How to think of Digital Transformation — A perspective.

There is a lot of pressure on companies today to embark on a digital transformation journey, or at least to start exploring it. The pressures range from within the company (to ensure your employees feel that they are working in a company which is agile and knows how to keep up with the times), to competition (if you are not doing it, your competition sure is) to customers (they want better accessibility and are being charmed by your competitors).

I wanted to share my views on how I think of digital transformation.

I really like the view of Digital Transformation put forward by Satya Nadella, CEO of Microsoft.

At a high level it talks about four pillars a company should look at to change it’s business with digital transformation: a) by engaging its customers, b) empowering its employees, c) optimizing its operations and d) transforming its products.

Here is my take on those four pillars:

  1. Engaging your customers: Customer obsession is not new, every now and then, you see books and articles about focusing on customers — but here I think we have an opportunity, to bring the disparate activities that happen in an organization and pull it together to have a different vantage point on the customer and take action on it. Think of understanding customers and their sentiments through social media and bringing that knowledge into decision making around building products and providing services and then taking feedback from delivery of those products and services and putting it back in the next iteration — this continuous feedback loop is today a possibility through technology (think Big Data, Data Mining, Analytics, Real Time monitoring, etc). The continuous tweaking allows companies to constantly improve how they are addressing customers though digital media. Not that we couldn’t do better engagement on digital media before, but today we are able to have almost a real-time feedback loop which can be implemented real time to measure and adjust how customers are taking action and how we want to change their actions.
    Digitization in traditional business models opens up opportunities to connect with customers in newer ways and is able to create net new sources of revenue for the company.
  2. Empowering your employees: Employees are the biggest asset a company can have. Retention of employees, Work-Health-Index, etc. are some of the key concerns of a CHRO and company leaders and managers. I think this breaks down into two categories:
    a) Automation and centralization of processes: let me start by repeating — employees are the biggest asset a company has. Assets that are hired with a lot of deliberation, cost and high expectations. A company should ensure that it is doing all it can to enable the employees to spend time on what it hired them for and not getting them to spend time on doing expenses, booking travel, logging in sick leaves, approving POs, monitoring proof of execution, etc. Automation and centralization of processes to give back more time to employees is an immediate advantage that can be reaped here! I agree its not as sexy as tweaking business models, but this is an easily remedied problem/issue with big returns that every company should look at. There are so many products/services and so many System Integrators that can provide all kind of services to implement this for you today
    b) Enabling employees: when automation and centralization gives time back to your employees, they should be rightly enabled to ensure that actual productivity can be correlated with improvements and time provided back through automation and process centralization. An easy example is productivity tools, there is a huge productivity uplift that online or cloud based productivity tools like Office 365 provides compared to on-premise or outdated one. If you just think about the enablement that it provides employees in terms of allowing them to collaborate with their coworkers better, the return to the company is exponentially multiplied. The impact here can be huge not only for the company in terms of increase in productivity, but also in terms of employee satisfaction, customer satisfaction, and gaining competitive edge by maintaining an enablement focused working culture.
  3. Optimizing your operations: Digitization can pay huge dividends in your day to day operations. Starting from improving your service levels, improving responsiveness of your business to reducing cost through adding efficiency to your daily operations. To me this means more than eliminating manual work — a good example would be how Walmart is testing blockchain for supply chain management. The supply chain sector which represents billions of dollars in enterprise revenue is troubled with losses and inefficiencies due to risk, fraud or old-fashioned manual paperwork delays. The Walmart case is particularly interesting because it’s not only optimizing its operations but also addressing the food safety concerns by using the transparent ledger model — BlockChain.
  4. Transforming your products: I look at this from a perspective of not only transforming your products, but transforming your business models. The possibilities here are endless as I am sure you can tell from the new products and services hitting the market these days. Every company would need to be a software company and use the power of software to expand the boundaries of their business model and leverage or partner with existing platforms to gain advantage and deliver better experience to the customer. There can be few ways of doing this:
    a) Leveraging digital to provide a companion digital product or create a digital version of the product (think of GE’s digital twin which is a complementary product to their engines and turbines)
    b) Creating or leveraging digital venues as additional sales channels for your products (think of going online or leveraging platforms like www.amazon.com)
    c) Expand your product/service to include peripheral products/services which you can provide as a supplement (think of travel companies letting you purchase hotels and insurance and rental cars and take up custom guided trips when all you wanted to do was just to book a flight)
    d) Leverage the global digital stage to expand across regions (think of using global eCommerce platforms to serve other markets and address additional customers around the globe)

Hope this provides you another viewpoint on digital transformation and is helpful in your journey.

All the best!