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In today’s episode, we will share thoughts about preliminary activities before starting a Digital Acceleration Journey.
When I decided to start writing for big audiences several years ago, I set a personal goal: to share something of value for non-IT Business Leaders in the typical time a person takes their initial morning beverage. (Brief, simple, to the point, time matters!).
Today’s Episode is very challenging because setting the foundation is a topic we can’t develop superficially.
To my benefit, many of this Newsletter’s subscribers are subject matter experts on this topic and have already started their digitalization journey.
Digital Acceleration Cadence, why?
A couple of comments before starting:
From the initial statement of Episode 1, it was clear that this would be a long journey, probably with weekly postings. Your feedback and contribution are very helpful in helping me understand if I am giving the right value to YOU.
I will address this topic in two episodes. My goal is to provide enough information to invite you to reflect on this subject and be ready for the next episode.
Ok, so let’s go:
Remote Origins of Digital Transformation:
Do you remember when you heard about Digital Transformation for the first time?
In my case, it was in the late nineties. I was an IBMer at the time.
IBM introduced a concept called e-Business, and its vision was to improve collaboration between peers, eliminating paper and speeding internal approving processes and overall communication.
Today, everybody has a way to collaborate and eliminate paper consumption “from granted.”
Why Paper Elimination was so revolutionary at the time?
Fact: Did you know that back in year 2,000, the number one supply the US Federal Government had was paper, and the number two was toner?
The Federal Govt. has a “paper reduction, paper elimination” directive. Still, last year, the number one Federal Government supplier received 653 purchase orders valued at USD439M for paper supplies. (Source: usaspending.gov)
Back to my original threat, there was a missing piece in that remote scenario of Digital Transformation: collaborating with the external ecosystem, partners, and especially customers.
What changed? What is Digital Transformation related to now?
Most people think that Digital Acceleration is about completing the Business Transformation journey: a business wholly digital and disrupted-proven, available 24×7, 365 days a year.
And, for some businesses, this is an important outcome.
Others, including me, think the outcome of Digital Acceleration is improving the business processes and sometimes remapping the business processes to address two primary business drivers.
1. Improving Customer Loyalty.
2. Improving your Operational Efficiency.
I think everybody knows why Customer loyalty is essential (I hope), but there are multiple explanations on why it is crucial to improve operational efficiency.
Typically, Operational Efficiency has two major benefits:
- Drive cost reduction and additional margin Companies can reinvest in the business to improve Customer Satisfaction.
- Win new customers and improve your market share.
How does Digitalization connect with the previous business drivers?
Simple, Digitalization is the current toolset of any innovation approach, and innovation is the key to operational efficiency.
Sound simple, right? (Well, the reality is there are a couple of exceptions to this rule, but we will talk about these exceptions in future episodes when we talk about current events in some industry segments, for example, food and beverage, retail, or banking, to name a few).
So, Digital Transformation’s early days approach was internal, was about my business, and the current path to Digital Transformation is about us (multi-dimension) and together (dynamic, real-time).
Currently, the goal is to interact, collaborate, build new relationships, find lessons learned collaborating with customers and partners, and exploit these lessons learned to build trusted relationships with customers that will sustain the business’s long-term goals.
Hmm, your statement seems to be not new at all. Am I missing something?
The statement may look the same, but the game elements are entirely different. Let me explain:
Previously, business leaders thought the game was to anticipate customer needs and build products and services to support those future demands.
Currently, Social Media, Cognitive Learning, Mobile, Cloud, Analytics, and the Internet of Things, to name a few, allow business leaders to collaborate with real customers in real-time and learn about their preferences and “want-to-be” and build new products and services to address these needs dynamically, real-time.
In the past, technology was typically on a business-centric approach.
Your new business model shall depend on the integrity of the value chain, and having good quality data, internal and external, will be key. Still, the latest data from social interaction enables a “do-it-together” game that was not possible in the past.
Instead of a two-dimensional chess game, the new game is like a multi-dimension Tic-tac-toe.
Many people say that Digital Transformation is risky because it is a disruptive process and high risk; any comment?
I like very much MIT Prof. Jeanne Ross’s approach to describing the scenario back in 2016:
The new Digital Economy will require business leaders to incorporate new tools in their IT footprint so they can share and receive vital information from customers and partners using new tools such as (1) Social Media, (2) Mobile, (3) Analytics, (4) Cloud, (5) Internet of Things.
Adding to that, every day, we find out new technologies to add to this multi-sensory landscape that enable endless ways to interact with customers and partners in real-time.
Digital Transformation can be perceived as high risk due to multiple factors that can be contained with good planning and monitoring.
First, the organization needs to be capable of responding to digital interactions. This statement has several implications.
– It is required to review business processes and correct internal business disruptions related to siloed solutions.
– It is also needed to infuse the business with the new technology to capture information inside and outside the organization and respond to that.
Not doing these two preliminary actions early in the transformation brings substantial risks of not responding correctly to customer expectations.
What are your thoughts about this?
This transformation, in many cases, will be disruptive, as it is required to review both the IT front-end (your new eyes, ears, skin) and the back end (Business processes and core applications) and eliminate barriers to allow communication flow effectively.
OK, but why is digital transformation perceived as risky and disruptive?
The risk is a consequence of the dynamic nature of the business.
Let me give you a graphical example:
If we ask the audience to share an example of a situation describing doing something in a dynamic environment, most people would think that landing a fighter jet in an aircraft carrier would be a good match.
Why? Several similarities:
(1) You need to understand the game: not only are you moving part of the puzzle, and
(2) It required a clear vision and a solid plan to land on a moving target.
Preparing for this game requires preparation work in the front-end and back-end of your business.
Another example: I live in Houston, within driving distance from NASA Houston Command Center. There is an exhibition hall and a kid attraction where kids can sit on an astronaut seat and play as if they were in a spaceship cabin control simulation.
The challenge: You are required to drive safely while the spaceship is penetrating the atmosphere and both your “astronaut seat” and the control panels (the dashboard) are moving because of the turbulence by “penetrating the atmosphere.” Many kids can excel at the simulation after playing several times and understanding the dynamics of the challenge.
I think kids learn by playing multiple times, and so do we.
This is the critical concept of the new game: Building new services and products working together in real-time is a continuous improvement approach that needs your organization to do some preparation work.
At this early stage, our challenge is to build an adequate foundation (baseline) to identify issues early enough to avoid business disruption.
What happens if I decide to wait? Why me? Why now?
The goal of an effective Digital Acceleration Strategy is to consider these uncertainties. Recently they have been referred to as VUCA (volatility, uncertainty, complexity, and ambiguity).
Like it or not, the game rule changed, and now the customer and the partners play a more significant role in the economy. It is up to us to decide if we want to benefit from these new opportunities now or if we are going to wait for our competitor to take an initial step before we move on.
One last comment, depending on the industry sector, the priorities of preparing the front-end and back-end may differ.
Good enough?
Any thoughts on the subjects raised in this edition of the Digital Acceleration Newsletter?
Please share your thoughts and feedback with the audience in the comments below.
Next week we will explore more about this preparation work before commenting on what is driving change in several industry segments. (Why me, why now?)
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