Digital Transformation

CORE ACTIVITIES

PROCESS TRANSFORMATION

Process transformation involves radically changing the elements of your processes to meet new business goals. Using this process transformation methodology, you can modernize your processes, incorporate new technology, save costs, and better integrate your core systems. Here is how:

1. Identify the goals of the transformation. These must be measurable. Don’t change for the sake of change and a checkbox for your resume. What are the reasons for this? Increase revenue? Improve efficiency? Customer experience score? Competitive advantage? Market reach? Pick at least two or three goals and establish a measure of how you will know that you have crossed the finish line.
2. Establish baseline metrics. This is a natural follow of step one and should be easy to do if you have a good measurement in place for the goal. The critical piece is that you need to publish this in a central repository where the entire team can access it frequently.
3. Map out the best scenario. This is where you innovate and reimagine processes. Ask the question, if cost and time were unlimited, what would this process look like? If you need inspiration run our Ideation play and then Prioritizing Work play to determine which ideas deliver the best bang for the buck.
4. Implement in a testing environment. This is often a skipped step but could be costly if something doesn’t go as planned or has unintentional consequences. Let’s say you have a new process that increases your acquisition funnel by 20% in 30 days and you skip this step. What happens if you don’t have enough customer service reps to handle the influx of calls, so customers get angry and leave scathing reviews for your business all over social media? There is no undoing that set-back even though your new process met the original goal. Test, test and then test again – it’s like measuring twice and cutting once. 
5. Set live and monitor. Okay so you have tested everything you can and are ready to go-live and pop open the champagne. Except this is the beginning of the journey, not the end. Celebrate this transformation but start to monitor for unintended changes, goal progression and performance metrics. Publish regularly in a central repository and share insights (both good and bad) with the team. Then start working on the next process to transform! 

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BUSINESS MODEL TRANSFORMATION

We can‘t solve problems by using the same kind of thinking we used when we created them – Albert Einstein

Digital transformation is an enabler for new business models. It opens new ways for developing products, finding clients, creating and delivering value and making profits. 

People often associate transformation with the adoption of new technology, and while technology is one of the important enablers of transformation, it doesn’t transform a company or an industry on its own.

Put simply, too many companies are still relying on business models that were never designed to compete in the digital economy, because they were created in a very different era to the one we now live in.

You need to rethink your business model or create a business model for the digital economy. Answer the following with a digital focus:

• Key partners: List the partners that you can’t do digital business without (not suppliers).
• Key activities: What do you do every day to run your digital business model?
• Key resources: The people, knowledge, means, and money you need to run your digital business.
• Value proposition: What are your digital products and services? What is the job you get done for your customer?
• Customer relationships: How does this show up and how do you maintain the relationship in a digital economy?
• Channels: How do you digitally communicate with your customer? How do you digitally deliver the value proposition?
• Customer segments: List the top three digital segments. Look for the segments that provide the most revenue.
• Cost structure: List your top costs by looking at digital activities and resources.
• Revenue streams: List your top three digital revenue streams. If you do things for free, list them as well.

You can map these to a business model canvas to gain a shared language for describing, visualizing, assessing and changing business models. This business model canvas has been adapted from Strategyzer.com

DOMAIN TRANSFORMATION

An area of enormous opportunity is the area of domain transformation. New technologies are redefining products and services, blurring industry boundaries and creating entirely new sets of non-traditional competitors.

The easiest example of this is Amazon, who was dominating the domain of online retail and then seemingly out of nowhere launched AWS (Amazon Web Services). While this was a surprise to some, what made Amazon’s entry into this domain possible was a combination of the strong digital capabilities it had built in storage, computing databases to support its core retail business coupled with an installed base of thousands of relationships with young, growing companies that increasingly needed computing services to grow.

There is a clear danger in trying to cross into a domain that is outside of your core competency but to not at least take a look may be leaving money on the table. How to build a sustainable digital competitive advantage? Start with your “est.” Best. Fastest. Smartest. Cheapest. Most innovative. Most horizontally integrated. What is something that better delivers more value to customers, or comparable value for a better price? This is a great brainstorming exercise to ask yourself initially what you are or want to be best at. Keep in mind, maybe it’s not the “est” over all – maybe it’s the “est” for a specific segment of your audience or need state of your customer or even just a geographic region.

Once you have a list of your strengths, think of ways that you can use those in a digital economy that you aren’t currently doing. Is there a new segment of the market that you haven’t explored? Is there some service that you are good at but not offering for sale? Is there something your customers keep asking for but you haven’t looked into doing it yet? 

Take a chance on a good idea! You may just find a new domain of opportunity.

CULTURAL AND ORGANIZATIONAL TRANSFORMATION

Some might say of all the transformations this is the most difficult. Why? People are key to this and it takes time. It won’t likely happen overnight and for some it may not happen at all. That’s okay. Just get the wheels turning.

Anytime I approach change, I try and find the ‘what’s in it for me’ proposition. You can get more people on board when they have a shared understanding of why we are doing something and what benefits it will provide them. Yes, humans tend to think of ourselves first, so work with that. Once people feel safe and okay with the plan, they can get behind it. 

Here is seven easy steps for managing a cultural change:

1. Understand current culture and it’s challenges
2. Involve leadership
3. Create a strategy plan that matches business goals
4. Engage employees
5. Pay extra attention to organizational fit
6. Track progress
7. Be patient – change takes time

Cultural/organizational change is a long-term requirement of success, but best in class companies regard the building of these capabilities as a product of, rather than a prerequisite for, business transformation initiatives. 

As technology change increases, industries will continue to be forced to change. Corporations that regard and pursue digital transformation in a multi-dimensional way will find greater success than those that don’t. 

Cultural/organizational transformation in any company is a complex process. However, it can have a tremendous impact on your organization and its future. The effort is worth it—and it will be reflected in your employee satisfaction and productivity numbers for many years to come.

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