When technology leaders and the teams they support think about transformation, make sure the emphasis is on more than just technology.
Digital transformation and transformation, in general, have become buzzwords that are bandied about to such an extent that their meaning and intent become obscure. It may seem like innocent fun to discuss the need for “digital transformation” with your teams without any defined intention behind the term, but advocating a strategy without a concrete definition is not a very effective way to lead your organization.
Leading with platitudes and platitudes has two clearly negative consequences. First, it leaves your strategy and goals open to interpretation. Your “out-of-the-box thinking” might be that I’m doing the same thing I’ve always done. Likewise, your team’s idea of “transformation,” whether digital or otherwise, may be very different from yours.
Secondly, a poorly defined or poorly articulated strategy weakens your position as a leader. Teams with a clear idea of their destination, objectives, and measures used to monitor performance against those objectives are generally much more effective than a team wandering through the metaphorical wilderness 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 two opposing definitions. For some, digital transformation focuses primarily on “transformative” technology, ranging from AI and machine learning to drones and applying cool consumer technology to businesses.
For others, the focus is on “transformation” and applying digital technologies and “digital age” thinking and techniques to transform a business. While there is some overlap, these two fields target very different parts of the company and have very different potential outcomes.
When applying the first potential definition, technology is typically applied to existing parts of the business, as this is the easiest way to justify a technology investment that may not have a long track record. For example, advanced drones can be deployed with AI technology to inspect power lines. This may be the first application of these technologies, but they are being applied to a very old problem of power line inspection.
However, although optimizing the power line inspection problem with drones can provide significant direct benefits in terms of cost savings and even intangible benefits such as greater safety for line inspectors, it does not change the nature of the business in any way. Take away the “cool factor” of new technology and you are doing what technology leaders have been doing for decades: take an existing process and make it a combination of cheaper, better and faster.
A missed opportunity?
If your organization is like most today, with the stated goal of transforming your business, simply making your existing business cheaper, better and faster is unlikely to achieve that goal. This is where the different interpretations of digital transformation become much more than a semantic game and have the potential for a technology leader to pursue initiatives that either drive the overall business forward or consign them to an order-taking role that cannot operate strategically.
The key to pursuing technology-enabled business transformation is understanding which parts of the business will change. Generally, to transform a part of a business, it is necessary to develop a new capability, look for new customers or markets, or combine the two.
It's relatively easy to find recent examples of both. Uber, for example, has taken its ride-hailing technology and associated business model and applied it to food delivery. In a stroke of luck, the transformational food delivery business accelerated just as the pandemic crushed the ride-hailing business.
Likewise, Dollar Shave Club offered existing razor customers new “technology” in the form of repeat shipments to their homes.
Starting the conversation about transformation
Examples like the ones above can help determine whether you are talking about true business transformation and begin to narrow the focus to whether you are targeting new markets, creating new capabilities, or a combination thereof.
Cool technologies should become a secondary focus if you start with this kind of conversation. Try to determine the extent of the transformation being targeted, which could range from a “bet the business” move reminiscent of Finnish company Nokia's move from truck tires to cell phones, or it could be a new delivery or purchasing model. for an existing product. .
You will likely find that different people have different views on what transformation means, how far the company should explore outside its current business, and whether certain current products or services are “off the table.” Using examples of transformations from other companies or even asking for facilitation and strategy help can bring many of these issues to light and force meaningful discussions upfront rather than risking arriving at the wrong destination later.
Technology after transformation
Once you have identified the transformation objectives, the organization's risk appetite, and what capabilities, markets, or new business models are in play, you can begin to consider the “digital” aspects of digital transformation.
For experienced technology leaders, these conversations should be second nature. However, it is essential to also include discussions about digital age thinking. For example, cloud computing is an extremely attractive technology, but it also allows you to quickly create and scale technologies for new experimental businesses that can be scaled or closed with little long-term investment. Likewise, methodologies like Agile and other rapid innovation approaches can be combined with the cloud to enable testing businesses to launch with unprecedented speed.
Even the most seemingly mundane and non-technology-driven companies could benefit from digital-age thinking and enabling technologies to get to market faster, adjust quickly to market feedback, and ultimately scale without capital investment. expensive.
Many technology leaders want to be seen as strategic business partners rather than mere implementers. With digital transformation on every executive's mind, take the lead and focus these conversations on real transformation. You will engage in strategic discussions, help define the future of your organization and be able to deploy exciting technologies that are seen as assets rather than costs to be minimized.
