While Digital Transformation has become one of the buzz-phrases of today’s business, insights from actual business practices tell us that, when it comes to digital, we still talk much more than we do. What is even more worrying, many companies misunderstand what digital transformation is all about and either get stalled or waste resources in pursuing wrong goals. Let us therefore clarify several key points regarding this topic.
Digital is here, increasing impact over time
Research evidence tells us digital is not just another fashion. The impacts of technology are measurable, among others increasing mortality of companies and decreasing the useful life time of business models. However, many companies are slow in reacting to this challenge, and those which more often look at bits and pieces, like introducing digital channels, rather than creating a fresh view of their business.
Digital is more about the business model than about the technology
Digital technology is an important enabler, it allows for more or less radical changes of existing business models, as well as creation of completely new ones. However, the focus is not on the technology itself, but what it allows to be created for the customers. Translated into the language of business models, we have to consider a) new customer segments made reachable by IT; b) new customer value proposition for selected customer segments; and/or c) how can use of digital technology improve our processes and eventually lead to optimized cost structure.
We have to survive the “market test”
All too often the ideas sound nice, but the customers refuse to recognize the value for them, or see the implicit costs (like taking risks with novel products or changing behaviors) too high for the value offered by the new business model. Therefore, rapid testing of new ideas through small scale experiments makes sense, rather than upfront committing precious assets to “grand plans”.
There is no transformation without new competences and new culture
At the end of the day, digital transformation is just another large scale change project in our companies. As any of them, it requires project thinking (timelines, KPIs, teams around activity breakdown, resourcing …), as well as change leadership (creating and “selling” the digital story, energizing the organization, defining new behaviors, building trust …). On top of it, it requires building a certain set of policies and not stopping until new competencies and culture have been created allowing for successful implementation of new business model. And, yes, digital competencies are there, but “good old” things like collaborative mindset, prudent risk taking and ability to build and use human talent still dominate.