7 Key Considerations for a Successful Digital Transformation
Digital transformation is nothing new today. Last month, I was in Bangalore for our global leadership meetings and had the opportunity to speak with local partners and venture capitalists. One thing that continually came up in all my conversations is how digital transformation is elevating their businesses to even greater heights. This isn’t surprising, seeing how everyone in India, from startups to governments, are talking about or are undergoing it.
Despite the ongoing conversations around digital transformation, people often see it as distinct from other types of transformation; I personally believe that isn’t the case. Any business transformation today will be digital, whether it is triggered by an opportunity, a competitive threat, or game-changing innovations.
This stands especially true as we enter the Fourth Industrial Revolution, what our Chairman and CEO Yuanqing Yang termed the Intelligent Transformation: a transformation driven by big data, cloud, and artificial intelligence, or better known as AI. Like every revolution before it, Intelligent Transformation will fundamentally change the nature of business and customer relationships.
How do we stay ahead of the Intelligent Transformation movement? Through meaningful digital transformation, of course. This creates a new organisational structure that delivers more value to your customers, in the products and services you sell and in the way you engage with them. It rebuilds an organisation from the ground up to make it more efficient and more flexible, empowering it with the agility to respond to new market opportunities faster than ever before.
What’s most exciting is that this can be applied to organisations of any size. Have you received a push notification on your smartphone about a parcel delivery or a reminder for your fitness appointment? You’re interacting with an organisation that has undergone a digital transformation. It could be your local hospital or a big technology player like Lenovo. Even the simplest of digital interactions signifies a digital transformation.
Know what you’re getting into
While technology is present throughout the entire digital transformation process, having a sound strategy needs to be the start of it.
Before going ahead, one should be aware of the implications of transformations. In the insightful June’s MIT Sloan Review, Sam Ransbotham alerted us to the underlying algorithms used in digital processes and analytics. The algorithms around us as consumers that he detailed in his article can be applied within the organisation as well. As we build digital organisations, define business objectives for transformation, develop new processes, and implement the technology that will make the digital transformation a reality, we also need to understand the business context for the transformation and have a clear understanding of the fundamental building blocks—the algorithm and data—at its foundations.
This raises two questions: what reliance will you place on your new digital organisation’s structure and how do you balance the operational efficiencies that will allow you to pursue new opportunities and enable the meaningful customer experience that fuels that growth?
Here’s an example how we at Lenovo are going through this process. We are currently working with our new internal AI team to consider where we can gain early leverage from our own big data and analytics. An early project will see how we can automatically identify which of our customers’ warranties are due to expire, so we can engage them ahead of time to discuss new options about continuing warranty, getting upgrades, or other alternatives.
It’s a very simple concept, but not one we can comprehensively deliver today. This changes with big data, AI, and analytics. Customers will get the certainty, peace of mind, and the option to consider new PCs or servers, taking away their need to remember and reduce the likelihood of products failing after warranty. The result? Satisfied customers and possible sales.
Achieving this requires us to bring three key elements together. Firstly, the strategy and clear business objectives such as reducing churn, actively managing valuable customers, and seeking new sales opportunities. The next, the understanding of the implication of the algorithms and analytics that will underpin the new approach to running our business. Lastly, the right people with the right skills and knowledge to support this new approach. Having these in place is fundamental to the success of any digital transformation initiative.
Have strategy and execution work in tandem
However, it’s always easier said than done. Digital transformation is complex, but the results are worth the transformational upheaval. With business as usual a given, organisations need to devote explicit effort, talent, and resources to the task. Here’s a guideline that has proven useful to me when driving an organisation-wide digital transformation.
Start by disrupting your thinking, especially if you’re a large company with a track record of success, perhaps as a market leader. As I’ve mentioned, business-as-usual inputs can only deliver business-as-usual outputs—so change the inputs. A well-known example for our business: we transformed Lenovo when we purchased IBM’s PC business 20 years ago. To have continued with a series of domestic business inputs focusing on the internal Chinese PC market could only ever achieve an incremental difference to our business, not a transformative one.
At the strategy level, think more like a startup. My colleague Amar Babu had some thoughts on this. Again, digital transformation starts with a disruptive mindset when developing strategy and allows a disruptive mindset once the organisation has started its transformation. The process has to be seeded and that’s best initiated at the leadership level. But as Anand Swaminathan and Jürgen Meffert note, quoting from their book and in a recent McKinsey report, organisations also need to bring in new talent, often raw, once the transformation planning and execution start.
Plan your transformation. What needs fixing, and what can deliver a marked improvement in customer satisfaction and sales in the quickest way possible? How long does it take you currently to quote, receive payments, or deliver products—and are these ripe for transformation?
If your organisation delivers large products, cars for example, how can you change the logistics chain that gets the car from the manufacturer to the hands of the driver? If you decide to remove links in that supply chain, how then do you negotiate with your dealer network and help them reinvent the value they bring to their customer experience?
Take into consideration the data you have. This can make a significant difference when integrated into your strategy, planning, and operational execution. Can you quantify the improvements in customer satisfaction if you transform the data available to customer service teams and the decision-making authority they have? If you transform their operations, do you have benchmarks to compare against? If not, establish early pilots to create them.
Don’t create just because you can, but don’t delay it either. This is difficult to balance. The urge to create and transform must be countered by being clear about the customer pain points it seeks to cure and the incremental benefits it can deliver to customers and the organisation. The strategy should drive this. Don’t confuse the popular startup mantra of “ship fast, then improve” with “ship something, at any cost”. One is digital transformation; the other is digital mayhem.
Digital transformations differ between B2B and B2C operations. For organisations such as Lenovo that operates in both spaces or for businesses such as pharmaceutical companies bound by tight regulatory frameworks, digital transformation can become more complex. The nature of these different operations provide the strategic clues to the desired transformation. B2B relationships, for example, are usually long-term and direct. Consumer relationships, on the other hand, are faster, more transient, and driven by brand and reputation.
Customer service experience is the obvious transformation candidate in the B2C space. An example in B2B is a recent development at Lenovo, where we now provide PC-as-a-service, a transformation that sees businesses now having the option to move away from asset ownership towards an asset usage model akin to novated car leases. McKinsey has given a good deep dive into the B2B transformation experience.
The takeaway is that digital transformations never end. You will never arrive at a destination and will never become a fully digitally transformed organisation. And there are, ultimately, just two types of organisations: those prepared and willing to transform and those who are unable to do so. Which one will yours be?