Digital transformation and transformation, in general, have become buzzwords that are bandied about to the point that their meaning and intent have become unclear. It might seem like some innocent fun to discuss the need for “digital transformation” with your teams without any defined intention behind the term, but espousing a strategy with no concrete definition isn’t a very effective way to lead your organization.
Leading with platitudes and buzzwords has 2 distinctly negative consequences. First, it leaves your strategy and objectives open to interpretation. Your “outside-the-box thinking” might be my doing the same thing I’ve always done. Similarly, your team’s idea of “transformation,” whether digital or otherwise, might be very different from yours.
Secondly, an ill-defined or poorly articulated strategy weakens your position as a leader. Teams with a clear idea of their destination, objectives, and the measures used to track performance against those objectives are usually way more effective than a team wandering in the metaphorical desert without a compass.
Transformation vs. digital
This misinterpretation of strategy is particularly acute when talking about digital transformation. Most people interpret digital transformation somewhere between 2 opposing definitions. For some, digital transformation focuses primarily on “transformative” technology, ranging from AI and machine learning to drones and applying interesting consumer tech to businesses.
For others, the focus is on the “transformation” and applying digital technologies and “digital era” thinking and techniques to transforming a business. While there is some overlap, these 2 camps target very different parts of the company and have very different potential outcomes.
When applying the first potential definition, the technology is typically applied to existing parts of the business since that’s the easiest way to justify an investment in technology that may not have a long track record. For example, advanced drones might be deployed with AI technology to inspect power lines. This might be the first application of these technologies, but they’re being applied to a very old problem of inspecting power lines.
However, while optimizing the problem of inspecting power lines with drones might provide significant direct benefits in terms of cost savings and even intangible benefits like increased safety for line inspectors, it does nothing to change the nature of business. Take out the “cool factor” of the new technology, and you’re doing what tech leaders have been doing for decades: taking an existing process and making it some combination of cheaper, better, and faster.
A missed opportunity?
If your organization is like most these days, with a stated goal of transforming its business, merely making the existing business cheaper, better, and faster is hardly meeting that objective. This is where differing interpretations of digital transformation become far more than a semantic game and have the potential for a tech leader to pursue initiatives that either drive the overall business forward or consign them to a role as an order taker that can’t operate strategically.
The key to pursuing business transformation that happens to be enabled by technology is understanding what parts of the business will ultimately be changed. Generally, to transform a part of a business, it must either develop a new capability, pursue new customers or markets, or combine the two.
It’s relatively easy to find recent examples of both. Uber, for example, took its ride-hailing technology and associated business model and applied it to food delivery. Through lucky timing, the transformational food delivery business accelerated just as the pandemic crushed the ride-hailing business.
Similarly, Dollar Shave Club offered existing razor customers a new “technology” in the form of repeat shipments to their homes.
Starting the transformation conversation
Examples like the above can help determine if you’re having a conversation about truly transforming a business and begin to narrow the focus to whether you’re targeting new markets, creating new capabilities, or a combination thereof.
Interesting technologies should become a secondary focus if you start with these kinds of conversations. Try to determine the extent of the transformation that’s being targeted, which might range from a “bet the business” move reminiscent of Finnish company Nokia moving from truck tires to mobile phones, or it might be a new delivery or purchase model for an existing product.
You’ll likely find that different people have different views of what transformation means, how far outside today’s business the company should explore, and whether certain current products or services are “off the table.” Using examples of other companies’ transformations or even calling in for facilitation and strategy help can get many of these issues out into the open and force meaningful discussions early rather than risking arriving at the wrong destination later.
Tech after transformation
Once you’ve identified the goals of the transformation, the organization’s risk appetite, and which capabilities, markets, or new business models are in play, you can start considering the “digital” aspects of digital transformation.
For savvy tech leaders, these conversations should be second nature. However, it’s essential to also include discussions about digital-era thinking. For example, cloud computing is a wildly compelling technology, but it also allows you to quickly build and scale technologies for new experimental businesses that can be scaled or shut down with little long-term investment. Similarly, methodologies like Agile and other rapid innovation approaches can combine with the cloud to allow you to launch test businesses with unprecedented speed.
Even the most seemingly mundane and non-tech-oriented business could benefit from digital-era thinking and enabling technologies to get to market faster, adjust to market feedback quickly, and ultimately scale without expensive capital investments.
Many technology leaders yearn to be seen as strategic business partners rather than pure implementers. With digital transformation in the back of every executive’s mind, take the lead in focusing these conversations on actual transformation. You’ll find yourself involved in strategic discussions, help define your organization’s future, and get to deploy exciting technologies that are viewed as assets rather than costs to be minimized.