Perspective on Digital Transformation: 25/25/50 Rule

Myth of the Buzzword

Digital Transformation is the most generous buzzword of the last decade. Together with Data, Analytics, AI, Machine Learning, Blockchain, Automation and Robotics, Digital transformation has become a giant beast of its kind today. Traditional global businesses are trying to join the digital bandwagon to compete with some of the niche ‘born-digital’ players in their respective industries. Among these tech-heavy words, enterprises are forgetting a softer aspect of this transformation, which, in my opinion, is the most critical success factor: the organisation itself and the people working in these organisations. Late Harvard professor Clayton Christensen has said that disruptive innovation is all about job-to-be-done in a new and different way. Organisations still do the fundamental jobs (of serving customer, managing finance, running operations, etc.), but does it differently now, which delights the consumer and creates value for the shareholders. Digital Transformation in its early days has focussed on the job, but not on the people doing the job. Digital transformation brings a new way to do the job, and that impacts the people aspect of the organisation. Some thought leaders are naming it “Future of Work”. The question is, “What businesses are doing to get their organisations and people ready to do things differently?” Unless and until people and organisation are part of the digital strategy, no digital transformation will be successful.

25/25/50 percent rule of successful digital transformation

Great thought leaders are saying that the Covid-19 pandemic will propel the speed of digital transformation among the traditional non-digital companies. So it will be essential that these companies spend their time and money very judiciously as they embark upon (or further propel, if already started) this journey. 

25% of the time and money should be spent on understanding the customer dynamics and then building technology and digital platform that will help to serve the customer differently than your competitor in the new digital world. Business models have to be changed, and unique ways of doing business should be thought through (new channels, new products, the new way to serve consumers et al.)

The next 25% of the time and money should be focussed on Data. Data culture will be the new norm of decision culture. With AI and advanced analytics becoming the mainstream of digital transformation, the decision making will be federated and distributed. The traditional command-and-control culture with centralised decision making has to be forgotten to make the businesses much more agile. Data democratisation will enable enterprises to make decisions quickly. Use of data-enabled analytics and AI will empower the blue-collared employees who can make the micro-level decision with speed. Data and decision making with agility will help to beat the competition and delight the consumer at the same time.

But the success of the digital transformation will depend on the last 50% of the time and money that businesses will spend. This large portion of time and money should be spent on people/employees and change. This is often the forgotten piece, and many digital transformation programs in global organisations have failed in the past of overlooking this. Usually only 10-15% of the time and budget is given for this aspect of the journey. Also, this is something which is often thought through only during the scaling / roll-out phase of the transformation programs. Organisations carry the biggest myth that employees will adopt and the new way of “job-to-be-done” will happen. Often it is assumed that leadership agreement and sponsorship is enough for people to adapt to change. Change starts from the onset. The moment your competition has started doing business digitally (if you are laggard) or you want to serve your customer differently (if you are are an innovator), you have changed your mindset. However, this mindset has to be percolated down to the whole organisation.

Agile or Sprint based change should not be just an IT mandate. It should be a business mandate, and above all, it should be a peoples mandate who run and govern the business. Change is easy if it comes from the core (or from the heart !). Adoption is frictionless if your heart adepts before your mind. Covid 19 pandemic will bring this mindful change easily, and it is the time that digital transformation leaders should start looking at it through new lenses. Technology bit is easy, but people and change bit is the toughest one and is the secret sauce of all success. Digital transformation cannot overlook this.