Is Digital Transformation in Your Business Blind Spot?

Digital disruption is fundamentally changing the roles of products and services.  Products are becoming living products. They can get better and improve their behaviours over time as they learn more and are fed more insights, evolving beyond the coder’s initial intended functionality.

Pervasive connectivity, speed and the low cost of everything, from automation assistants handling emails to smart manufacturing driven by industry 4.0 will force expansion in the underlying technologies of: the Internet of Things (IoT), Big Data Analytics, Artificial Intelligence, Advanced Robotics, 3D printing, 5G Cell Processing, Cloud platforms and Edge computing. These technologies are already reshaping the way of business, irrespective of whether an organisation operates in a B2B or B2C sector. Digital Transformation (DT) is used in this article as a short hand for the many converging technologies that are disrupting businesses today. In equal measure, these disruptions are both an opportunity and a threat, and businesses should consider how they can gain innovation business advantage and leverage their ecosystem fully at every touchpoint to solidify opportunities.

The IKE Institute’s experience over the past twelve months whilst benchmarking innovation capability and readiness of different businesses has highlighted the varying levels of sophistication in how DT is being used. Essentially, all enterprises have used DT to achieve productivity and efficiency gains. And, only some have managed to extract additional value from deploying DT initiatives in, for example, the implementation of Smart Factories or changing their business models to deliver higher degrees of automation to avoid outage with the help of Predictive Maintenance.

However, many businesses still experience a strategic blind spot when it comes to Digital Transformation. Adopting new DT initiatives must go beyond just achieving some percentage points of efficiency optimisation. After all, the dictionary definition of transformation is: a marked change in form, nature, or appearance!

DT is about innovating the total business model and reconfiguring its ecosystem to be ready to leverage mega-trends and opportunities. It is about curating the business ambition into growth opportunity profiles and identifying clear differentiation for the enterprise. It should also be about generating the X-factor in revenue and profit, and demonstrating aggressive organic growth. It should also be about rewiring the business to protect customer loyalty, create new customer experience, and deliver new value from existing assets.  This means enterprise leadership must challenge limiting assumptions and management self-bias that often cloisters organisational culture. It is an opportunity for brave leaders to press the reset button and set a new ambition!

It’s worth taking note of the automotive sector and their relentless drive for autonomy, and how this is changing in a multidimensional way, the car users’ experience. The idea of mobility as a service, where drivers will become the riders, and where vehicles will become the platforms for meetings, entertainment theatres and morph into other forms of connected media channels, is transforming the whole sector. It is a true game changer! While autonomous cars may take a decade or so to become mainstream, the customer and user experience is being readily sensitised to manage future expectations. Intel and market researcher Strategy Analytics predict that the value of goods and services for the in-car services and experiences-based economy will be close to $7 trillion by 2050, more than double the predicted value of the ‘Sharing Economy’. It is conceivable that the next generation of youths might not even need to obtain a driving licence to drive a car!

So, in this hyper-connected world B2B enterprises will need to have a strategic outward focus on how DT will drive competitive advantage in the modern industrial economy. This requires a genuine evaluation of future capabilities and technology roadmaps.  With technology maturing so quickly, it will be less about the physical product and more about the software.

Putting trends and insights aside, one could argue that adopting DT fully forces an enterprise to take a huge leap of faith without having any clear predetermined metrics or ROI measures in place. This is where great visionaries are needed to envision and shape the future of their businesses.

To become a truly authentic Digital Company means embracing an honest and unambiguous vision of how you want your future business to be, matched by an unbiased understanding of the future capabilities that are needed, to ensure that you get the most value out of your products, services and assets.

Transitioning towards a truly digital enterprise can commence by slicing the DT journey into seven manageable chunks as outlined below:

1. Define your intent with clarity and absolute commitment.  Develop a good level of understanding of what DT could mean to your business. Be mindful of the evolutionary paths that DT could project and therefore, possible growth opportunities that could be presented. And, be flexible and willing to change your plans accordingly.
    
2. Turn your focus onto your customers and end-users. Thoroughly understand their experiences at every touch point within your organisation. Centre your efforts on the ‘value track’ to your customers. And, remember Data collection is helpful but it doesn’t always necessarily enable you to understand why people are doing what they are doing. Use qualitative techniques to help you to understand the ‘Why’. Spend time you’re your customers asking them questions and observing their behaviours. Your aim here is to uncover where things don’t work properly and identify un-met needs or latent needs and critical opportunities for innovation, which can then be used to influence the direction of transformation projects.
    
3. Understand your core competencies and existing capabilities. Assess the capabilities of partners and suppliers that have a direct impact on your business. Identify the level of digital competency readiness and areas for development. Identify how the skillset base will be migrated towards digital competency and create a DT competency bank. Technical input into the HR function is a must!
    
4. Set-up a multidisciplinary team (7-11 members) to reconfigure your business logic. Initiate new business processes that reflect the new customer interaction scenarios.  Always ask the question: What are we going to do different that we haven’t done before? Combat self-bias and challenge limiting assumptions. Simplify workflows and validate the best way to get the work done (and not how it’s always been done in the past!).  
    
5. Collaborate and deploy Open Innovation challenges to expand the organisation’s options for exploring and exploiting new opportunities across multiple innovation horizons.
    
6. Deploy a hybrid approach to introducing the new DT-centric organisation, whilst protecting existing revenues and commitments. A point of caution here: define strict timelines for rapidly transitioning the total organisation into the new digital outfit with a relentless focus on forming the new digital enterprise.
    
7. Communicate and measure!  Ensure consistent and persistent communication internally and externally with customers, users and stakeholders.  Share experiences and gain insights with respect to the value generated and delivered. Establish an enterprise-wide balanced approach to your DT efforts and success measures. Evaluate the newly formed ecosystem and continually search for new growth opportunities and differentiation.

All of the above requires senior leadership to be totally committed to embracing innovative thinking and to fast-tracking innovation efforts to reinvent the business as a digitally-driven intelligent enterprise.