By now you’ve at least heard of companies “doing Digital Transformation” in some form or fashion. But, what does the term actually mean? How does one “do” it?
In reality, Digital Transformation is just about changing the way companies think. Moving away from tactics, into growth, and eventually foresight. The foresight to connect people and systems in ways that will drive an effective customer experience irrespective of how the world evolves.
If we look at Dell’s recent pivot (post-EMC acquisition), Digital Transformation is focused on information technology, workforce integration, and security transformation. What that means for customers is an alignment of subsidiary business units to offer a more comprehensive solution set, via Dell Technologies. For other companies, like Southwest Airlines, Digital Transformation is the byproduct of a successful company-wide software and systems update that creates efficiency and a better customer experience through improved service and operations.
In each instance, the motivation for change was slightly different. For Dell, it was to evolve the business model and better serve customers by offering Digital Transformation to others. For Southwest, it was motivated by internal struggles with maintaining systems and efficiency. Though neither company approached it in the same way (or for the same reasons), both changed core aspects of their business model for future success. Both had the foresight that adaptive teams and systems would be paramount to insuring against market and customer shifts.
Sounds Easy, But it’s Actually Wizardry, Isn’t it?
Based on much of the commentary, Digital Transformation is either true Alchemy or buzz-wordy fairy dust. Something that is simply a conjured term to represent “best practices” in our current age. Or, the product of such sorcery that only a chosen few can unlock its great power. For instance, “Magic can’t make Digital Transformation Happen, But We Can,” is Dell Technologies new position.
So, why the polar views? Why is Digital Transformation so hard to define? Because, it’s not a single “thing,” but instead a holistic evolution of a corporation’s philosophy. A change in mindset.
People understand tactics. They are tactile, measurable, familiar. Similarly, growth is measurable and familiar as well. Growth in community size. Growth in market share. Growth in sales. Digital Transformation, on the other hand, is all about the future. What could be. What should be. How to plan and mitigate against market events and customer trends that haven’t happened yet. It’s about having the foresight to insure tomorrow while succeeding today.
How does that happen? By shifting the conversation.
The Basic Conversation: Non-Transformational Tactics
Every business has a core set of needs that “keep the lights on” month-to-month, quarter-to-quarter. Solving these needs may certainly increase revenue, but isn’t inherently transformational. These commonly manifest in conversation that begins with:
- [Marketing] I need to get more visitors to my site to purchase product or request a demo
- [Sales] I need a sales playbook for my reps to use in the field
This is all tactical stuff. You’re spending $5,000 per month for a $6,000 return. You want to spend $10,000 per month for a $12,000 return. Your sales team is closing 20% of leads. With a better sales deck, they think they can close 25%. We’re talking in the realm of 2X ROI here.
Are these needs invalid? No. But, they aren’t really future-focused either. Quite often they are reactionary to a down quarter or pressure from above to increase revenue. None of them speak to the future broader organizational goals: growth and positive change.
Conversation Focused on Growth: Still Not Transformational
When we can change the conversation from what is needed to solve a problem, to an understanding of why it’s needed, we’re getting closer to a growth mindset:
- [Marketing] what – I need a communications strategy to drive more visitors – why – to support a product launch for a new audience segment
- [Sales] what – I need a sales program – why – that enables my sales team to focus on cross-selling/bundling solutions instead of products
A shift in approach from what to why, tactics to growth, changes the conversation from need to value. This results in an ultimate increase in company valuation if the organization is able to deliver value to customers through:
- An “actual” brand experience
- At the Customer Moment of Truth
- In a purpose-driven way
The challenge is feeling pressure to deliver something, anything. The idea that short-term something is better than long-term strategic accuracy based on insights. And, it’s tough to be purposeful in real-time as we often look 18 months out for planning.
Business Model Innovation Conversation: Digital Transformation
As mentioned above, Digital Transformation is a philosophy. Like meditation, it’s a shift in an organization’s mindset, routine, and default settings. It’s a practice… that takes practice, and often a sherpa. It manifests as a program and mindset across the organization as a whole. A whole new business model that when crafted appropriately:
- Creates strategic alignment across all corporate functions
- Future-proofs an organization
- Accelerates growth
- Enables companies to leverage all channels appropriately
Instead of identifying appropriate tactics or even effective strategies, Digital Transformation addresses the broader issues organizations face and creates processes, protocols, and governance around how to activate against them. Evolving the examples above, a Digital Transformation mindset would approach sales and marketing conversations as follows:
- [Marketing] How can I best integrate data, analytics, and research into customer touch-points to ensure the effective evolution of corporate positioning and messaging based on changes to engagement habits?
- [Sales] How can I analyze product software usage to inform my sales team where to expect customer pain points and leverage that information to establish a product innovation roadmap to better suit customer’s changing demands?
The above focuses on an organization’s business model more generally: how a company operates, activates employees, integrates technologies, aligns communications, engages with the market, reacts to data, and innovates its communications, products, or services. It turns the conversation away from tactics, or simply the interest in “growing,” and toward the customer, who ultimately has the most control over the future success of a business.
The advancement and interconnection of departments, systems, processes, technologies and strategy creates a company that effectively leverages technology to act more human. Humans are able to adapt and evolve, solve complex problems and focus on preferred outcomes over outputs, and do so in a personalized way without losing passion and empathy.
The Final Step
A large gap often still exists between being ready to change the conversation, and actually doing it. There are immediate pressures to execute in ways that increase sales in the short term. Shareholder and Board pressures against making investments in new people and systems that might not prove immediate ROI. Often times personal risks are also present: acting as a change-agent within an organization that otherwise isn’t ready can be a lonely and risky proposition.
But, it’s not magic. It takes confident leadership and an experienced sherpa. Leadership with the foresight that organization-wide changes must be made now to ensure future success. Changes that will make a company more efficient and provide customers a better experience as their needs evolve. And, a sherpa that not only provides the route but takes the journey with you.
Interested in speaking with one of our sherpas? Let’s have a conversation.