Ep.2 Digital Acceleration: Building the Foundation (Part I)

When I decided to start writing for big audiences several years ago, I set a personal goal: to share something of value for non-IT Business Leaders in the typical time a person takes their initial morning beverage. (Brief, simple, to the point, time matters!).

Because of this self-imposed restriction, this is a very challenging episode: building the foundations is a passionate topic that can be developed for endless hours.

To my benefit, many of this Newsletter’s subscribers are subject matter experts on this topic and have already started their digitalization journey.

A couple of comments before starting:

-???????This topic will be addressed in two episodes. My goal is to provide enough information to invite you to reflect on this subject and be ready for the next episode.

In addition, I kindly request your help with two actions:

1.?????Feel free to share your thoughts with me and the audience. Your contribution will let me know if I am on the right track and bringing the correct value. I will use it to improve my writing skills.

2.?????If you see value in the topic and my episodes, please subscribe to the newsletter by clicking the subscribe button at the top of the page.

Ok, so let’s go:

Remote Origins of Digital Transformation:

Do you remember when the first time you were exposed to Digital Transformation was?

In my case, it was in the late nineties. I was an IBMer at the time.

IBM introduced a concept called e-Business, and its vision was to improve collaboration between peers, eliminating paper and speeding internal approving processes and overall communication.

Today, everybody has a way to collaborate and eliminate paper consumption “from granted.”

Do you have a difficult time understanding why this value proposition was so revolutionary at the time?

Fact: Did you know that back in year 2,000, the number one supply the US Federal Government had was paper, and the number two was toner?

The Federal Govt. has a “paper reduction, paper elimination” directive. Still, last year, the number one Federal Government supplier received 653 purchase orders valued at USD439M for paper supplies. (Source: usaspeding.gov)

Back to my original threat, in that remote scenario of Digital Transformation, there was a missing piece, and that was to collaborate with the external ecosystem, partners, and especially customers.

What changed? What is Digital Transformation related to now?

Most people think that Digital Transformation is about making your business wholly digital and disrupted-proven, available 24x7, 365 days a year.

And, for some businesses, this is an important outcome.

Others, including me, think that Business Transformation is about improving the business processes and sometimes remapping the business processes to address two primary business drivers.

1.?????Improving Customer Loyalty.

2.?????Improving your Operational Efficiency.

I think everybody knows why Customer loyalty is essential (I hope), but there are multiple explanations on why it is crucial to improve operational efficiency.

To me, Operational Efficiency is an internal weapon to drive additional margin that can be reutilized in the business (creating a Tsunami effect) or transferred to customers to show appreciation (loyalty) or win new customers and improve your market share.

What are your thoughts about this?

Remember that I told you that this Newsletter benefits from a solid technical and business audience?

Every time that you find the expression (What are your thoughts about this?), it is my way to recognize that my comment is very personal and subject to a considerable number of diverse -and valid- opinions. Probably, you are about to hit the comment section to make your views public: to roast me or to grill me, based on your personal preferences.

Please do so; your comments are welcome.

We are moving on!

I recognize the validity of all other business goals and business drivers that you will propose, but, honestly, the ones I mentioned are my personal favorites because they are simple to communicate to non-IT professionals and are simple to monitor and measure by non-biased third parties.

Let’s say that I like vanilla and you like chocolate, no worries! Everybody wins.

How do Business Transformation, Digital Transformation, and you-named-digital connects with the previous business drivers?

If you are like me (I bet you are), you are very impatient to connect the points.

Simple, Digitalization is the current toolset of any innovation approach, and innovation is the key for operational efficiency.

Sound simple, right? (Well, the reality is there are a couple of exceptions to this rule, but we will talk about these exceptions in future episodes when we talk about current events in some industry segments, for example, food and beverage, retail, or banking, to name a few).

So, Digital Transformation’s early day’s approach was internal, was about my business, and the current path to Digital Transformation is about us (multi-dimension) and together (dynamic, real-time).

Currently, the goal is to interact, collaborate, build new relationships, find lessons learned collaborating with customers and partners, and exploit these lessons learned to build trusted relationships with customers that will sustain the business’s long-term goals.

Well, I am sorry, but your statement seems to be not new at all.?Am I missing something?

The statement may look the same, but the game elements are entirely different. Let me explain:

In the previous scenario, business leaders thought the game was to anticipate customer needs and build products and services to support those future demands.

In the current scenario, Social Media, Cognitive Learning, Mobile, Cloud, Analytics, and the Internet of Things, to name a few, allows business leaders to collaborate with real customers in real-time and learn about their preferences and “want-to-be” and build new products and services to address these needs dynamically, real-time.

In the past, technology was typically on a business-centric approach.

In the new business model, internal data is still of great importance because it is needed to protect the integrity of the value chain. Still, the latest data from social interaction enables a “do-it-together” game that was not possible in the past.

Instead of a two-dimensional chess game, the new game is like a multi-dimension Tic-tac-toe.

What are your thoughts about this?

Many people say that Digital Transformation is risky because it is a disruptive process and high risk; what is your opinion about that statement?

I like very much MIT Prof. Jeanne Ross approach to describing the scenario back in 2016:?

The new Digital Economy will require business leaders to incorporate new tools in their IT footprint so they can share and receive vital information from customers and partners using new tools such as (1) Social Media, (2) Mobile, (3) Analytics, (4) Cloud, (5) Internet of Things.

Adding to that, every day we find out new technologies to add to this multi-sensory landscape that enable endless ways to interact with customers and partners in real-time.

Digital Transformation can be perceived as high risk due to multiple factors that can be contained with good planning and monitoring.

First, the organization needs to be capable of responding to digital interactions. This statement has several implications.

-???????It is required to review business processes and correct internal business disruptions related to siloed solutions.

-???????It is also needed to infuse the business with the new technology to capture information inside and outside the organization and respond to that.

Not doing these two preliminary actions early in the transformation brings substantial risks of not responding correctly to customer expectations. ?

What are your thoughts about this?

This transformation, in many cases, will be disruptive, as it is required to review both the IT front-end (your new eyes, ears, skin) and the back end (Business processes and core applications) and eliminate barriers to allow communication flow effectively.

OK, but why is it risky, and why is it disruptive.

The risk is a consequence of the dynamic nature of the business.

Let me give you a graphical example:

If we ask the audience to share an example of a situation describing doing something in a dynamic environment, most people would think that landing a fighter jet in an aircraft carrier would be a good match.

Why? Several similarities:

(1)??You need to understand the game: not only you are moving part in the puzzle, and

(2)??It required a clear vision and a solid plan to land in a moving target.

Being ready for this game requires some preparation work in the front-end and back-end of your business.

Another example: I live in Houston, driving distance from NASA Houston Command Center. There is an exhibition hall and a kid attraction where kids can sit on an astronaut seat and play as they were in a spaceship cabin control simulation.

The challenge: You are required to drive safely while the spaceship is penetrating the atmosphere and both your “astronaut seat” and the control panels (the dashboard) are moving because of the turbulence by “penetrating the atmosphere.” Many kids can excel at the simulation after playing several times and understanding the dynamics of the challenge.

I think kids learn by playing multiple times, and so do we.

This is the critical concept of the new game: Building new services and products working together in real-time is a continuous improvement approach that needs your organization to do some preparation work.

At this early stage, our challenge is to build an adequate foundation (baseline) to identify issues early enough to avoid business disruption.

We can talk for many hours about this. I will do my best to keep it concise and straightforward, but I still want to address a couple of topics in the next episode.

?What happens if I decide to wait? Why me? Why now?

Like it or not, the game rule changed, and now the customer and the partners play a more significant role in the economy. It is up to us to decide if we want to benefit from these new opportunities now or if we are going to wait for our competitor to take an initial step before we move on.

Good enough??Can we stop here?

One last comment, depending on the industry sector, the priorities preparing the front-end and back-end may differ.

Next week we will explore more about this preparation work before commenting on what is driving change in several industry segments. (Why me, why now?)

Enjoy your last sip of coffee (my today’s preference)

Cheers!