There are very few industry sectors that haven’t experienced some form of digitisation. We shop, pay our bills, read the news, and book holidays online. We register for government services, and interact with customer services through Twitter, Facebook, and online forums.
We can register our likes and dislikes, make service providers aware of our preferences, and set reminders for repeat services. And we can do these things from almost any device in almost any location.
But the truly digital business is harder to find. This online capability is little more than an extra layer added to existing business processes, or a new channel that has been jerry-rigged on to the side of existing procedures.
Behind the scenes, the day-to-day operations of many organisations remain largely unchanged. Data is constrained by silos that lock up potential value. Processes are duplicated and repeated, and fiefdoms of operational responsibility are fiercely guarded.
> See also: Cloud strategies for digital transformation
Consider retail as an example of the digitised business that hasn’t quite made it to fully digital status. Online sales continue to rise every year, but very few retailers have a fully hybrid ‘bricks and clicks’ operation that enables online orders to be picked up in store, or online purchases to be made while browsing the aisles.
Digital retailers could create a personalised shopping experience; but instead they have simply made another completely separate shopping channel available. In the same way, most retail banks now offer online and mobile banking capabilities.
But joined-up services that put the customer at the heart of the business and deliver ‘needs-based’ payment capabilities are much harder to find. That banking app is just a less paper-intensive way of doing what banks have always done.
But there is much to be gained from going fully digital. As these examples suggest, part of the value of a truly digital business lies in the nature of the relationship with customers: it can be more personalised, more relevant, more responsive and more immediate.
By eliminating layers of bureaucracy and cutting duplicated processes, digital businesses also have much more efficient and streamlined operations that can improve P&L and cut costs.
However, for many organisations a move to digital is about averting a more fundamental, even existential crisis. There is a growing cohort of businesses that are built to be digital from the outset, and which are now challenging long-established incumbents.
Those banks that are resisting digital are facing disruptive challengers from the most unexpected quarters like Google and Apple. The purchase of the storied Washington Post by Amazon tells its own story about the future of print media.
Film-makers are by-passing broadcasters and traditional distributers and going straight to the consumer. And of course, taxi drivers are being challenged the world over by Uber – the poster-child of disruptive start-ups.
The truly digital firm isn’t just about the technology – although it naturally plays a huge part. It’s often about having a lean, fit-for-purpose set of business processes unencumbered by traditional ways of working or old ways of thinking.
Digital transformation is a serious undertaking: it’s not about adding automated capabilities to analogue procedures, or replacing paper-pushers with screen-jockeys. Instead, it’s about re-engineering the organisation around a digital capability and, if necessary, re-inventing its processes from the ground up.
It’s a major change project and should be managed as such – which creates its own challenges. The key things to remember are:
As with any change management programme, getting the fundamentals right is essential
This means having a clear vision of what you want your digital organisation to look like and the benefits to be delivered.
Secure buy-in and leadership from the top. Since digital transformation is likely to have an impact on every role within the company, ensure that everyone understands and is engaged in the project.
Plan and co-ordinate properly.
It’s always tempting to respond immediately to the latest technology launch, market development or competitor announcement – especially when the fear of disruptive start-ups is a driving force. But it’s rarely a good idea. Be clear about your organisation’s goals and how far and how fast you want to change.
Keep attention on the bigger picture.
Don’t get distracted by day-to-day events or by minor adaptations to existing procedures.
Distinguish between short-lived trends and major new movements in the marketplace, and avoid getting bogged down by the minutiae of technology risk assessment, widgets and apps. The goal is business transformation. Digital tools are simply the enablers.
Work with the right people.
Digital officers, data scientists, and high-tech user experience designers, for example, are all likely to play a significant role – focusing on new possibilities and how best to transform core operations quickly.
But managers and employees from the traditional part of the business must also be engaged to share skills, knowledge and industry experience, as well as ensuring that the day-to-day operations stay on track.
Prepare people for the digital future.
A truly digital business is rarely static and usually requires faster decision-making. Successes are likely to be incremental, and where failures occur they need to be fast so the organisation can quickly move on. Different management styles may be needed, especially as digital transformation can cause unexpected or unwanted shifts in power relationships.
Expect to support both dented egos and vastly altered career expectations throughout your organisation. Encourage managers who have learnt to operate in the analogue era to learn how to use big data to guide their decision-making.
Remember that goal posts are always moving.
The pace of change is so fast that the move to digital will always be a dynamic project – with new opportunities and challenges continuously emerging. It’s all about agile development and flexible progress: monolithic IT installations are yesterday’s dinosaur.
Keeping focus on the end goal – re-engineered business processes that deliver greater flexibility, lower costs and greater customer satisfaction – helps meet moving targets.
Decide how far you want to move away from the traditional business model and established business purpose.
Going digital can be distracting and confusing, and organisations can lose their way by moving too fast and changing too much, and so lose sight of the things that currently make them successful.
Move too slow and the world moves on without you. Innovate at the pace that suits the business, its market and its customers.
Finally – the simplest and the hardest rule of all: Be prepared to change everything.
Sourced from Steve Mcloughlin, CEO, Zaizi