Myths and trends of digital transformation in 2018
You have been hearing about the Fourth Industrial Revolution. It’s probably the hottest topic for businesses, thought leaders, policymakers, scientists, and of course technocrats.
Klaus Schwab, the founder and CEO of the World Economic Forum, who coined this term, writes: “The First Industrial Revolution used water and steam power to mechanize production. The Second used electrical power to create mass production. The Third used electronics and information technology to automate production. Now a Fourth Industrial Revolution is building on the Third, the digital revolution that has been going on since the middle of the last century. It is characterized by a fusion of technologies that is blurring the lines between what physical, digital and biological spheres”.
He makes a very important and relevant point: “Neither technology nor the disruption that accompanies it is an exogenous force over which humans have no control. All of us are responsible for guiding its evolution, in the decisions we make on a daily basis as citizens, consumers and investors.
While digital transformation as a term is still misunderstood, digital transformation is now widely accepted as a business imperative. So what is a digital transformation in practice? Is it an IT project? Or the introduction of some great tools in the company? Or incorporating a mobility-driven customer relationship management (CRM) initiative to better engage customers?
As an organization, whether you are looking to start the digital transformation journey or trying to stay away from it, there are still some myths about digital transformation that you should avoid. If you want to lead your organization through digital transformation, the first step is to understand the realities of digital transformation, rather than getting carried away with the hype.
In this article, we use excerpts from some prestigious industry reports/white papers to dispel some myths.
The reports/white papers we cite include:
World Economic Forum (WEF) White Paper on Digital Transformation of Industries: Digital Enterprise, developed in collaboration with Accenture
Forrester Report, The Digital Business Imperative, co-authored with Martin Gill and Nigel Fenwick
Digital is a fad; a trend my business doesn’t need to think about
digital transformation process
Digital has transformed the market environment for all businesses and the pace of change is accelerating.
The WEF White Paper says – There is widespread recognition among leaders in most industries that the role of digital technology is changing rapidly, from being a driver of marginal efficiency to an enabler of fundamental innovation and disruption. Digitization is causing radical and large-scale transformations in multiple aspects of business, providing unparalleled opportunities for value creation and capture. Business leaders across all sectors are grappling with the strategic implications of these transformations for their organizations, industrial ecosystems, and society.
Digital transformation means exceptional customer experiences powered by new technologies
Digital has impacted not only channels and customers. It is disrupting organizations from within, changing the way they do business. Digital brings new opportunities for organizations that can adopt technology quickly enough. Speed time to market, lower costs and unlock new revenue streams.
Forrester Report says: Digital business is not just about the customer experience; it’s also a way to drive operational agility. Digital operations can increase speed to market, make employees more productive, promote more agile processes, and maximize asset utilization.
Let me build an app. My digital transformation is done.
Digital transformation is not about the introduction of a few tools designed to change a particular facet of your business, be it employee collaboration or customer transactions.
The Forrester report says:
Digital fundamentally changes your relationship with your customers. You can’t address this change with an additional digital strategy that adds an app here or a site there. To stay competitive, you must redesign how your business creates value for your customers in the digital age.
Re-envision your business not as a bundle of products and services, but as part of ecosystems of personal value that your customers bring together based on their needs and wants. Learn how to increase value by expanding your company’s role in your customers’ personal value ecosystems.
Digital Transformation can only happen through disruptive technologies
It is not necessary for every digital transformation exercise to take cues from Uber and Airbnb in terms of the use of emerging technologies. The technology stack you would use depends on your business context and technology leverage is only one part of digital transformation. Sometimes you can achieve significant improvement in productivity, agility, and customer focus by using proven operational technology (networks and databases) and strategic technology (enterprise resource planning or customer relationship management) or mobility.
The WEF white paper says: A truly digital business represents more than just using new technology for the sake of it. Rather, what really distinguishes and gives a digital company its competitive advantage is its culture, strategy, and way of operating. Digital businesses continually strive to enable new and more efficient operating models supported by agile business processes, connected platforms, analytics, and collaboration capabilities that improve business productivity. A digital company relentlessly searches, identifies and develops new digital business models, always making sure that customers and employees are at the center of everything it does.
Digital transformation: I need to do this this year so I don’t fall behind
Digital Transformation cannot be and does not need to be a sprint. It is a long journey with multiple touchpoints and milestones; dependencies and synergistic efforts.
Forrester Report says: You need to transform your business by applying digital thinking to everything you do: how you win, serve and retain customers; how its internal processes operate; and how you obtain business services.
For example, just your answers to the following questions will help you design a roadmap that takes digital transformation beyond the realm of IT.
Business success of digital transformation
Have you identified areas in your business where automation is most relevant?
Is your current workforce constantly improving productivity and quality?
What steps have you taken to convince your investors of your digital vision and the long-term value creation of your digital transformation journey?
How much of your income comes from new digital business sources?
Is your business leveraging analytics around customer data, operational data, and compliance?
Do you have a digitally literate leadership team?
Have you established training programs to bridge the digital skills gap and retrain your existing employees?
How are you empowering employees through digital channels to enable faster decision-making and foster greater agility within your organization?
These are just a few myths that we have tried to address. We invite you to share your opinion about these and other myths.