9. What are the KPIs you need to define in your digital strategy to measure the outcomes of the different initiatives and digitised processes?
10. How smooth and cost efficient are your regulatory and compliance processes? Can digital technologies help you lift some of its burden?
Answers to these questions will help you define the foundations of a sound and clear digital strategy. It might even spark other very interesting strategic questions beyond digitisation. Most importantly, it will help you put in place a coherent and comprehensive digital transformation plan that you can clearly communicate, articulate and turn into motivating digital initiatives throughout the company.
Once a sound strategic plan is ready to be executed, an even bigger and crucial challenge is awaiting, the transformation itself and all its inherent necessary changes. Change is by nature difficult and can turn sour and negative if not properly and professionally managed. Change implies, among others, challenging established and complacent cultures, spotting and tackling missing skills and reviewing outdated behaviours and processes. All of the previous are outside of our natural zone of comfort, therefore a comprehensive change management plan should be laid down to help the company and its workforce embrace smoothly and confidently the transformation at all levels.
Finally, I want to conclude by stressing out again the looming disruption and the urgency with which digitisation needs to be dealt with. As the 21st century American poet and singer 50 cents would have put it in this context “Get strategically digital or die trying”.