My Experiential Insights - Creating, Scaling & Sustaining Digital Transformation Strategy

What could be one of the best ways to design a Digital Transformation Strategy? A few years ago, this was the question posted to me by one of the CXO members of a reputed IT company. I paused for a few minutes and then a thought popped up in my mind saying why don't I design a Digital Transformation Strategy based on "Value" itself? I crafted the strategy in the next 45 minutes and on the next day, I presented a draft version to the board of directors at that time. This post intends to echo the essence of it. Before you read further, understand that "A plan is NOT a Strategy".

I started with the idea of a value-based strategy that popped up based on the detailed data analysis. And I was particularly interested in if we are looking at a couple of firms in the same industry at the same period, why is it that some companies do so much better than others? And I walked away from that data analysis being super optimistic about the potential for many companies to be far more successful than they are today. You tell me what company you work for, what industry it is, what country, what time, and in all likelihood, I can show you very similar companies that dramatically outperform your organization. And so when you are thinking about how much runway I have, I think there's every reason to be optimistic there's going to be a lot of runway for the vast majority of companies. And then the question of course is well what can I do? My first expectation was well it must be that these leading organizations do something very complicated and that they are very sophisticated in their strategy. And a little bit to my surprise I found these not true, they're only three things that these companies do.

1. They create additional value, extraordinary value for their customers
2. They create value for the people in their organization for their employees
3. They create value for their suppliers and that's it! there's nothing else (we are done).

And by value, I mean very specifically the willingness to pay customers for your product or your services. Or can you decrease the willingness to sell of employees, meaning how attractive they find the work, the compensation that they need to have to be at your organization? And if the answer is yes you can think of novel ways and you can move willingness to pay or you can move willingness to sell, you're a strategic thinker and you have a potential strategy.

Now coming back to "technology" the first thing in every digital transition is that we are not sure which technologies matter and which technologies are not so important. A few years ago, I had my teams working on ideas related to blockchain. However, today that number is a small fraction. Blockchain might be an amazing technology, it might allow us to do many things much cheaper, much more secure, and in a very different manner, but if they are asking themselves is blockchain going to change the?willingness to pay their customers or is the blockchain going to change the willingness to sell of my employees? For the vast?majority of businesses, it turns out the answer is?no. And so that's the first task, every technology that you see, every opportunity in the digital?space, you're going to ask two questions.

The first?one is does this technology allows me to?change my willingness to pay or to change my willingness?to sell. If the answer is no, end of conversation.?You might have other interesting ways to go through the digital transition, but that?particular technology is not for you.

And then?the second thing that I would like you to think?about is if we do this in a promising manner what's the selection effect? Who will?be particularly attracted to my business?if I use a piece of digital technology??And I give you one interesting observation,?when you look at the pool of drivers for Uber and?Lyft and these ride-hailing companies you will see?that in part they found so many drivers because?they have twice as many women who drive as men.??How is that possible?

Driving a taxi or driving Uber?is not that different, why is it that so many more?women are attracted to driving Uber, driving Lyft,?driving via? Well very simple, we use that digital technology to create "more safety" and we use?digital technology to create greater flexibility, which created a ton of value on the driver's?side.

And as a result, you get a very different composition of drivers. So two questions really,?I see an opportunity, a digital opportunity and I'm thinking about does it changes willingness?to pay, does it changes willingness to sell, and if I can change willingness to sell or?willingness to pay what's the selection effect,??who among my customers will be most?excited, which new customers can I gain???

And the same I think on the talent side, who?am I among my employees who like this idea?and who can I attract in addition to the people?who want to work for my organization today? Those?are the two big questions to ask and think of?value-based strategy as a filter. If we make a list of all the digital opportunities that you have, all the technology that is out?there, that list is unmanageable. The risk is?that you do many things a little bit and as a??result don't get much of an effect

Value-based?strategy is like a lens, it's like a filter, and it allows you to see where your company?has the most amazing opportunities.?Increasing Willingness to Sell to Employees by increasing safety and infusing technology from?Uber and Lyft's perspective. How else do you think organizations can use this idea of?willingness to sell and focus on what their employees are looking for?from them as an employer and maybe change the way that we're bringing technology in to support our?employees and this idea of willingness to sell in a different way than maybe we are today???

So first I may say willingness to sell is not the most intuitive of concepts. when?you first hear it and you say what we're?supposed to lower willingness to sell,??that makes no sense what is this thing about?? Here's the thought experiment that I would like?you to do.

Say you have a friend who works some other at some other company and you would like to?join that friend in your organization. And so you're writing an offer letter and you have to state some compensation and you're thinking about what's the lowest compensation that I could offer?and my friend would still come? That compensation is the friend's willingness to pay and willingness to?sell. And so if the job that you have is super attractive, her willingness to sell will go?down because it's a dream job and it's an amazing opportunity. If the job is quite risky say it's?personally dangerous, then her willingness to sell will go up. So we're using a willingness to sell as?a data-driven measure very much keeping with the digital times as a data-driven measure for?how attractive is work.

I give you one example that I like quite a bit.? It's in the retail sector the gap, the fashion?retailer, they ran an experiment and they wanted to improve the life of their workers in any tangible way. And what I like about this example is typically when I speak with executives I?ask them how do you make a job a better job. The list of suggestions is quite narrow, it usually?focuses on some training or maybe some career aspects, some process-related kinds of things,??but the gap had a much bigger insight.? If you're a retail worker in the United States it's quite stressful, because the typical retail worker knows only about a week in advance when he or she has to work. So you learn very late about what your shifts are going to be and even worse the number of shifts that you get, varies dramatically from week to week, and as?a result, your income varies dramatically from week to week. What did the gap do? Very simple, they partnered with a company called Shift Messenger which essentially uses digital technology for employees to trade shifts. My child has fallen ill, and I shouldn't be at work today,??I just offer my shift on shift messenger,? or towards the end of the month I could use?some extra income, maybe I take on some extra work and I'm getting some extra shifts from people who?can't use their shifts. This also allowed the company to take back unneeded shifts, so it turns out that oh the shipment is not going to come this week it's only going?to come next week so if too many people, the company can take back shifts on shift messengers?without any unexpected changes in income.? It's a very creative, very interesting?use of digital technology. What's the right what's the net what's the net result? For the first time,?employees feel much less stressed about their work. Many of them report that they sleep?better because there's more predictability in their lives, they can plan their lives.??

And then from a narrow business perspective what happens if your employees feel better if they're?more engaged, you guessed it, productivity shot up with sales, and same-store sales increased?by double percentages within the 10 months of this experiment. And so this is the spirit I?think of using digital technology in a really meaningful way. Always ask how can I create?value for my customers. How can I create value for the people who work for my organization???And then what digital technology is out there to help me make that a reality?

#digital #transformation #strategy

?