By Victoria Tucker
If you are anything like me (and therefore not a tech guru), you are scratching your head over the term digital transformation – and all that goes with it. The following is an attempt to help explain this new technology “normal” by summarizing what a couple of leading individuals and institutes are saying on the topic.
First, digital transformation is a big freaking deal, and it is sweeping across businesses like wildfire. So much so that the World Economic Forum made an emphatic case for digital adoption in their 2020 report Digital Transformation: Powering the Great Reset. Though making the shift to digital seems like a done-deal, and evidently EVERYONE should be doing it, the Forum stated that only 13% of business leaders believe their organizations are ready for the digital age. That certainly doesn’t jive with the fact that these same industries spent $1.2 trillion on digital transformation efforts in 2019.
“Accelerating digital transformation, with purpose, is essential for companies to survive and thrive in the new normal.”
World Economic Forum
It is beyond redundant to say that since the onset of the COVID-19 crisis the way we live, and work, has fundamentally been altered. While nearly every facet has been impacted, the use of technology has shifted most of all. Even I have felt the magnitude of change in the limited tech areas I interact with– all of which are amplified by the Forum’s statistical accounting:
- Internet usage has increased 70%
- The use of communication apps has doubled
- 48 percent of employees will likely continue to work remotely at least part time post-COVID versus 30% pre-COVID
- There is a 160% expected increase in frequency of digital purchases, as reported by consumers
- Some video streaming services have seen daily usage increase 20-fold
The World Economic Forum stresses that our “industries and societies must digitally enable corporate leaders to transform into a digital business where there is new value creation; digital-at-the-core business models; intelligent and agile operating models; localized and resilient supply chains; real-time decisions at the edge; data-driven investment decisions; and augmented talent.” These statements are heady, even attention-grabbing, but what does digital transformation really mean?
What is digital transformation?
According to George Westerman, MIT principal research scientist and author of Leading Digital: Turning Technology into Business Transformation, “digital transformation marks a radical rethinking of how an organization uses technology, people and processes to fundamentally change business performance.”
This reimagination requires cross-departmental collaboration with particular attention to coupling business-oriented philosophies with rapid application development models (aka fast prototyping with quick feedback to make iterations). In a nutshell, when today’s company is trying to stay competitive with their products and services (especially during turbulent pandemic days), they must comingle the thinking from various departments to innovate faster and better by referencing all types of electronic applications and equipment that make use of relevant information – otherwise known as digital technologies.
Big technologies – like Blockchain, Cloud, AI, IoT and Cybersecurity, are already transforming industry and marketplaces. And, while workplace collaboration tools have more to do with how people get work done, rather than how products are manufactured, these are also emerging as significant game changers. Consider these jaw-dropping stats underscoring the speed that technology endeavors are being embraced:
Global spending on technologies and services enabling digital transformation will reach $2.1 trillion by 2021 – this is double that of 2016.
The number of Internet-connected things will reach 50 billion by 2020 (which means we are already experiencing that).
Source: CISCO Systems
The damage caused by cybercrime in 2017 totaled $1.4 billion USD.
The amount of money spent on collaboration software (team messaging apps like Teams and Slack) was $45 billion USD (and that was before COVID-19).
Source: Synergy Research Group
The above statistics should not imply that companies are on a seamless trajectory of adopting technology. It is more like they are on a bullet train hurdling along on an unfinished rail track.
Think about Adoption Like the Oakland A’s Baseball Team
The whole baseball metaphor may seem far-fetched but hang in there with me. What I have learned is that technology adoption and customer experience go hand in hand. Companies would do well to think deeply on what will compel their customers before they leap headlong into investing in spendy software, hardware, or people.
“Customer expectations are far exceeding what you can really do. That means a fundamental rethinking about what we do with technology in organizations.”
MIT Principal Research Scientist and Author
Rethinking what one does with technology in organizations is somewhat akin to how renowned General Manager Billy Beane (of the Oakland A’s) changed the way Major League Baseball franchises thought about forming their teams back in the early 2000s (if you haven’t seen the movie Moneyball, it’s worth watching). Rather than Beane “buying” wildly expensive individual baseball players which his organization could not afford (they lacked the money compared to teams like the New York Yankees), he discovered something curious. First, he learned that the A’s could win by changing their focus to winning through a collection of average players versus winning with individual high-powered players (which they could not afford). Second, Beane realized that while fans flocked to see individual players, they would be more delighted if the team won. Period.
Let me be redundant. Beane realized that his team had limited resources with which to win so with the help of a bean counter (pun intended), he thought about the aggregate of the entire team rather than recruiting individual All-Stars. For him, it became a mission of building a team that could get on base because that was the precursor to runs which in turn led to wins. The more wins, the more fans. Fast forward through the first part of the season, and that is precisely what the Oakland A’s did. They looked for affordable players that had decent (but not stellar) stats that when combined with other players (who had respectable batting averages), would translate into more runners on base.
That was the formula for the Oakland A’s winning big which in turn was what the customer wanted most (to be delighted) and combined it with their technology (decent players that they could afford). This approach fundamentally changed how professional baseball teams recruited their players going forward.
The point being made is that before jumping on the digital train (throwing capital at acquiring sophisticated technology), reexamine the so what in terms of getting wins and delighting customers. Turning technology “base runs” into company successes should be predicated on what the customer expects.
Deloitte, the British multinational professional services network, says in their Global Contact Center Survey that “more than 62% of companies view customer experience as a competitive differentiator.” Finding ways to exceed a customer’s expectations (even if they do not know how to concretely express that) should be front and center at every organizational discussion held on growing the business. This means a renewed, and serious undertaking, of analyzing customer feedback which implies more than a happy-face-survey. In the simplest of terms, it is worth thinking deliberately about improvements that can continuously create better business experiences. Note that continuous means just that – ongoing – as in all the time.
The questions each business should query themselves on seem straightforward though are more wicked in nature than not (wicked as in complex and in need of frequent revisiting).
- What do our customers expect? What could we deliver that exceed those expectations?
- What will help the company “get on base” in a global age of change and when competition is steeper than ever?
- What technology should we adopt that when combined with what the customer wants and what we can afford, moves us ahead?
- What value will digital transformation yield in getting the wins (base runs) we need?
What is the difference between automation and digitalization?
Added to the lack of understanding around digital transformation is the frequent reference to automation. Here is my take on the pairing of the two. In essence, automation refers to the process of making manual tasks more efficient through technology. AgreementExpress.com calls it “the first-wave effect of going digital – machines saving humans time and energy. An obvious example – online forms with auto fill parameters.”
Automation can be interpreted as a business trying to keep pace with the times whereas digitalization implies “setting the pace”- e.g. go faster, bigger, and broader with application. In other words, going digital could include collecting the information on that auto-fill document and using it to analyze the nature of financial transactions then assessing any risk for money laundering or other financial ill-gotten gains that could occur in the process.
Diabetes testing is a noteworthy example. One of the biggest automated advances in recent years has been the mass distribution of continuous glucose monitors (CGM). Patients can now get subcutaneous glucose measures every minute. Transformation is occurring by creating actionable insight from the data and linking that insight to the timing and dosing of insulin therapy by pens and pumps. In a way, it nearly takes the patient out of the loop and in the process- relieves them from the cognitive burden of managing their disease 24/7/365.
Consider What It Means to Deliver Profound Value
It’s intriguing to look back a couple of hundred years and find that following every significant global event (world wars, major natural disasters and even the 1918 Spanish flu pandemic), industries have responded with a pivot towards more automation. Plainly put – when it comes to producing goods and services, calamity requires business to get leaner, smarter, and better. Whether companies are small, or large, they inevitably find themselves wrestling to adapt their operations on the heels of disaster. And, when they do, that reset usually entails automating.
To be intentionally redundant, digital transformation is about adding profound value for customers instead of making small improvements on existing tasks and services. This is the driver pushing leaders to rethink how they conduct business, and it means more than replacing human tasks with automation. Instead (and which was already mentioned), it speaks to enabling transformation that delivers beyond expectations. It is the reimagining of how work can be done – of extending beyond the immediate task to an innovative stance… not guessing at the future but using technology to gain insight required for data-based decisions that can propel the business forward.
Digital Transformation Requires Change and Change is Best Served Up as a Plan
According to Clint Boulton, Senior Writer at CIO, there are six steps companies can follow to launch their digital journey. They are summarized here.
Align objectives with business goals. Answer the question: What business outcomes do you want to achieve for customers? Smart IT leaders should know the problem the business is trying to solve and align their projects with the results the business is seeking to achieve.
Be bold when setting the scope. Successful digital transformations are 1.5 times more likely than others to be enterprise-wide in scale. In other words, go big or go home. Incremental changes are just that – piecemeal steps that may distract you from the bigger adoption that is needed.
IT and business must co-create and co-exist. The antiquated perception of Information Technology departments has been that of fixing broken hardware or software. Today, IT must step-up and co-create with business functions to solve the wicked operational problems to deliver customer value. This implies IT must actively push the business functions for better clarity on what the customer really expects.
Embrace adaptive design. This means more than making a company website adaptive versus responsive. This is a mindset of pursuing ongoing tweaks to the transformation strategy and in retuning how people are being deployed. Plans should be viewed as organic versus concrete.
Adopt agile execution. Work to encourage a culture of risk taking, enabling even the newest person on a team to be part of the decision-making process. Everyone should be given leeway to fail fast and then promptly nudged to learn from the mistakes made.
As a result of COVID-19, the future of work is festooned with a colossal-sized palette of digital stuff. Learning to understand the role it can play (stepping on the heels of its dance partner automation) is quintessential to thriving (let alone surviving) in the evolving world of work.
Regardless of whether you possess technology prowess, it’s definitely time to dip your toes into the ocean of change. To jumpstart your acquaintance, conduct an online search for “What is digital transformation for (insert name of your industry here),” and you will be met with a score of resources on the topic. Think about what you find, and at the very least, brush up on the terminology being used so you end up wowing others (versus embarrass yourself) at upcoming business meetings.
You might also want to keep in mind that the pandemic is urging us to go beyond just getting used to the idea of digital transformation. It is also nudging us to be ready for the frenetic pace that often accompanies it. In truth, digital transformation can make any one feel as though they have been hurled headlong into a dizzying theme park of technology-laced roller coasters making even the most tech savvy amongst us want to buckle up and brace themselves. For those of us who grew up in the 60s feasting on Saturday morning cartoons, we can relate to Senior VP & CIO of Tribune Media, David Giambruno who summed up the speed of digital transformation best- “We went from being the Flintstones to the Jetsons in 9 months.”
Victoria Tucker is the Managing Director of ZBglobal, founder of Geniopath, and adjunct program advisor/instructor with the University of California, Irvine. A workforce architect who blends behavioral science with digital platforms, Victoria is dedicated to helping individuals, teams and organizations ignite compelling engagement and performance where collaboration is amplified and knowledge is shared. Learn more at victoriatucker.com