How to do Digital Transformation

I'm often asked about how companies should go about the process of digital transformation. My response is to avoid that particular question entirely. Forget about having a goal of becoming more digital. Instead focus on becoming better at responding to changing customer behaviours and expectations. The rest will follow.

The phrase “digital transformation” has come to be understood as the transformation of business by "revamping the business strategy, models, operations, products, marketing approach and objectives by adopting digital technologies". The term was first coined around 2011 but it is only in the past 12-18 months that it has become something that people like to be seen to talk about; as evidenced perhaps by Wikipedia’s tracker on interest in this topic:

Digital Transformation was not invented in 2011 and certainly did not accelerate in volume of activity from 2016. This is something that every organisation has been taking on board since the advent of computers and more specifically since the birth of the Internet. What has perhaps changed recently is the recognition of the need for a more structured approach to better leveraging digital technologies within businesses.

Many organisations have had false dawns, investing in digital strategies that are not focused on the best use of technology or the volumes of data now available within organisations. I regularly hear organisations talk about the massive investments in digital that didn’t seem to have delivered an ROI or the mountains of data that no one knows what to do with.

We need to turn this conversation on its head and stop asking about how to get better at digital and data. What’s actually driving all these conversations is not the advent of new technologies or data capabilities, but how consumer behaviours are changing. It is because consumers are becoming much more digitally active and as a result generating much more data around their behaviours, that we must now adapt our strategies, models, operations, products, marketing approaches and objectives. Digital technologies and data capabilities are the key enablers to help us get there.

If the customer is the starting point, what are the right approaches to take in today’s rapidly evolving business world to deliver successful customer strategies? There is much written about this elsewhere, but these five pointers outline an approach that seems to gain universal agreement:

1. Find Your North Star

Start by asking yourself what problem are you solving for your consumers? Why are you doing this? What does that look like in the future? What’s your long term destination?Millennials as a cohort are said to be looking for purposeful work. But this is nothing new. All the great companies have a clearly articulated purpose that revolves around higher order implicit goals anchored in improving the lives of people in society. What’s your purpose and what does that look like in five years? Let that be the north star that guides your transformation process.

2. Bake Customers into The Process

Gone are the days when you do lengthy customer research and then head off into the bunker for six months to build a product. Until you actually put a meaningful MVP product proposition in front of customers in a real world context, you know nothing. Insert customers into the process from design to execution. Use design thinking, lean start-up and agile methods to ensure that the feedback loop is effective and rapid. There is no better way to understand how you can best solve problems for customers, than by actually solving those problems for customers. Build MVPs which are solutions for the users built together with the users. Remember that perfection is the enemy of progress.

3. Focus on Value

Costly process, slow delivery, lack of choice, difficulty in use – start by finding the biggest pain point for consumers. Identifying and ranking pain points that are keenly felt gives you the first places focus on. Seek to improve user value by improving the process. Price comparison sites focused on the painful process of entering the same information repeatedly across multiple websites; and won customers as a result. For sure, finding a great price is a key benefit, but the driver for consumer adoption was the step change in shopping around for financial products. Bear in mind that sometimes, customers are not even aware of what causes them most frustration; very often they’ve come to accept that’s it’s just how things work. Watch your customers and see where they struggle most with your product or service offering. That’s the place to start delivering value first.

4. Create a Roadmap

For internal stakeholders create a viable plan that maps out the path towards the north star. Reassure your teams and partners that you know where you want to get to and you know how you are going to get there. One of the biggest barriers to digital transformation is often the culture of an organisation. We’re usually talking about radically changing how we run many aspects of our organisation and that can be uncomfortable. Having a vision together with a plan to get there will reassure those that are genuinely up for the journey. The strands of any plan must include Audience, Structures, Leadership, Products, Marketing, Technology, Data and Operations. Make this easy to understand – create a visual map that shows the journey from AS IS moving towards TO BE. Create and share the plan and then update it to track and communicate progress.

5. Create Pull

In old-world industrial economy organisations we push instructions, training and development out to employees from the top. Our modus operandi was to give employees the knowledge and skills required to do their job effectively. Given the rate of change required to adapt to today’s consumer expectations in a knowledge economy, this model simply won’t work. We need to create pull amongst employees – giving them ready access to the information they need when they need it in order to deliver on the shared mission. It is a bottom-up approach that puts the tools in place that connect employees and foster collaboration in order to rapidly adapt to shifting market demands. Employees who are passionate about the purpose, are focused on providing value to the customer and who understand the roadmap; need a whole new set of resources and decision-making aids that fuel action.

There is no easy formula for how do to digital transformation. The first thing to do is stop talking about digital transformation and get talking to and about your customers. You'll then quickly find that the answers and innovations required to support today's consumer have digital technologies and data capabilities at the centre.