Digital Transformation - Why The Fear
Despite more than a decade of work to become more digitised, the hard fact is that global businesses who wish to undertake serious digital transformation are many more in number than those who are on the path of successful digitalisation.
The first two baby steps have by now been taken by a large number of businesses. The first baby step is that a large proportion now have their website, and the second baby step is that, sitting on the website, they have added some ecommerce tools to transact business.
The vast majority are yet to transform meaningfully into true data-driven cultures. Remember the famous Peter Drucker quote, which I also mentioned in my last article, and which says “Culture eats strategy for breakfast”. This means that strategy is extremely, critically important, but without a strong, well-defined culture, even the best-laid strategies can backfire.
One of the possible roadblocks could be that, except for the few best-in-class organisations, a heavily top-down approach to decision-making persists. Product planning, digital marketing, the road map ahead continue to remain the sole purview of either owners or senior leadership. They most definitely need to be involved in terms of creating the vision and guiding the way forward.
Despite having and collecting huge amounts of data, most senior executives I have talked to mention that their companies are not spending quality, dedicated, allocated time strategising and using data as effectively as is the urgent need of the hour. The more one talks to senior executives globally, the more one realises that there seems to be a fear of sharing relevant data which could actually be used to make better decisions. The collection of reams of data is a great starting point, but it cannot be the happy end destination. This, therefore, leads to most companies spending long durations of time trying to figure out the best way forward.
The best way to actually understand and implement digital transformation correctly could be to take a few intelligently assessed steps in several areas, sometimes fail fast in some, while also looking at some significant gains in others.
One of the biggest misconceptions that need to be corrected is that digital transformation is about using technology to drive growth. Technology, at best, is only an enabler. At the start of the digitalisation boom, those who had a head-start on technology reaped certain benefits for some periods. But the current phase is such that, even if a newer entrant were to adopt the best technology, they may not be able to achieve much unless there is a well thought-out road map with a team of good drivers. The analogy is similar to someone who has a fleet of the best, most expensive cars but does not have capable drivers who know the route.
It is not uncommon to hear of even good organisations launching into a transformation effort without fully understanding, or agreeing on, what success looks like, or what the end destination should be sometime in the future, and where on the route should one have periodic rest stops.
Is it the case that most organisations' senior teams are still trying to understand terminologies like cloud technology, AI and machine learning, while the real big roadblock could be the culture lacking the necessary data-driven framework or mindset?
Honestly, it is no one’s fault. The majority of the current decision-makers and those who give money decisions globally grew up in a more traditional business environment. They therefore may end up believing that the use of technology will help businesses succeed. So every few years, organizations may be convinced that they need technology upgrades, which could be certainly correct. However, the organisation would need to culturally treat data as a strategic asset and then build capabilities to put that asset to use.
Only companies that can train their teams to shift their mindset and culture to adopt new processes and behaviours are the ones who will ultimately get rewarded. Otherwise, the same mistakes will be repeated, where spending on frequent technology upgrades may be misunderstood to be faster digital transformation.
Too often, data initiatives start with what we want from the customer, rather than what the customer values. Customers give companies data on themselves and their behaviours in return for a better experience, a personalised offer or some other quid pro quo. Without this two-way value exchange, there is no business or data relevancy.
The world is getting into a series of new paradoxes. One part of the paradox is the new age of truth. Truth in what companies and organisations do, truth in what products and services do, truth in how much damage is being caused to the environment, and truth in how these organisations manage their people who are their first-level brand ambassadors.
On the digital marketing side, the paradox is that online majors charge a hefty fee for brands and services to advertise online, and at the same time, have started charging the customer a subscription fee to have an ad-free experience. So, in effect, it is like having one’s cake and eating it too.
Monetary value motivates consumers to purchase, but it will not be enough to motivate them to repeat that purchase or to recommend that product or service to others.
The good news is that, while the tier one digital transformation companies have already moved way ahead in the race, they remain a small number. They have now reached a plateau where they are trying hard to reinvent themselves.
Yet, there is enough space and room for the next level of challenges to create their own space and success stories. It is here that the gap is massive and untapped. Some will need to re-script their story to attempt and make it a blockbuster. Digital transformation is not an end destination. It is a non-stop journey.
