Busting 5 Digital Transformation Myths
By John Rethans
In the “Aeneid,” Virgil wrote, “Persevere and preserve yourselves for better circumstances.” That’s probably how a lot of business leaders feel about digital transformation.
Research firm IDC projects annual global digital transformation spending will reach $1.7 trillion by the end of 2019 — yet according to the firm’s research, 59 percent of businesses indicate they’re at a point of “digital impasse.”¹ When a business knows it must transform but gets stuck, what is there to do except bear down and persevere through the struggles?
But perseverance takes a company only so far. If these struggles persist long enough, a business may be more likely to stagnate than transform.
Luckily, many organizations’ struggles fall into identifiable patterns — which means weak points in a digital transformation strategy may be easier to identify and remedy than many business leaders expect. Often, an enterprise leader’s first step is to disabuse him or herself of persistent myths about just what digital transformation really is.
Leading digital transformation strategy for Google’s Apigee team, I’ve seen firsthand how these myths can operate in large organizations and how they manifest in academic research Apigee has contributed to. Based on my experiences, here are five misconceptions enterprises would do well to avoid.
Myth 1: Digital transformation is a project.
Too many organizations approach transformation as a “project du jour.” It’s not uncommon to hear executives say things like, “By 2020, we will have digitally transformed.”
Digital transformation isn’t about drawing up a giant omnibus budget or setting up lots of stage gates and processes to ensure completion of various milestones. Rather, digital transformation is about gaining the ability to test and iterate products until they are as relevant as possible to customers and partners. It’s about modernizing the most critical systems for performance, scale, and security. And it’s about doing these things continuously — without end.
Businesses do not transform from one thing into another; they continually adapt. Digital transformation is about evolution and adaptation — not any one phase that a business may occupy along the way.
Myth 2: A business can transform without changing how it operates.
Enterprises often claim they want to “transform” to fend off disruption or grow into adjacent markets but fail to realize that what’s disruptive are the business models new technology makes possible, not the technology itself.
We’ve found that leaders are often more willing to swap out software systems than business models. They may be interested in releasing mobile apps or leveraging cloud storage — but when asked to do more radical things such as integrating technical leaders into strategic decision-making or restructuring companywide funding, governance, and operations for agile product management, many business leaders grow timid. They’ll say, “That’s not really the way we do things here.” But that’s the whole point — to change!
To create real change, it’s critical to communicate early and often, throughout the organization and especially from the C-suite down, that where the company is headed may not look like the company’s path today. It’s important to communicate what the future may bring in terms of values the company may hold, metrics it may value, and how those metrics could fit into incentives, job titles, processes, and organizational structure.
A successful company will always keep customers and partners as a fixed point on the horizon. It may maintain many of the same core competencies over several phases of business transformation, though how it capitalizes on them is likely to evolve. But so much else — for some companies, virtually everything else — is likely going to change.
Myth 3: Launching an innovation center increases the likelihood of digital transformation success.
As businesses face more pressure from their boards to show digital transformation progress, it’s become fashionable to launch innovation centers or put out press releases about research projects whose real-world use cases may be a decade off. These efforts can be valuable, to be sure — but too often, they’re marketing campaigns that might reassure shareholders and attract talent in the short term but don’t ultimately impact the core business.
Indeed, in my experience, many of the most successful innovation efforts have involved expressing core business data and functions as application programming interfaces (APIs), then building both internal and external ecosystems of innovative developers. The idea isn’t that each of these innovations will be a success — rather, the APIs allow developers to accelerate time-to-market for new products and services, iterate quickly, and help the business to evolve as quickly as customer preferences change.
Myth 4: Only big, rich companies can digitally transform.
Big companies often generate digital transformation headlines because of the billions they spend — but that doesn’t mean large, well-monied companies are always the digital transformation leaders, let alone the only ones who can do it.
Indeed, in times of change, fortune often favors the bold. Many of the most successful customers the Apigee team has worked with have been challengers in their space. The top business in an industry may not feel the pressure to change until it is too late — but the middle-of-the-pack businesses have every incentive to shake things up.
These companies may have an advantage in that they can more easily accommodate the holistic changes that true evolution requires. Larger companies are vastly bigger ships that can take longer to turn, and they typically face much more internal resistance from entrenched cultures and incentive systems.
Myth 5: A digital journey can be planned in advance.
The right approach to digital transformation can give a business more control over its future and even the future of its industry — but not total control. What will be the dominant user interface in five years? Will most transactions still be powered by people tapping and swiping on touchscreens? Will we use voice interfaces? Will we make purchases in virtual space using gestures in augmented reality? No one can say — and the companies that prepare best for digital transformation recognize that this means future success relies on interfacing with technologies that haven’t even been invented yet.
Fifty-slide presentation decks and extensive process flows might sound good on paper — but in practice, they often misrepresent what digital transformation requires. It’s about building capabilities to quickly create, test, and bring to market new products and services in an iterative and fluid process, not an exhaustively-planned one. Being thoughtful in this process is certainly a prerequisite, but as the German Field Marshal von Moltke remarked, “No plan of operations extends with any certainty beyond the first contact with the enemy.”
Avoid the Myths
As more businesses embrace the more holistic and wide-ranging definition of digital transformation discussed in this article, many of these myths will fade away. But remember — digital transformation is a perpetual process, so it’s likely that as soon as some myths are debunked, new ones will take their place. Businesses can get a start today with the tips we’ve discussed, but as new disruptions and challenges emerge, the most successful companies will likely be those that treat customer expectations and preferences as their guide.
1: IDC, “IDC FutureScape: Top 10 Worldwide Digital Transformation (DX) Predictions,” November 2017.