Digital transformation in times of recession

Through 2018 I have got a handful of questions from customers and people around my network about how to handle digital transformation in times of recession. My short answer is that; digital transformation is the initiative that will get you through a recession, it is not an obstacle or "something" to be shut down.

There have been nine good years since the last big recession flooded the global economies and there will be another one in the future. I am not to tell when, how and what impact it will have, but what I can tell is that digital transformation is one of the best ways to prepare and get through tough times.

So before I get more into why, I want to let you in on some definition limbo.

Well, digital transformation can either be internal or external.

Internal digital transformation is transformation related to your company. It can be anything like; transforming the way you work together, how you organize, how you communicate, how you do sales and obtain customer insights that will give you new knowledge about our market and help you prioritize product development.

When we are talking about external transformation, we are talking about transformation in your products and services towards your market and customers. It can be IoT for physical products, new ways of building your software, how you offer maintenance and support and new pricing models or anything else that is customer oriented.

I will not go into further extend on the definitions here (my forthcoming book will do that), but as a general rule, internal transformation have impact in your profit, and external on your revenue.

So by carefully choosing the right initiatives for your transformation when the sea is rough you are able to steer through a recession by especially taking care of your internal transformation first.

The reason for this is, that internal digital transformation will make your company faster, more agile and especially learn to be better at external transformation. And you need to be that, in times of recession to be able to innovate, generate new revenue streams, minimize manual tasks, and much more.

A lot of times when recession hits the economy, many managers tend to cut down, implement more structure (many managers thinks it will help, but it does the opposite), more frequent and typically manual reporting (can often be automated), stop new development (which brings revenue) and a lot of other things. But the only way out of a recession is to transform through great leadership. Transform new ideas to business, be more innovative, change the ways of working, try out new ways of organizing to be more efficient, implement less structure and everything that makes your company much more agile.

And that, is the core of digital transformation, to transform your company into a new, and better state.