Guides

What Is Digital Transformation & Is It Relevant to Me?

The issue with the phrase ‘digital transformation’, is that we hear so many people talking about it, and claiming they’re working on a digital transformation project. But many don’t truly understand what digital transformation actually is.

The challenge here is that there isn’t a set definition of digital transformation. When we ask the various companies we collaborate with, from IBM to EY and system architects to scrum masters, everyone articulates this term differently.

Often it can be used as a euphemism for modernisation, including migrating from legacy on-premises systems to cloud software. Others have abused the term when talking about IT leader’s requirements, and I’ve even witnessed branding agencies referring to it when they’ve simply updated a website!

This is one of my favourite descriptions I have encountered:

“Digital transformation marks a radical rethinking of how an organisation uses technology, people and processes to fundamentally change business performance”

GEORGE WESTERMAN, MIT PRINCIPAL RESEARCH SCIENTIST AND AUTHOR

 

George Westerman emphasises the key areas of technology, people and processes, but he still falls short of highlighting the core vision of putting customers first.

 

Who are digital transformations for?

Digital transformation programmes are for ambitious businesses that need to act quickly to defend their market share. This can often be triggered by disruption from a smaller company that has used technology to challenge an established incumbent business successfully. The challenge becomes a threat, often when customers are lost, and then the business must evolve (transform) to adjust to this change, rethinking how it operates entirely from inside out. It’s for leaders willing to embrace change and businesses that want to be the disruptors in their industry.

For me, there are five key ingredients to be classed as a digital transformation;

  1. A business must first need a transformation, to ensure they evolve their offering and positioning to remove or reduce the potential of disruption
  2. It should be led by the CEO and not be a CIO (Chief Information Officer, usually heading up IT)
  3. It needs to put customer expectations and experience first
  4. It’s a business-wide exercise
  5. Technology is seen as a tool and not driving the exercise

A vital but overlooked part of this is aligning the brand strategy as part of the business strategy and carrying that through a complete programme to ensure it carries the main message out to all the people you need to take on the journey. It’s going to be a large project and requires a variety of people with crucial skills, all working cohesively together and buy-in from across the company is vital.

 

It’s for us, but what is the success rate?

Recent research shows that the number of digital transformations which fail is a staggering 70% [1]. But results are unclear as to why.

My thoughts on this are that too many are highly focused on integrating the technology and completely miss the opportunity to strengthen brand perception and tell the story. Engaging employees becomes a tag on at the end often leading to high attrition.

Many are making judgements or predictions on whom they think the customer is, without doing a deep analysis of the opportunities first. This leads to creating a business based on guesswork.

“The most successful programs are where businesses are 100% obsessive about the customer and embrace rigorous research on uncovering what their customer wants and thinks”

MICHAEL VON DE GEEST, CEO EY SEREN

 

Others are not digitising the brand, a key component in making the new tools and platforms a joy to use and applying brand guidelines intended for print produces boring experiences. There is a strong need to connect the technology we use in our personal lives and integrate that into your work life. A poorly designed digital experience in our personal lives dies quickly if it isn’t always evolving, but in businesses, products are developed and sit embedded as a terrible interface / system / product for years – this is not acceptable in today’s world.

 

What are the first steps I should consider?

Firstly you need to consider hiring a consultancy, and you might need to hire internally depending on your business and what’s right for you. Here are some common questions people have;

Do I need to hire a CTO?

A Chief Transformation Officer (CTO) can be a valuable role and should regularly report progress to the CEO, highlighting issues and decisions for resolution.

The transformation needs to be from the CEO from a company vision and business strategy point of view, but the CTO should lead the charge.

How do I get to know my customer?

If you onboard a consultancy, they will be able to help you by conducting in-depth research both within your current customers and those who buy through a competitor. There are market research tools out there to conduct your own, but proceed with caution, online tools can give biased feedback, getting precise analysis and reporting can be problematic, and this can be a time-consuming process.

How can I measure success?

In our experience, the most successful transformations use an advanced tool (sometimes custom-built) that allows you to track the bottom-line impact of initiatives, so make sure this is part of your roadmap.

 

A digital transformation is about using technology as a tool to deliver a better experience to your customers. Without your customers there wouldn’t be a business to transform, so they should be at the heart of your transformation journey.

 

[1] “The ‘How’ of Transformation”, McKinsey, 2016