To fully grasp the digital transformation paradigm, it is helpful to have a transformative digital experience. For me, it came purchasing eyeglasses online.
Born with bad eyesight, I have worn glasses since I was two-years old. Every other year, I buy new frames and lenses – a necessary, mundane, and expensive experience. After my eye exam, I selected potential frames from the limited selection at the optometrist’s office. Then I would try them on, examining my profile in the mirror, and soliciting opinions from staff. I would wait weeks for them to be crafted and finally return to pick them up.
When Costco began selling glasses, the selection improved, the price was better, and the wait time dropped to a week. My customer experience incrementally improved.
Recently, searching the web, I found EyeBuyDirect.Com. I registered, typed in my prescription, and found hundreds of designer frames. When I dragged in a picture of my face, I was able examine how the frames looked on me. The website suggested different styles and let me examine them, side-by-side. The process was simple, fast, easy, enjoyable, and 35% cheaper than Costco. I was able to pay with my Amazon account and the glasses were delivered by the USPS in a week. Best-of-all, once my order was complete, I was prompted to donate a free pair of prescription glasses to a needy person in a country or geographic region of my choice. WOW!
THE DIGITAL PARADIGM SHIFT
Digital technologies are changing how we live and how we conduct business. They are able to harness three capabilities: abundant data, unlimited connectivity, and massive processing power. This fundamentally shifts how businesses can operate and deliver value to customers.
Think of how Amazon has altered your purchasing behaviors and shopping experience; or the ways Netflix streaming has transformed your viewing habits. These are digital-native businesses. And they are eclipsing traditional brick & mortar operations!
Designing and implementing digital products and services will change how you engage and enable your customers. It goes well beyond digitization – the application of digital technologies to enable operational efficiency and improve performance.
Transforming your company to provide your customers, stakeholders and partners with digital products and services is an expansive and long-term effort. It involves remaking your company to perform existing operations, while adding new externally focused products and services. It requires new business models, organization models, processes, governance, IT capabilities & structures, as well as new technologies and architectures.
Digital transformation is not only about the consumer experience. Big Data is changing the way traditional industrial companies operate. GE, the industrial prototype, has created GE Digital, a service business. Their brochure highlights how digital twins, artificial intelligence, predictive maintenance, and cybersecurity are transforming industrial companies. It says “Using these technologies to connect machines to the Internet of Things (IoT) not only offers significant cost savings through improved productivity, reduced waste and optimized maintenance processes, …it opens up a world of servitisation, (the capability to provide new services or outcomes that supplement traditional products) , the holy grail of value creation for both customers and manufacturers.”
FIVE BUILDING BLOCKS OF THE TRANSFORMATION
“Designed for Digital” author Jeanne W. Ross says, “Digital business design aims to make a company agile so that it can create an innovative and evolving portfolio of digital offerings in response to rapidly changing technologies and customer demands.”
She offers 5 building blocks for digital transformation:
- Operational Backbone – Standardized, integrated systems, processes & data for core operations
- Digital Platform – Repository of business, data, and infrastructure components
- Shared Customer Insights – Organizational learning of what customers will pay for
- Accountability Framework – Distribution of responsibilities for digital offerings and components
- External Developer Platform – Repository of digital components open to external parties
Many businesses are starting on their digital journey by launching digital activities: web sites, e-Commerce, on-line support, subscription-based services, SaaS, Artificial Intelligence, Machine Learning, and cloud migration for some assets and apps. However, these activities alone are not transformative.
The are many reasons why companies initiate digital transformation. The most common reason it that they have to. Howard King in a Guardian article stated, “Businesses don’t transform by choice because its expensive and risky. Businesses go through transformation when they have failed to evolve.” In other words, it is fear-driven, and a survival issue.
Digital transformation takes time. It is difficult. The journey differs by organization. The order in which you attack the building blocks depends on where you are starting from and how fast you need to shorten the time to value.
However, digital transformation offers many organizational benefits: including improved innovation, alignment, agility, efficiency, productivity, and profitability. More importantly, the opportunities for digital value creation are endless. Finally, digital transformation will allow your organization to stay competitive and relevant while guarding against disruption from other digital competitors.
Where is your company on the digital transformation path? What opportunities will digital transformation create for you?
In future posts, we will explore digital transformation from many perspectives, organizationally and individually, linking risks and the future-of-work.