Why Organizations Feel Pressured To Go Digital And How To Help Them

This article covers the following key areas for successful digital transformation:

• Understand why there's so much pressure to go digital while so many digital transformation projects fail
• Learn why a strategic approach like Digital Transformation Planning (DTP) can help to reduce digital failures
• See how a vertical such as the automotive industry can benefit from a strategic approach like DTP

Organizations feel peer pressure to go Digital

The digitization of the global economy has had many effects on global organizations but few are more significant than the overwhelming desire to undergo digital transformation. Modern organizations are under tremendous pressure to undergo this process lest they be left in the past, but digital transformation failure rates have become a major problem. 

Unfortunately the peer pressure organizations feel to update their operations has led to organizations rushing to incorporate new technologies without fully understanding how they will improve their daily operations. In the past it has been noted that around 84% of companies fail to achieve digital transformation.

The reason for this astronomical digital transformation failure rate has been attributed to everything from complexity to poor organizational structure. While these factors have their place in explaining the high rate of failure amongst modern enterprises there are more simple explanations; unrealistic expectations combined with a lack of strategy.

So, how can we solve these challenges? Unrealistic expectations can only be solved in the mindset of the people at the client side. Not only are companies under constant pressure to position themselves as ‘thought leaders’ but there is no universally agreed route to implementation. That's why I would like to suggest that people start with developing a so called Digital Transformation Plan.

Reasons why you need a Digital Transformation Plan (DTP)

A Digital Transformation Plan or Roadmap is a blueprint that should have a validity of 12 months. The reasons for developing a 12 month roadmap are not self-evident. Certainly technology is important, but why must the business meticulously plan out their strategy for a year into the future, especially if the environment is working just fine as it is? The truth is that there are many reasons to draft your roadmap, and some of these reasons will be more or less relevant to different businesses depending on their industry.

• Staying competitive: There are industries that are so intertwined with their technology that lagging behind could cost the business their position in the market.
• Predictability of IT expense: IT expenses can be notoriously difficult to predict. Should a piece of data center hardware fail, it could cost thousands of dollars of capital to replace.
• Answers the Cloud question: The cloud is not something any company should rush into. It takes a lot of time to migrate, and if not done correctly, your migrated applications may not even work.
• Ensuring the business meets regulatory and compliance needs: A roadmap provides the opportunity to prepare for any compliancy or regulatory changes that must be made in the organization 
• Attract better IT talent: If you know what you want and you know what you need to do to achieve it, you’ll understand what additional personnel will be required to complete the roadmap.
• Using employee time wisely: It is easy in IT to get lost in the weeds of day to day management of an IT environment. Administrators can lose hours in a day to putting out fires and addressing immediate concerns.
• Improve the relationship between IT and the business: It can be seen in the business as a barrier, when it should be the enabler of success. Instead of IT telling other business units no when they request a new application or technology, the roadmap will ensure the IT department addresses the needs of the business in the most stable, secure, and cost effective method possible. 

But how do you develop a Digital Transformation Plan? There are many methodologies that claim they can get you there. Many of these focus on a paricular part of your business. In order to get it right from the beginning, you need to focus on a holistic approach.

Holistic Digital Transformation Plan

I believe the Business Model Canvas and SOSTAC? methods together represent a valuable toolkit for effective management of your assets, capacities and revenu. Both of these methods are worth using because they are portable, lightweight, and actionable. What this really means is both methods are easy to use in practice.

The Business Model Canvas was first originated in the book Business Model Generation by Alexander Osterwalder & Yves Pigneur. From the description:

What are the harsh new realities that small businesses, individuals and public sector organizations face in today’s marketplace? The business model canvas (BMC) helps to address your human, financial and brand capacities.

The SOSTAC? planning model by Paul Smith is directed at those in digital marketing, customer relations and professional communications, although you can use it in a broader perspective. SOSTAC? stands for Situation analysis, Objectives, Strategy, Tactics, Actions and Control. Like the Business Model Canvas, the SOSTAC? method delivers a complex message with ease.

The BMC in the example below reflects your current situation. It's important to develop this starting point, so you remember where you came from. 

BMC before transformation – Automotive case

The integration of digital technologies in the Automotive industry is probably the most game-changing development in recent years. Each step in the value chain will be affected by digitalization. Moreover, new business models arise on the back of these developments and traditional ones are transformed in the digital world or simply being disrupted. Luxury car brands in particular are competing fiercely to become the digital leader in their market.

The BMC before transformation is required because you need to have an overview of your original business model as a starting point.  

The first part of the BMC is focused on your customers, so you need to fill in the building blocks Value Proposition, Customer Segments, Channels and Customer Relationships.

The second part is focused on your financials, where you fill in Revenue Streams and Cost Structures.

The third part is focused on your assetss. Here you need to fill in the building blocks Key Resources, Key Partners and Key Activities.

BMC after transformation – Automotive case

Information for the BMC after transformation comes out of the SOSTAC? sessions and are marked in red in the figure on the left. This gives you an overview of your innovated business model. 

You can start again with your Value Proposition and then continue with filling in the other building blocks.

Want to know more?

To get more information on this topic, I would like to invite you to register for my webinar Hybrid CX (Pt 3) - Why Organizations Feel Pressured To Go Digital And How To Help Them. For compehensive information on the methodology and other interesting topics, I would like to recommend my book New World Technologies: 2020 and Beyond. I also want to invite readers to write a review on Amazon.com

About Errol van Engelen

I am an author, speaker and independent advisor in Digital Transformation and Emerging Technologies. I can help organizations to transform from a traditional business to a digital leader by using Digital Transformation Planning methodology. Feel free to connect with me on LinkedIn. 

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