What is Digital Transformation?
In many companies, a transformation journey has started which is called digital. It is one of the most popular words in articles today, but what does it really mean? Here is my understanding of digital transformation: “it is to leverage new technologies and utilize new set of capabilities, tools and design/create new services, products to the customers and change your culture, operational model, organization according to that and start to do your processes different than as you get used to. For example, when I go to a bank branch, I would sit in front of a screen, talk with virtual agent and get helped by a machine which looks like an inspector gadget’s. Or banks will get services from fintechs and integrate them with their products & services to offer customers new values. Or manufacturing companies will use sensors to monitor the products they sell and inform their customers about the performance & life cycle of that product and even configurations of the product will be changed according to coming data from sensors.”
One day, when I did a similar explanation to my colleague about digital transformation, he had a weird look and said “so expectation of customers’ needs to be met.” Well, when I say that simple, my answer does not sound any digital. Frankly it is that simple; to meet customers’ expectation, we need to transform our processes, technologies, culture, skill sets and organization. By the way, Amazon is not transformed to technology seller company from a book seller by just adapting to their customers’ expectations. Expectation is both sided medallion, one side is for customers’ and the other side is enterprise’s (aka strategy).
But haven’t we done this for ages? Right, we have been transforming from the first day of Adam, it is in the theory of evolution. So why is that digital transformation different than our recent transformations?
I believe it is the acceleration of change, which has been increased incredibly for last years. I hear new technologies, scenarios which make me to stare at space for a few seconds and try to digest it, like blockchain, IOT, AI or Elon Musk’s tweets. His tweets make me to expect that one day I will go to Mars for vacation instead of my parent’s summer house. Also according to Google’s study; if the website takes longer than three seconds to load, customers will leave that page. I remember times when I was waiting in peace in front of my loading screen like a yogi in mediation on Himalayas. Yes, expectation changes.
So far we have slowly built beautiful, battle tested strong and successful solid systems, processes and organizations with tears and fight. But all of a sudden, we see that it is not bending as we want anymore. Honestly our way of doing work hasn’t been changed for decades in many industries.
We have done technology transformations, change our infrastructures, applications, programing languages. For example implemented ERP software or finance systems and optimize our processes. But fundamentally, didn’t change how we serve to our customers. In that case technology transformation and digital transformation are two different concepts. In digital transformation, naturally we need to use new technologies, but also we need to change our organization, way of serving to our customer & also employees and culture.
In some big companies, there is an innovation fund, which is not linked to ROI (return of investment). This encourages organizations to try new things without fear of failure. For those companies failures have valuable outputs, you learn something new to try for the next time. This is a good example of cultural change and mind shift in organizations which is underestimated generally. Unfortunately, in transformations most of the time focus is just on the technology part, like development & maintenance of systems, integration points, monitoring systems. But how can we innovate new services, products without experimentation? How can we experiment without failures? Without failures, how can we develop? Failures will not be a lost, if we learn something from them.
Digital transformation is a new way to interact with customers, but also it is a new way of interact with employees, too. If we start digital transformation, without being prepared for failures, how we can be successful.
It is inevitable. When you have a new technology to implement, it means you will have an untested technology also you don’t have in house knowledge. We cannot assume to go out and buy a new technology and implement it without any problems. “There will be failures, don’t try to avoid them. Embrace them gracefully” I like this statement which came across while studying Netflix micro services architecture transformation.
All enterprise’s digital transformation journey and their challenges will be unique. Because new set of capabilities they want to have will be align with their strategies which will be specific for all. In this journey, one company may select to develop this in house, one might select outsource and focus on vendor management skills. But all of them have to be prepared for failures during that transformation and have strength for it.
But how can we prepare for failures? When we try something new, generally we don’t know what could be the results at the beginning. Sometimes we are learning, while we are doing. When we try something and fail, we try something new. But if other services are dependent on us, we afraid to break them while implementing that new technology. If we fail, impact would be huge. In this case best risk mitigation approach would be to minimize the impact of failure.
Nature is so kind, solutions are coming with difficulties. In this new era, sharing information is valuable. That’s why development of technologies is so fast now. We share our experience and built on others’ lessons learned. How big data was started? How machine learning or micro services are developed so fast? It is same for blockchain development, too. (I have achieved to use all the buzzwords in 2 seconds!) Answer is open source.
Some big companies like Amazon, Netflix, Spotify, Souncloud and many others share their journeys and make their some workings public. These companies’ common point is that they make transformation and design their architecture to resist failures aka embrace them gracefully. We may not work in technology companies like these, but we may find beneficial points for our transformation.
Let’s study what they have done to be flexible, modular; and minimize the impact of failures or embrace them gracefully. I will try to summarize my inferences of other companies’ transformation journeys in series of posts. Hope it will be helpful for all of us. I use this platform to share and learn. For that reason all comments and feedbacks are welcome. See you at next post!
P.S:Original link of the article is = https://www.linkedin.com/pulse/prepared-digital-transformation-onur-deler/