Transitioning from digital transformation to digital acceleration: What history teaches us

Author's note: This article was published 8 months BC, i.e. Before ChatGPT. Its concepts and guidelines remain as valid now that Generative AI has taken the world by storm as it did back when I first published it early 2022. Enjoy! (sept 2024)

For years, digital transformation?has been a hot topic,?with countless articles?highlighting the?long-term?strategic?need for every company?to?transform digitally.?The pandemic has had such a dramatic effect?that virtually all companies and all internal processes have at least started?this transformation. Or, as Satya Nadella?said?in April 2020 :?“We’ve seen two years’?worth of digital transformation in two months.”?And?that was?at the start of this now 18 months?(and counting)?pandemic.?

As?the end?of?2021?approaches?and?we look?towards the remainder of the decade, a more appropriate question that companies should ask themselves is not about?the need or timing for their?digital transformation but?more?about their?digital acceleration.

Digital acceleration: A?paradigm shift that?enables?organizations to realize the full potential?and ROI?of their digital transformation.?

Now that processes?are natively digital,?how?do you?leverage?your?digital transformation?to increase its?returns in terms of customer benefits, cost reduction, quality improvement, and employee?satisfaction??To reap those benefits, we advocate companies switch their mindset?to a digital acceleration one.

What history teaches us?about?how long it takes to?fully embrace new technology paradigms: Steam-powered?equipment?and?car dashboards

Before digging into the implications?of switching from digital transformation to digital acceleration,?let’s look back?at?two previous?mutations that dramatically?impacted the?(then)?“business as usual.”

Manufacturing: The?switch from?steam?to electricity-powered equipment

Arguably, the industrial revolution started when steam machines were?developed?and?deployed?at scale and across industries.?But this?was?only the first step?in productivity gains?that the industrial revolution brought.

When?electrification?became mainstream ?in the late 1800s?(and early 1900s for the electric grid),?electric?engine-powered?equipment?appeared?in?manufacturing plants around?the world. However,?they were initially only used?to?replace the steam machines?one-to-one: same output, same location in the plant, same goals.

A?current IT technology?analogy would be the lift and shift?movement that?started in the early?2010s?when on-premises applications?were?moved?to virtual machines?on clouds?such as Microsoft Azure,?Amazon?Web Services, or Google Cloud?Platform.

Source: Wikimedia

Machines?powered?via?a steam engine?were installed,?aligned,?and spread?across multiple floors because they were all connected?to the?same steam?engine?through?drive belts running at the same speed, regardless of the machine.

When?manufactured started to use?electric machines,?it barely improved factories’ overall productivity because they were only swapped in for the steam-powered ones.

It took?decades before?industrial?process?engineers realized?machines didn’t?need to be?all close?to one another, next to the steam engine-powered?belts,?in this new electricity-powered equipment paradigm.

This?new approach?led?to?incredible productivity improvements where machines?could be organized?to follow?logical manufacturing flows.?It?increased?manufacturing speed?and?production efficiency and enabled?even larger-scale manufacturing.?It?also?paved the way for the moving assembly process pioneered by Henry Ford that revolutionized automobile manufacturing and made cars available to the mass market.

The dawn of the EVs

Similarly,?when the first hybrid cars came around?in the early 2000s,?batteries?recharged?through?braking?and?the gas-powered?engine.?In those cars,?the electric?motor?would?be used at low speed?before?the gas engine would kick?in?or complement the gas engine?for?better?acceleration.?The Toyota Prius?used?the first?approach, the Honda Civic?Hybrid the second?one.

Then?pure?(or hybrid pluggable)?EVs?came?out,?with the most famous being the Tesla?Roadster and?Model S.

Now, let’s?zoom in on?one specific element?in?those cars:?the dashboard

All?the cars mentioned above, including the Roadster and Model S,?shared?a similar dashboard design: they?replicated the?dashboard?model of?gas-powered?(or ICE, for Internal Combustion Engine) cars.?Those dashboards?had an?extensive?set of?buttons,?knobs, lights, gauges,?meters, etc. This?itself dictated?how?the heating and air conditioning could be dispensed?for the front passengers.

In 2018, Tesla introduced the?Model 3. This car,?from a dashboard perspective, was a leapfrog in?design.?For the first time,?the dashboard?truly took?advantage of the fact that the?vehicle?was an EV.

First, everything disappeared from the dashboard?and migrated to?a central?touchscreen. Because of that,?the traditional?air vent?system?was not needed anymore. Tesla used?the fact that the whole dashboard was now clutter-free to?innovate ?when?dispensing air?to?the front rows.

The?picture of the Model 3 and Y user interface?below depicts?how it works.?Tesla?leverages the?full dash?length?to generate the front?airflow. It then?controls?the?airflow?direction?by merging it with?a second?vertical?airflow. This leads to more comfort?for?the?driver and?the?passenger. It also provides?more controllable and flexible airflows?than the?traditional?vents?with?clunky?mechanical rotation?capabilities?and directional?tabs.

In this example, once again,?it took?almost?20?years?between?when?a?new technology?(Hybrid/EV)?started to be deployed commercially at scale?and when?manufacturers?capitalized on?its?full?potential.

What those two stories have in common is?that?it took?(too)?many years before?industries embraced the?new?paradigm?made possible by those?innovations. To benefit from the potential of cloud, data, and AI-powered processes,?companies need to move to a digital acceleration paradigm now and not in 5, 10,?or 20 years.

How does a business shift its mindset from digital transformation to digital acceleration??

The benefits of digitally native approaches

Digital transformation has mostly, for now, been?about bringing existing analog?(or?on-premises)?processes to the cloud?by replicating?one-to-one?on the cloud?what used to be done by humans,?on?paper, with?Excel?spreadsheets, or on legacy software.

The 2020-2021 pandemic forced?every company on the planet?to digitize?many?processes. However, those digital transformations?were often unexpected or,?at minimum,?very?accelerated. The limited amount of time companies had to achieve those transformations?meant?they?mostly?digitized?existing processes?instead of?genuinely transforming them. Instead of?digitally native?processes,?most companies are?essentially?using?an electric piece of equipment where the steam-powered one was?or?are still?designing their?dashboards for an?ICE?cars?world .

Companies?need to switch from?a?digital transformation paradigm to?a?digital acceleration one?to truly reap the benefits?of?all?digital processes?and?augment humans in their?day-to-day?work. Only then will they reach the?potential business value of?digital transformation. They must refrain from?stopping at?only?migrating?a process to?the?cloud. They must?reimagine?the why,?what, and how of each?process.?And?they must rethink, reboot, and rebuild to?optimize?those processes?and?take?full?advantage?of?this new paradigm.

If left alone,?as?history?taught?us, it?could take years,?if not decades, for?those advanced digitally native?solutions?to?be implemented?across?business?processes,?industries,?and companies.?Therefore, companies?need to?be more intentional and?switch from?digital transformation to digital acceleration.?It’s not about digitally transforming your company – that’s a given – but?rather?how to?accelerate this transformation.

Of course, not all processes in all companies will attain the?nirvana of the digitally optimized processes immediately. They will fall along?the?spectrum?of transformation as depicted in this?diagram.

Beginning with the end in mind

Customers that?fully?embrace?the concept of digital acceleration by rethinking their processes to leverage all the potential benefits of a digitally native?business process?will?achieve?a?far?more significant?return on?investments?than?those that don’t.

However,?it does not mean that every project needs to be a massive?undertaking?that will demand?years to?achieve an?ideal?ROI positive?state. It means that companies need to take a good look at their processes and, as?Stephen?Covey wrote , that they?“begin?with the end in mind,”?not with the first step of moving to the cloud alone.

For instance, a?health insurance company?was using a manual process to check for claim?underwriting.?A simple?digital transformation?would have?meant?migrating?claim?storage to the cloud.?Claim?underwriters?would still?manually and?randomly check claims for frauds. However, the customer wanted to?improve this process dramatically,?so they did not stop at that.

The project?started?with this relatively simple cloud migration step. But it did not?end?there. The Neal team then integrated NLP and developed a Machine Learning (ML) model to?automatically identify potentially fraudulent claims and?spot those that could indicate a patient was not using all the coverage they were entitled to. By doing this, the claim auditing coverage went from a few percent to 100%.?It also improved?employees’?job satisfaction as the grinding work of parsing?potentially?false claims?from?genuine ones?was outsourced to the ML models.

At?Neal Analytics, we often start digital acceleration engagements by conducting extensive multi-days?cross-functional?assessment?workshops to help define which projects can?and should?start first and?where they?should?aim to go?eventually.?It?is often a crawl-walk-run?approach?that can?lead to?several?parallel projects spanning?multiple years. However,?companies can achieve this?ultimate goal?by starting with the end in mind and being deliberate about the steps to take at a process level.?This approach makes?it?possible to?accelerate both individual processes and company-level transformations significantly.

Technology is an enabler, not a solution

Often, digital transformation leaders?can fall into the pitfall of assuming the technology alone will suffice to?transform their company by creating so much value and being so visible that?all the other elements will then fall into place on their own.

Far from that.

To succeed in switching from?individual?digital transformation?initiatives to digital acceleration, leaders need to pay at least as much attention to?three?critical?business-centric elements:?Business model, digital culture, and incentives.

Business model innovation

In addition to?tools and processes, companies could re-invent?how?they engage their customers by redesigning how they monetize the interactions and?the?value?they?provide.

Leveraging digitally native business processes almost always open the door to business model innovations from pricing to delivery, packaging,?churn reduction, segmentation, and more.

People need to embrace the digital culture

Executives should aim to create a digital culture?that embraces?the new capabilities and the value of data. For instance,?people and departments who exemplify the digital acceleration outcomes?should?be celebrated?and rewarded accordingly?to?send a clear message about what behavior?will mean career success for employees at all levels.

Incentives drive behavior

Humans?conduct themselves for self-preservation and monetary benefits. Therefore, it is?vital to link?incentives to the company’s?digital aspirations.?Well-designed incentives?will accelerate?people’s?transition?to a digitally accelerated company.

Final notes

How should one think about switching their approach from digital transformation to digital acceleration?

First and foremost, executives need to embrace that this acceleration implies a?long-term?commitment throughout the organization?and?across departments and levels. They need?to?embrace the digitalization and optimization of virtually every business process in the company.

Then,?companies need to?carefully pick the most urgent, impactful, and achievable projects and do so with appropriate milestones?that can demonstrate clear business outcomes?at each step.

Eventually, this?transformation?will?become a business-as-usual process where every new or existing business process is?constantly?reevaluated?using?the lens of what the latest technology solution?could potentially mean for both?its?“how”?and its?“what.”

Whether?the?result?is advanced dashboarding and reporting to get a better pulse of the business in real-time,?improved?forecasting?with?machine learning algorithms, or?new?business opportunities?using?the most advanced AI technologies,?such as?Generative AI or deep reinforcement learning,?technology will always remain a means?to an end.?Those technology choices,?however,?can dramatically change?what?the end?business impact can be.