Transformation (Not Digital) is the Key to Digital Transformation

Searches for Digital Transformation on Google
Searches for Digital Transformation on Google (Source: MIT Sloan Management Review)

George Westerman, principal research scientist with the MIT Initiative on the Digital Economy, wrote an excellent article on Digital Transformation titled Your Company Doesn’t Need a Digital Strategy.  His key point was that the true value in digital transformation comes from using digital technologies as the fulcrum for transformation not as the objective.  When focusing simply on a technology for technology’s sake, the return on investment is much lower.

In the digital world, a strategic focus on digital sends the wrong message. Creating a “digital strategy” can focus the organization in ways that don’t capture the true value of digital transformation. You don’t need a digital strategy. You need a better strategy, enabled by digital.

Westerman cautions that technology doesn’t provide business value in a vacuum, but only when fused with a business strategy that transforms a key aspect of your business such as product delivery (e.g. e-commerce), customer understanding (e.g. analytics), “radically synchronizing operations” (e.g. IoT), changing business models (again IoT), etc.  Thus, “technology’s value comes from doing business differently because technology makes it possible.”

For example, sales intelligence isn’t about providing reps with additional contacts or feeding them with business factoids so they sound smooth on calls.  It is about transforming sales and marketing processes by infusing relevant, accurate, and timely intelligence into sales and marketing workflows; aligning sales and marketing objectives; prioritizing activities; and making sales reps more efficient and effective at selling.

Westerman offers four strategies for digital transformation:

  1. Get Away from Silo Thinking — Focusing on a technology strategy (e.g. Mobile, Big Data) can be limiting and ends once the technology has been implemented.  A technology focus results in incremental improvements, whereas a business transformation strategy employs multiple technologies and management interventions.  You begin with the objective and then determine the digital processes and workflows for implementation.  “A customer intimacy strategy, for instance, uses mobile along with other digital technologies to constantly increase personalization, engagement, and satisfaction.”
  2. Don’t push the envelope too far, too fast — Overly ambitious strategies may be very risky while more mundane projects may be ignored.  Cutting edge technology may not be ready or implementation strategies may not be understood.  “Business leaders leave easy money on the table if they ignore incremental steps and pursue risky opportunities that may not be ready to pay off yet.”
  3. Don’t ask your tech leaders to drive transformation alone — This is an old piece of advice, but still relevant.  Early CRM projects often failed due to a top down approach that lacked support from sales and support teams.  The CTO or CIO needs to work with other C-level and mid-level executives that provide expertise in the industry and function.  For example, The CTO cannot transform sales and marketing by fiat, but must work with sales and marketing management for expertise, cooperation, risk mitigation, implementation, and communication.
  4. Build essential leadership capabilities, not just technical ones — Digital transformation isn’t a project but the ongoing development of enterprise capabilities and business value.  Digital leaders should “create a transformative vision, engage their people in that vision, and then govern strongly to chart a course across a whole portfolio of digital transformation efforts — some planned and some yet to be discovered.”

Not all problems require expensive cutting edge technology.  Many problems are still soluble through low tech solutions, small dollar investments into current platforms, and modified processes.  A focus on technology not only brings about silo thinking, but could increase complexity and cost.

I’m reminded of my high school Geometry teacher who said, “there are two ways you can kill a fly.  You can use a fly swatter or you can use a bazooka.”

I suspect the bazooka would be a lot more fun, but costlier and riskier.

That being said, there are also great risks in moving slowly or lacking a digital strategy.  Forrester highlighted the risks of being a Digital Dinosaur.  The author Nigel Fenwick noted that the digital predators are customer obsessed:

While all companies profess to put customers first, it’s clear from the data that executives at digital Predators care more passionately about the customer across multiple dimensions: In every customer metric we measured, these executives rated the importance of the customer higher than peers in transformers and dinosaurs – in short, they are not just customer obsessed, they are really, really customer obsessed.

And consistent with Westerman’s advice, customer obsession is a business objective, not a technology focus.  It is this deep understanding of customer needs that both informs the business and technology strategy and creates a defensible technology advantage.

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