Digital Transformation has become a hot topic on the corporate front, sparking interest and even amusement amongst most IT professionals. After devoting years to the technology industry, many of us have passionately extolled the crucial roles that technology plays in enabling, driving and speeding up sweeping business changes. However, in recent times, our colleagues, board members and even freshly-minted digital advocates have likewise come to acknowledge and promote the potential of Digital Transformation.
It is a common observation that when crafting their Digital Transformation strategy, companies tend to overemphasize technology. While implementing fresh schemes that employ state-of-the-art technologies can have advantages, it is crucial to exercise caution, as this approach can result in minor enhancements to the current business rather than generating new products, markets or business models. In the end, such a narrow emphasis on the digital facade can undermine the desired transformation.
A Comparison of Today’s Business Transformation with Future Trends
As key players in our respective industries, we have devoted considerable attention to optimizing our current operations. In principle, advanced and robust technologies may have the potential to simplify and hasten our business processes, thereby enabling us to expand beyond our previously perceived limitations.
In the past decade, there has been a considerable decline in the pace of adoption and advancement of new technologies in the market. Technologies such as virtual reality, drones, and artificial intelligence that were once considered intricate and expensive are now commonplace, with even children receiving them as Christmas presents within months instead of decades. Computing power that was previously exclusive to the most dominant governments can now be bought by any consumers over their lunch break and conveniently switched off after use.
The broad range of available technologies and the access to technical expertise from various parts of the world can be appealing and advantageous to businesses of any size. However, the real challenge arises when businesses adopt these technologies to make only minor improvements to their current operations instead of delving into possibilities that have the potential to create entirely new industries in the future.
The chances of a meaningful transformation occurring within an existing organization through the wise use of transformational technology are comparable to that of the author of this text becoming a celebrated fashion designer just by acquiring a sewing machine.
The conversation on what constitutes ‘true’ transformation may seem abstract at first but holds significant ethical implications. Many organizations that initially welcomed Digital Transformation may become disappointed when the ‘innovative’ technologies they have invested in fail to provide significant benefits. Such lack of success cannot solely be attributed to poor management or faulty technology but could stem from implementation of the technology for mere minor modifications.
Failing to fulfill your commitments to Digital Transformation can be regarded as a faltered technology investment and hinder your potential as a leader.
This raises a significant question: how can one differentiate between tomorrow’s business and today’s?
A Simple Model of Metamorphosis
There exists a wide array of models and standards that one may choose from to contrast and differentiate between conventional businesses and those that possess the potential to cause a transformative revolution. In general, it would be appropriate to categorize most businesses into only three main components.
- Customers/Market Segment
- Resources and Products/Services Offered
- Ideas and Conceptual Framework(s)
It is frequently necessary to make alterations in one or more of these areas to accomplish tangible outcomes. Reflect on these common situations:
- Previously, Adobe software operated under a ‘one-off’ strategy, in which consumers purchased a license for a single edition. However, the company switched to a subscription-based model that allows users to access the latest versions of Adobe’s multiple products by paying a monthly fee. Thanks to digital distribution, long production cycles and complex supply systems are no longer a hindrance.
- Nestle and Keurig played a significant role in elevating the global trend of single-serving coffee by producing new assets and engaging in distribution and licensing deals.
- Analogic, a medical imaging company, has broadened its operations by utilizing its existing technology to venture into the airport security sector. Their innovative technology, with the ability to “see inside” a human, is now being applied to examine and validate the contents of baggage.
It is worthwhile to contemplate whether the technological investment you are contemplating will allow you to innovate or create a new asset in any of the three sectors. For instance, evaluate this scenario:
- By utilizing the computing capabilities of the cloud, you can experiment with new business models without having to spend money on building new data centers.
- By merging drones with AI-powered image recognition technology created for internal purposes, it is feasible to discover a new asset that can be offered to an untapped customer base through a cost-effective subscription model.
- Utilizing remote-working tools and contemporary collaboration models, you can promptly create an external team with a joint-venture partner to tackle new digital product development within “innovation sprints” demanding limited time. This approach eliminates the need of a full-time workforce and is cost-effective.
Investing in innovations that impact all three areas might be transformative for your company, so keep a lookout for such opportunities.
While discussing digital transformation, it’s crucial to assess how it affects business change, such as the introduction of new markets, products, or assets, and even new business models. This analysis will lead to a better comprehension of the significance of digital transformation in the company’s growth. Additionally, it will offer a more comprehensive explanation of how technology can be beneficial, rather than depending on speculation regarding return on investment metrics.
Executives in technology are frequently surprised to learn that their funding requests are accepted with a multiple of 2-5X, enabling a faster journey to the market.
It’s crucial to steer conversations inside the organization towards understanding how disruptive technologies influence the industry. Regrettably, many companies underinvest in actual transformation because of this mindset. They believe that having a substantial IT budget and access to sophisticated technology is sufficient to accomplish digital transformation. However, this approach only leads to slight improvements in the current state of the business, instead of revolutionary enhancement.
With the evolution of technology, an expanding number of professionals are acquiring the communication skills necessary to excel in this arena. To guarantee that your organization stays competitive and innovative, it’s imperative that you take up the challenge and create a compelling narrative for transformation.