The term digital transformation has always perplexed me. Digital technologies have been in play for a really long time.
So why is it that companies are going through 'Digital Transformation' by the masses? I mean its 2017 and we're finally starting to take advantage of the digital technologies that have been around for years.........really?
If you don't believe me, according to Forbes, in Jan 2016 88% of large organisations were going through some form of Digital Transformation.
In my experience, companies generally identify the need to go through digital transformation when they are falling behind in their respective markets. It really is the behaviour of a laggard and seems to be triggered by an attempt to 'catch up'.
So what?
Does it matter? As long as the transformation goes great we'll be back on top right?
Well that's where the problem lies. A true transformation is a fundamental change in the DNA of a business. It cuts through all aspects of the organisation from how people are managed to products, customer interactions, operations, business process…..and the list goes on.
During the course of a transformation you can flip the business and its underlying construct on its head. This can happen in a relatively short period of time and can put a massive amount of stress on the organisation.
It requires all its people to become well versed in modern technology, change focus from process to customer and miraculously create synchronisation between technology and the business.
In other words the risk associated with Digital Transformation is quite high. According to Forbes 84% of companies fail at Digital Transformation. This happens for various reasons from, change management to scalability of solutions.
This means 84% of companies put themselves through the disruption associated with a Digital Transformation with none of the pay off.
This can't be an effective model !
I believe the key is to focus on not needing to transform.
What I mean by that is that a company is far better off by building a strong, sustainable focus on innovating and keeping pace with technology.
Grow by incrementally adopting new technology.
Build a culture of experimentation and regularly interact with bleeding edge technologies.
They may not need to be exposed to customers yet but once these technologies mature you will already be well versed in them and can access their full potential.
Innovative companies always have active investment in R&D for new technologies. They are constantly focussing on improving operations or customer experiences using these technologies.
Take a look at companies like Procter & Gamble. They started using big data and behavioural analytics decades ago before anyone else. They identified commercial applications for this tech a long time before anyone else.
Another great example is Salesforce. This team consistently win the title of 'The worlds most innovative company'. They didn't magically achieve this by going through Digital Transformation. They constantly innovate. It's in their DNA.
Digital Transformation can be extremely taxing on an organisation. It's only really required when a company hasn't invested and focused in innovation. As the numbers tell us this approach typically fails.
Instead of heading down this path, put a focus on innovation and building a culture that supports experimentation. This has its own challenges but will result in a far more sustainable and stable business that is geared to take advantage of technology as it evolves.
What are your thoughts on Digital Transformation?