Demystifying Digital Transformation
Should companies really care about it? Can big corps compete with start-ups, already digitally born?
Disclaimer: please note the following is a collection of personal thoughts. All info is publicly available. The content hereby written does not reflect in any way the position of the company I work for.
Today we talk about digital transformation. We keep seeing and hearing these two words on lots of social media networks, blogs, magazines, newspapers, books, conferences, events, internal meetings, presentations. We keep hearing them over and over. The two words are so relevant that even new professional roles have been created. Among the most common: the Digital Transformation Director/Officer, which purpose is to bring the company (usually a mature business) into the digital era.
So now with this article, I will try to give an answer to the following questions:
- Why should companies care about digital transformation at all?
- How can big corporations compete with startups, already digitally born? How can they adopt the same speed and execution excellence?
- Where do businesses need to focus on? What are the typical stages?
- But most importantly, what does digital transformation really mean?
To answer these questions, I’ll start by giving some explanations around the most common meanings. I’ll also describe the necessary steps to become a truly digital company following, as a metaphor, the four stages in the metamorphosis of butterflies and moths: egg, larva (caterpillar), pupa (chrysalis) and adult (a nature-oriented cit.)
Enjoy the reading.
What does digital transformation mean?
The official version states:
Digital transformation is the change associated with the application of digital technology in all aspects of human society.
The transformation stage means that digital usages inherently enable new types of innovation and creativity in a particular domain, rather than simply enhance and support traditional methods.
In a narrower sense, “digital transformation” may refer to the concept of “going paperless”, and reaching a “digital business maturity” which affects both individual businesses and whole segments of society, such as government, mass communications, art, medicine, and science.
There are also other versions. The following comes from Mr. Solis, an expert and thoughtful leader in the field, which defines digital transformation as:
[…] the realignment of, or new investment in, technology, business models, and processes to drive new value for customers and employees and more effectively compete in an ever-changing digital economy.
Why should companies care about digital transformation at all?
It is inevitable. Some say that the disruption that digital is bringing may wipe out 40% of Fortune 500 firms in the next ten years. There is no escape. Make peace with it.
Digital transformation is about realizing that customer expectations have changed and companies need to meet their needs in new ways: faster and via other tools. Customers are now used to get anything they want, everywhere they are, in the shortest amount of time. Before they had limited choices and power, now their world is literally at the palm of their hand, with a constant overflow of info, data, products, ads, all fighting for a micro-second of the customers’ attention. So embracing a digital transformation can help the companies survive, as they future proof their success.
Refuse to do it? Researchers found that businesses who do not address digital transformation could lose 30% of revenue and up to 25% of lower earnings.
How can big corporations compete with startups, already digitally born? How can they adopt the same speed and execution excellence?
First of all start-ups are digitally born not because of the fact that all start-ups are digital. Not at all. It is because the teams’ structure and composition, culture and skills are usually formed by people that were born with a digital mindset. Through a mobile always connected device, they have access to an infinite amount of information. The brains of the new generations are wired differently.
Now, for a big corporation and matrixed environment, this is really challenging and likely the toughest part. Change management is important here: inevitably, you’re asking employees to embrace change. People are usually reluctant about that. So you need to take them with you on the journey.
Where do businesses need to focus on? What are the typical stages?
As I was writing before, let’s try answering these questions using as a metaphor the four stages in the metamorphosis of butterflies and moth.
1. Egg. Laid on plants by the adult female butterfly
So, plant the seed. Explain the why first. Make them dream, let them also have fear. The stick and the carrot. However you want to put it, you need to convince and persuade people that this is the right thing to do. A good starting point is to set-up informal discussions within teams to get thoughts around potential challenges and blockers. This is actually also a good opportunity to understand who could potentially be the ambassador of the new “movement”. Evangelists which the company can use “for free” to “convert the non-believers” (a religious cit.).
“A butterfly starts life as a very small, round, oval or cylindrical egg. The coolest thing about butterfly eggs, especially monarch butterfly eggs, is that if you look close enough you can actually see the tiny caterpillar growing inside of it.”
2. Larva (Caterpillar). The Feeding & Incubation Stage
Something is changing, growing. Engage at multiple levels. Educate the workforce, start with the entry levels in the hierarchy, but absolutely do not forget about the Sr. Leadership. Nothing will happen if the board and the other senior leaders do not buy into the idea. Suggest running a masterclass to bring the most influential people of the company to understand how the future looks like on Earth. Sell the vision! Talk about the disruption that Amazon, Facebook, Google, Microsoft, Apple, Alibaba are bringing, mention new business model innovation and its benefit, the new sharing economy with the likes of airBnB, Uber, Netflix, explain the concept of digital transformation, suggest implementing lean methodologies. Show them how other companies are successfully (or not) implementing the change.
Actually, you don’t need to leave the galaxy to find good examples (a space cit). Just look at East. China, Japan, India are really showing their muscles when it comes to new technological improvements and the rapid pace of change of their economies and businesses. Constantly nurture middle management with new information. Identify the ones with ties with the most senior leaders and bring them along with you.
This is the prototyping phase. The Minimum Viable Product. Select a small cohort and adopt lean start-up methodologies in full. Do daily stand-ups, change their targets, protect them from the paparazzi (curious employees and senior willing to help but actually interfere in the change process). Then do another experiment: identify another cohort and start implementing small changes instead. Define KPIs. Monitor. Test and learn. Repeat. Find the formula that works for your company. Rules and guidelines can be applied until a certain point because each company has a different culture. Fasten your seat belt though, because the flight is going to be on a bumpy and cloudy ride (an aerial cit.).
3. Pupa (Chrysalis). The Transition Stage
“The pupa stage is one of the coolest stages of a butterfly’s life. As soon as a caterpillar is done growing and they have reached their full length/weight, they form themselves into a pupa, also known as a chrysalis. From the outside of the pupa, it looks as if the caterpillar may just be resting, but the inside is where all of the action is. Inside of the pupa, the caterpillar is rapidly changing.”
Here we start seeing digital transformation spreading like a virus, contaminating other people minds (a human-body cit.). At this stage, half of the workforce will look at you like a beast, while the other half will start producing results with speed, becoming more and more effective and productive (a monstrous cit.).
4. Adult. The Reproductive Stage
The final stage. Not the end, but a new beginning. In this stage, after many years have passed and many people have been luckily re-trained on digital and change management skills with surgical precision (or fired!), we finally see the company moving at pace and even surpassing its peers and competitors. We are ahead of the curve. Investing millions in research and development, hiring and retaining the best talents in sectors like engineering, software development, digital measurement and analytics, new e-business development, digital and eCommerce sales & marketing. The company sets the example and the talented professionals who led the change and obtained big achievements, are now finally ready to leave the company, to reproduce and spread the mantra of digital transformation in new-old companies to transform.
What does digital transformation really mean?
All four stages have happened. The company is now a new company. Re-born digital. In reality, I will tell you this secret, here what digital transformation truly means*:
- It means a change in how people are rewarded and a change in KPIs. The new targets are around how much we learn from the customer, how many digital campaigns we activated, how many converted and how fast can changes to the offerings (or a website) happen in real time
- It means your daily discussions at work rotate around data points, metrics and cool new features released on your dashboard by some phantomic far away engineer leaving in a remote place
- It means you are no longer complaining about how many negotiations call you need to do, but rather how lonely and miserable you are in front of your computer
- It means Excel is your new best friend, and Powerpoint is your dead grandpa
- It means you show off with your colleagues by showing the latest automated function you created
- It means discussions are more and more fact-based and there is no social cohesion in meetings: everyone can challenge if backed-up by data points. This is especially true for Western companies like Amazon
- It means you get pretty annoyed when you realize two set of tools don’t get you the same output, as the attribution methodology is different, and you realize that after ten meetings with your senior executives
- It means a Sr. Leader in your company asks you to run a query, but in case you don’t do it, he/she runs it by him/herself and then fires you with great satisfaction, acknowledging how useless you are
- It means you miss nice talks in person, face to face, as 80% of your interactions happen virtually, as the majority of your colleagues is working remotely, somewhere else in the world
- It means you can stop spending money hiring digital agencies because you can rely on your internal team of pro developers, precision and performance marketing experts
- It means a good chunk of your company is formed by engineers and software developers, which earns more money than you do, but surely live like pack mules
- It means your leadership principles reflect full customer obsession and a data-driven approach and low interest for anything that is opinion based
- But it also means that actually, in an era where data is accessible to anyone and opinions are fact-based, one of the key long term competitive advantages is to know how to blend a data-driven mindset with good business acumen and gut feeling
- It means your ordering process, supply chain and logistics are automated through machine learning and managed by an AI
- It means repetitive jobs are done by machines and algorithms and — unless you are the creative mind your company needs (mission impossible) — you need to find another job
- It means your governance process is leaner and requires fewer steps to bring projects to life. This means less time to market. Yay!
- It means experimentation and A/B testing is a huge part of your daily job
Before any technological improvement anyhow, the true change happens at the organizational and individual level. The way people interact, the day to day job, changes. So digital transformation really is the transformation of the human behavior, in a world where 80% of our time (which we spend at work or working) will slowly move away from contact with nature and animals, away from contemplation, slow rhythm and meditation and more towards the world of wonders, where artificiality merges with reality in a way we will no longer able to tell the difference and realize that we spent 3/4 of your life in front of a screen.
That’s all ladies and gentlemen! What do you think about digital transformation? Did you experience the same in your company? I am looking forward to hearing your opinions in the comment section below.