Digital Transformation: what and how? One formula and 3 key ideas.

You know when certain sentences become so abused that they lose meaning? Like for instance… “digital transformation”.

Everyone is using this sentence, it’s become almost a thing in and of itself, it’s a buzzword that everyone interprets differently.

I was talking to someone the other day and this person kept saying Digital Transformation. Then I stopped and asked for a moment: “could you please define digital transformation to me?”?

Silence followed.

That’s the thing with words that we use, and abuse, everyday in our professional lives. We lose contact with their meaning, assuming that a meaning was there in the first place.

Ok what is then Digital Transformation?

Trying to look for a definition of Digital Transformation I stumbled upon this one from Gartner : “Digital transformation can refer to anything from IT modernization, to digital optimization, to the invention of new digital business models. The term is widely used in public-sector organizations to refer to modest initiatives such as putting services online or legacy modernization.”?

That’s a bit the point: the term can be (and is) used for anything that looks a bit more modern than what the company has had in the past.

There’s certainly an element of modernisation, but Digital Transformation is far from being just that.?

Salesforce has a bit better definition of it in this post: “Digital transformation is the process of using digital technologies to create new — or modify existing — business processes, culture, and customer experiences to meet changing business and market requirements.”

There’s quite a lot to unpack in there and it’s rather omni-comprehensive but it touches the right points: digital technology, processes, culture (people), customer experience. It’s not just a technology thing.

And that’s why I find this article from HBR rather spot on: “If people lack the right mindset to change and the current organizational practices are flawed, Digital Transformation will simply magnify those flaws.” (There are 5 lessons in that article that everyone in the field should read).

Since I have a background in engineering and math I like to try to make things logical and put things into formulas if I can. They are the best way to explain things to myself and hopefully to others as well.

Digitisation?

Everything started long time ago when the first mainframes were invented and humans got access to them with a process called digitisation, which is simply the process of converting Analog information (e.g. paper documents) into Digital (bits and bytes). Slowly but steadily we started getting Data as a result.?

Accounting books became spreadsheets, books become Lotus Notes documents, Rolodex became CRMs, photos became JPEGs and so on.

The process started slowly and exploded in the last decade to the point that the world produces now 2.5 exabytes of data every single day and more data is created?and consumed in a minute than anyone could think of just 15 years ago.

Digitisation is the building block of digital but alone all this data can’t do much transformation.

Digitalisation

The next ingredient is digitalisation, the process of “using Data, human centricity and digital technologies to reinvent?business models or create entirely new value-producing opportunities”. The result we get are new Digital Services that give birth to entirely new Business Models for companies.?

Netflix uses data to offer you the next thing to watch, and they go even further by using data to predict the next movie or series to produce (yeah they do that!).?

Salesforce uses data about the customers you have to reduce churn and automate marketing messages.

Facebook and Google use data to know what ad to put on your screen at the exact moment when you need it studying your footprint online.

These are just 3 examples but you should get the point: data alone is nothing. Data analysed with humans in mind is money.?

This starts transforming things but it’s more just creating new business models and ways for people to consume things they really want. It’s mostly progress, although you can find a lot of backlash against the Big Tech because it’s also profiling people and companies in the process. If maybe a bit more human centricity would be used I believe we would get better digitalisation than we got today :)?

Digital Transformation?(at societal and company level)

Finally I get to defining what I believe is Digital Transformation, which is the total and overall effect?of digitalization: we get a new Society (and when applied to companies also a new Company) as a result.

This happens when you combine the TikTok, Google, Facebook, Salesforce, grocery shopping and delivery at home, Zoom meetings and virtual conferences, NFTs (whether you like it or not) and Blockchain.?

So the formula for Digital Transformation is:

Societal Digital Transformation = (Data + Human Centricity + Digital Technologies = Digital Services & New Business Models)^n?

When talking about a company a real Digital Transformation is the cumulative effect of the changes in the:

?- Mindset of your employees (Agility + Growth orientation)

?- the Processes that your company uses (Multi-functional teams + Automation)

?- the Digital components (micro services + cloud)?

which results in a wholly new Customer Experience that your company can create.

Company Digital Transformation = (Mindset + Process + Digital Components = Customer Experience)^n

Three key ideas to start with Digital Transformation

1 - Start from people

I am a big time advocate of people first and in this case I don’t feel changing my mind.?

Start with your people: in today’s work climate focusing on your people is the most important thing you can do. Only in US the number of people who are quitting their jobs is shattering record over record and that happens when your employee experience is not on par with the best companies in the world.?

Help your employees get acquainted with digital technologies (which does not mean only coding, there is a million other things out there), help them understand how digital products are created, help them understand how to work on agile multi-functional and self-organising teams.

2 - Invest in understanding your customers

The big promise that digital brings is the ability to create better and more personalised customer experiences for the people who believe in your products.?

Each product you build has probably a million ways how it can be improved, but only a few will make a difference for the customers and will improve their experience in a meaningful way.?

Invest in getting to know your customers by building experimentation in your routine. Why Experimentation?

Customers don’t often know what they want until they see it, and it doesn’t make sense (nor is financially viable) to build all the features you could possibly think of they might like.

Take a page out of the startup playbook and start creating experiments in your products, gather data (and do it in a privacy respecting way, always), and act on the insights that this data gives you by doubling down on those features that your customers really seem to care about.

3 - Invest in creating a library of digital components?

I wanted to save this for last :)?

Much you can say about how software is important in the digital world. But I didn’t want to give the impression that software is the only thing. Still it is a very important thing and to do software right and in an efficient way you must not reinvent the wheel and you need to keep things simple.?

If you spent more than 5 minutes with an engineer in your life you might have seen these two things:?

• ?DRY: Don’t Repeat Yourself
• ?KISS: Keep It Simple (Stupid)

Software engineers have know this for ages but may not have always acted on those mantras as much as they wanted.

IT architectures are impossibly complex nowadays and suffer of a lot of repeated systems, components and functions. Nothing is DRY and nothing is Simple.?

De-duplicate your IT architecture. Yes it will take 5 or 10 years, but it will always take 5 to 10 years so you better start early, there is no magic wand that is going to help you. It’s going to be painful and hard. So don’t panic and take your towel with you (because after all “a towel is about the most massively useful thing” you can have with you)

Build on top of it a set of micro-services that are re-usable across your products whether they are the “shopping cart”, the “login button”, the “product stripes” or anything more complex than that. Just do it and let them talk through APIs.

In case you have a big monolith already then start breaking that monolith down. If you are lacking ideas how to do that here and here (yeah even Amazon.com was a monolith once upon a time) or here (yeah Netflix did it too).

Summa summarum

Wrapping it up here is the formula:

Company Digital Transformation = (Mindset + Process + Digital Components = Customer Experience)^n

And here the 3 key ides:

1 - Start from people

2 - Invest in understanding your customers

3 - Invest in creating a library of digital components?

Simple?

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