It is amazing to me how many conversations on Digital Transformation (transformation through better use of data) confine themselves to the technology aspects of the solution. Typical questions I hear are, how will we get as much data as possible from the products, process, people, and IT systems? Understand what the data is telling us? The Technology aspects of solutioning become the enabler, yet the real innovation comes when a company determines how those technology elements will transform the business and markets served. How will data and the access to information transform the markets you participate in?
How will a transformation program change the way in which your company interacts with and serves its customers? What new market opportunities will emerge that might be lucrative? These are the real transformation questions that executives need to explore providing context for the technology implementation initiatives. Digital is causing disruption across many industries to products, services and entire markets so how can you be sure that your investments are targeted properly to capitalize on this trend? I believe that paying close attention to these four areas can help executives be successful at creating the foundation for a digital transformation initiative.
First and foremost, think strategically about markets and look broadly at the opportunity space –Digital transformation enabled by connectivity and data will give rise to a whole new set of opportunities. One quite common example is companies shifting from selling a thing to selling a service. Software is a good example of this shift. When companies moved from selling a shrink-wrapped piece of software “the thing” to leasing software “as a service” and pushing regular updates to a customer it changed the software market. This became a new way of selling. Another common model is leasing a piece of equipment through a “per click” model. Prior to “per click” a company was limited to selling a device and maybe an annual service contract. The opportunity to sell was focused on an annual event. When selling a connected “per click” device, companies have the expanded opportunity to place a piece of hardware, gather data on the customers operations and become a valued partner by offering customers insights; creating an opportunity to make day to day operations easier leading to a deeper relationship with the customer. Opportunities to sell will expand, allowing companies to offer services like; material replenishment, data sharing, support for enhanced operations, up-time guarantees, etc. It is particularly important to first leverage available device data to improve internal operations that support up time because companies that have low reliability will never become a trusted partner. Companies should then very quickly shift their focus upstream to create new ways to engage their customers and even the broader marketplace; establishing partnerships if necessary, to help customers solve their operational inefficiencies.
Digital Transformation will impact the portfolio management process – Changing the way you engage the customer can lead to a portfolio of projects impacting many different aspects of a company’s culture in new and unfamiliar ways. This is a time to apply the fundamentals of leadership, so dust off those books and find your talented leaders. Make sure annual management investment “baselines” are challenged to ensure that funding and resources truly find their way into the transformation portfolio! Ensure that efforts are coordinated around business objectives, accompanying strategies and rigorous communication plans to help focus and align the multitude of functions that must be involved in decision making. Determination of appropriate investment levels by function will be critical to the overall success of the transformation initiative. Product Technology alone may no longer be the road to the customer, so the company strategy must evolve to the next level of sophistication as portfolio decisions are made. Feature and Technology development organizations that for years led the way are giving sacred ground to groups that understand customer facing experiences that access to data makes possible. The plan must come together for top level executives to lead. The portfolio plan must create alignment, so the various functional parties have awareness of each other’s role and responsibilities. All functions must have an appreciation and a full commitment to the business transformation objectives at hand. Push the business verticals to focus on opportunities that increased access to data exposes. Let central groups like IT determine the technology platforms needed to clean and present data and avoid wasteful, endless technology preference discussions. The transformation portfolio and the entire organization needs to be focused on delivering the strategies that delight the customer!
Focus on maturing cross functional team management processes, communication, and coordination – Appreciate that most digital transformation projects cut across many functions and will require mature cross functional coordination as a critical component of success. Statistics show that a vast majority of these efforts fail to deliver. These failures may be attributable to the siloed organizational governance models and the lack of mature cross functional processes that identify the critical deliverables needed for true transformation. Processes must ensure people are engaged and working together and allow management to have an acceptable level of cross functional oversight that is not bureaucratic in nature. An integrated methodology and light weight framework will help teams make well informed decisions at the project level creating coordination success at the portfolio level. Avoid arguments that revolve around “turf” in favor of cross functional team coordination that includes Sales, R&D, IT, Logistics, business, process improvement and operational resources. Digital is disruptive, so disrupt your internal culture first and reward the teams that play well and focus on the critical deliverables together!
Break traditional silos that negatively impact the delivery speed of transformation – Silos depend on baseline budgeting so shake up management by banging the birdcage hard! Rethink investments and even organizational structures based on the emerging portfolio strategy! Resources must commit and shift towards new opportunity spaces that enable new innovations for your customer and for your internal operational efficiencies. As a result, various functions will have new expectations and must make the changes necessary to be successful. As examples; R&D resources that may have always worked on feature development may find themselves shifting to analytical data modeling that will help predict the failure of a component so that service can save money and customers can avoid downtime. Research may shift from 100% new technology investigation to understanding data visualization and interface development. IT will need to understand aspects of Data Engineering and learn to work next to their cross functional counterparts to clean up and prepare data for analysis. A true transformational approach will require a critical shift in thinking away from a pure feature orientated, product driven, annual strategy mindset towards a more engaged, informed, and real-time perspective that is more in tune with customers. Many organizations will get this wrong at the beginning and squander large amounts of time and money because of silo optimization by laggard managers. Traditional mindsets and current momentum are the enemies of digital transformation, engage your teams early and often, making sure all knowledge workers understand the opportunities that access to data can bring to the enterprise. This is a time for leaders, not so much for silo thinking managers.
The promise that all this new technology brings to the market is an important but secondary conversation to the broader business innovations that must take place to be successful. There are many challenges that digital transformation brings to the forefront for any organization large or small, so the leadership and strategic foundation will become the mechanism to align the company around a disruption of this magnitude. Organizational leadership, change management, strategic thinking, targeted portfolio investments, aligned executive leadership and solid cross functional program management will turn out to be the real enablers of success for companies that are working to transform themselves and gain the promise that access to data brings.