7 digital transformation mistakes to avoid
Most business leaders know that they need to transform their organisation to ensure success in the digital age. And most business leaders are adopting a ‘rabbit in headlights’ posture because they simply don’t know what to do next. To ensure you get off to a flying start, be aware of these seven flawed assumptions.
If you fall into any of these traps, you can rest assured that your digital transformation endeavours will be derailed from the get-go.
It’s an IT project
Isn’t digital just another name for IT? Very true. Or at least it was when I started out over three decades ago; the terms were synonymous. But in recent years, the term digital has gravitated towards a variety of themes including the cloud and web-driven marketing.
Some even say that digital is a term used by the boardroom when they want to discuss IT matters but do not want to involve the CIO.
So, it is understandable that the relationship between digital and IT are muddled. New technology is an important element of digital transformation. Think of digital transformation as the process in which organisations adapt to the demands and opportunities associated with entering the digital age. It is much more than an IT refresh / cloud migration exercise.
It’s a digitisation project
Digitisation is often considered a synonym for digital transformation. Like IT, it is an important subset.
Digitisation makes sense when you want to improve your business processes in respect of efficiency or effectiveness.
As such, it can be seen as an exercise in replacing people with technology.
The problem with focusing on digitisation is that it presumes that the existing business model is fit for the digital age and merely needs a bit of tuning. This perception of current success being an indicator of future success is a fatal mistake in respect of the digital age.
Digitisation has an important role to play, but only in the context of developing a more adaptable and risk-balanced business model.
It’s a device project
This is to some extent a variant of the previous mistake. Marketing departments have correctly recognised that consumers increasingly want their experiences to be both digital and omni-device. In this respect, this is an important consideration for evolving one’s business model. But to do that in isolation of the wider considerations associated with the economic transition from the industrial era would be a mistake. But in the absence of a more concrete definition of digital transformation, this ends up being the extent to which organisations prepare for the future.
Putting triple glazing windows into a collapsing thatched cottage comes to mind.
It’s bad news for the staff
There is a perception that digital transformation is bad news for staff. I am sure that some leaders fantasise about presiding over an organisation that is free from people issues. Robots do not have hangovers, or aspirations and are not always questioning their remuneration.
But the reality is that robotic developments have some way to go before they can outperform humans in respect of what humans are good at.
If your people are carrying out highly procedurised tasks, then they are at risk of being swapped out. But smart organisations are recognising that humans have tremendous cognitive potential and if you create the right conditions, this cognitive capacity can be harnessed to create value. The right conditions include the use of robots and other tech to augment, rather than replace, the workers.
The next decade will be about augmenting humans so that they can create and deliver highly differentiated customer experiences that command a high margin. In this sense, your staff will be more akin to rock stars than replaceable ‘cogs in the machine’.
In fact, the digital age is really the human age.
Thus, all digital transformation efforts need to put people at the centre.
It needs a new department
One of the ways in which senior executives can offload the day to day burden of digital transformation is to create a new department. This department might even be given responsibility for innovation and be led by a Chief Digital or Innovation Officer.
More often than not, this is an abdication of responsibility.
Digital transformation is a competency and not a role or a department.
If the senior executives do not get this and set up a new function, they are in danger of creating a fault-line through the organisation that will eventually lead to its demise.
It will threaten our cashflow
The reality is that transformation in its traditional sense doesn’t work. Any organisation that has attempted to turn its process-focused factory into a creative studio will know the folly of trying to change people and the confusion it causes in the market.
The smart approach is to maintain existing cashflows by not interfering with the current business. By all means optimise and digitise it where you can, if it will help yield more value. But in respect of digital transformation, business leaders need to focus on growing new business models to run in parallel with what might be called your existing ‘Plan A’.
The good news here is that you do not need to threaten your existing cashflows to transform.
But you must remember not to take your eye off Plan A (as GE did) or starve it through reckless funding of your Plan B, C etc. experiments.
It must include blockchain, AI etc.
Gullibility is a real risk when you are a time-starved senior executive who is more at home orchestrating and drum beating than developing your own worldview. Thus, when others in your industry announce a big data, machine learning or blockchain solution, your first response is to do the same. But of course, it makes sense to be on top of these new game-changers, including to what extent they are overhyped and to what extent they could reshape your market.
My real point is that digital transformation is much more than trying to shoehorn the latest tech into a traditional business model.
It might well give a dying business model another few years because the adoption has yielded some cost savings. And in fairness it could also help a dying business repurpose itself beautifully for the digital age.
But again, embracing the latest new technologies does not constitute digital transformation. At a stretch you can say you are ‘doing digital’, but the aim is to be digital, and that is much more than an IT refresh.
Broadly there is a perception that digital is simply an initiative to be added to the boardroom’s ‘to do’ list alongside the traditional strategic actions. It can thus be compartmentalised into an agenda item bullet. It is true that senior executives have a variety of issues to manage, but I encourage you to see digital transformation as the platform on which all these other initiatives sit, or the table on which your precariously stick-mounted spinning plates are balanced.