The point of the Digital Transformation (or, what happened to the queue?)

Do you remember what personal banking used to be like before the internet banks? You would go to the bank office – between 9am and 3pm on weekdays – fill in paper forms, and wait in line for the teller. The process was probably as efficient as it could be, given that everything had to be recorded on paper. A visit to the bank office was not required for everything, though: if you had bills to pay or transfers to be made, you could sign them, put them in a special envelope and send to the bank to be paid. Incredible numbers of transactions were handled this way every month. It was a highly optimized, paper-based process.

The internet banks of course changed all of this. Suddenly, you could run your bank errands outside the limited office hours and without waiting in line. Sending papers by post was quickly replaced by paying the bills on the web. Even if the post-based process was relatively fast and reliable, it stood no chance against the speed and reliability of the internet bank payments. The internet banks were a huge improvement for the customers. Within short the bank offices were all but obsolete, at least for personal banking.

This stands out to me as an example of a successful digital transformation. The first internet banks of course had their quirks and limitations, and behind the scenes there were the mainframes limiting the speed of innovation (I bet many of them are still around today), but from a customer perspective, all of that didn’t matter: it was a huge improvement for both productivity and customer satisfaction.

Digital Transformation: the good, the bad, and the ugly

The idea to dig into this topic and write about it was sparked by a tweet by John Cutler:

A fairly innocent-looking question, right? There were many responses with a wide range of diversity. Some serious, some cynical. Some hilarious. Let’s start with some of the more serious:

• turning an analog business process into a digital one
• increasing the velocity of the business
• change ingrained outdated work practices and bringing culture and tools into a modern pattern
• acting more like a startup / modernizing / automation
• having systems to automate stuff and manage the movement and mapping of data instead of humans and paper
• adapting your business model to take advantage of the depreciation provided by digital tech (gets better and cheaper every year) and to include purely digital value channels along with offline modalities
• we’re now in a world where more and more of our business results are driven by software and we’d better get good at that if we want to survive
• innovating new business models and fixing under-performing ones using rapidly delivered and well-designed software

In summary, a digital transformation is how you turn a company from the pre-digital era into a modern tech company. All traditional companies know that they need to do it. Software is eating the world, as Marc Andreessen put it, and any company which cannot keep up with the changing environment will become obsolete. Just imagine a bank today without an internet bank service. It might find a market niche for nostalgics, but there is no doubt that most customers would go elsewhere.

On the other hand: digital transformation, being one of those buzzwords, has been accused of being too vague, being just another change program, burning lots of money with small returns, and so on. In short: a lot of hot air, as some of the more funny and/or cynical tweets in the thread can confirm:

• go from on-prem to X cloud provider
• running around like chickens without heads spending lots of money on worthless software with no thought behind it or underlying business strategy
• useless and expensive consulting
• MOAR CONSULTANTS
• saying we are solving our customer’s problems when we are really fixing ours…
• letting the cool kids run things
• let’s fix non-technological problems with technology!
• cost reduction
• a genuine attempt by executives to leverage the internet; normally too late, without a grounding in knowledge on the topic and certainly in a manner that isn’t sustainable when it needs to be
• selling the installation, configuration, and massive projects linked to the sales of one or preferably all of the following CMS, CRM, ERP, HRIS, etc

What can we read between the lines, assuming that there is no smoke without fire? For example, people being tired of Yet Another Change Program which is expected to magically fix all problems. That the label “digital transformation” gets slapped onto all kinds of change initiatives, until it means everything and nothing.

More seriously, signs of management stepping back and letting consultants run this “digital thing” that they themselves don’t quite understand. Or taking the cargo cult approach: imitating what they see others do, but without fully understanding the rationale behind it or how to adapt it to their own context.

It could also simply be change management not working so well. Change is hard!

Going digital

Let’s look into this desire to become a tech company, and what the components of such a digital transformation might be. That will be the topic for the next couple of posts in this series.

Credits for the quoted tweets: @Alec_Coughlin, @alexcrossley, @allenholub, @arnaudportiere, @codingpartner, @constmontague, @daveslutzkin, @designer_kim, @drewfalkman, @jaysonrobinson, @jayzasa, @jfournier, @johncutlefish, @laura_yarrow, @Klaver4, @mkatz0630, @Nico_Rossello, @nrose, @_slimmer_, @trib. Thank you all! The last quote in the first section is from Michael Coté’s book The Business Bottleneck, added in for good measure.

Note: Opinions expressed in this article are my own, not necessarily those of my employer.