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How to Make Digital Transformation More Than a Catchphrase in Your Organization

N. Venkat Venkatraman

What do you think when you hear the term “digital transformation”? Do you imagine some sci-fi giant touchscreen and holographic virtual meetings? Or do you roll your eyes and write it off as something that doesn’t apply to what you do? Or maybe somewhere in between, cautiously optimistic?

Wherever you fall on that spectrum, it’s clear that digital transformation is one of the most overused phrases in business today. Tech vendors use the phrase to sell their wares, business consultants to sell their services, and CEOs to sell their vision to the stakeholders—especially the investment community. CIOs use it to show that their plans are future-focused, the marketing leaders to show that they are unwaveringly customer-centric, operations executives to restructure supply chain relationships, HR executives to attract new talent, upskill existing employees and so on. 

Since this term means so many different things to different people, it loses its power to be the glue that drives the organization forward. And many executives understandably find the phrase to be so clichéd that they do not engage in discussions to delve deeper.   

Does it mean that leaders shouldn’t be concerned with digital and transformation? Absolutely not. Does it mean that digital is no longer a priority? Far from it. Does it mean that transformation should be relegated to consultants and change agents? Not a bit. 

Let me share with you how leaders can go beyond the overused two-word expression to create and capture value for their organizations with digital technologies.

Complete your complimentary registration for our CIO panel on this topic at the 2022 Veeva Industries Virtual Summit

As a preview of the content we’ll explore in the upcoming Veeva Industries Virtual Summit, here are six truths about digital transformation - distilled from the last three decades of my research - with reflection questions for evaluating how prepared your organization is to successfully achieve a digital transformation. 

  1. Digital transformation is about reinventing the business for a future state where digital technologies will impact how you design products, how you structure your processes, how you deliver services to customers, how you differentiate from your competitors, how you organize internally, and how you interconnect with partners in ecosystems. It’s not just about using the latest technologies to rectify inefficiencies in the current ways of working, but instead laying the foundation for winning in the future. The future is not a linear extrapolation of the past. This means that you must use technologies to defend the core (today) and design the new (tomorrow). Focusing on one at the expense of the other is limiting and will be ineffective.

    Reflection: Where are your organization’s digital efforts focused - today, tomorrow, or both?
  2. Digital transformation changes the competitive landscape. Every business—sooner rather than later—will become a digital business or compete against one. A common limitation that I have observed studying digital transformation is that companies do not widen their vision to recognize future threats from unfamiliar competitors. This is especially true of born-digital innovators and big digital giants—such as Amazon, Apple, Alphabet and Microsoft—who seemingly suddenly emerge as interlopers invading traditional sectors. It’s no longer an academic exercise to ask: “What could Amazon or Apple do if they enter your industry?” And it should not surprise you that venture capitalists are prepared to invest in disruptors who articulate their vision to go after pockets of untapped value by using digital technology in new and compelling ways.

    Reflection: Does your digital transformation roadmap recognize and respond to  potential redrawing of the competitive landscape?
  3. Digital transformation is about reallocation of key resources.  It’s well known that successful companies fail because they over-invest in what they have been historically good at (core competencies of yesterday in the analog world) and fail to finetune their resources towards where they need to be good at (core competencies of tomorrow in the digital world). The word transformation clearly implies changed routines and behaviors. Start by evaluating three key buckets of resources—financial, human, and management time (and focus).

    Reflection: Do you see a noticeable shift in reallocation of resources in these three buckets?
  4. Digital transformation starts with steps to recognize and respond to inherent traps that prevent change. Change is hard but inevitable, and we should follow Peter Drucker’s warning: “The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday's logic.”  Companies are trapped in their dominant logic through their metrics (how they define success), their competencies (what they have been good at), their talent (how the employees function as a collective unit) and their ecosystems (how their partners complement and add value). Digital future challenges the logic of the industrial past. Continue with your industrial logic at your peril.

    Reflection: Is your organization willing to question its dominant logic and the underlying traps?
  5. Digital transformation challenges the role of the CIO and every CXO.  Focusing on the CIO for now, let me underscore that the CIO plays a central role in making digital transformation succeed. The CIO inspires the ‘art-of-the-possible’ and invites business executives to design the digital future. The CIO demonstrates how the IT organization has transformed to embrace the future (e.g., mobile, cloud, AIOps, ML etc.) inviting the other CXOs to imagine their functions in the digital future. The CIO is not just an implementer within isolated areas, but a coordinator to align 0the different functions to propel in unison. The CIO is not just a technical expert but one who can translate and explain the business rationale for the transformation.

    Reflection: Is your CIO organization seen as a prisoner of the past or the pioneer of the future? 
  6. Digital transformation is most effective when you combine smart humans with powerful machines.  What makes digital transformation different is that it is not linear but exponential. Human inclination favors linear thinking, while this moment calls for non-linear, exponential thinking and actions. Technologies such as artificial intelligence, blockchain, cloud computing, computer vision, autonomous drive, Internet of Things (IoT), robotics, machine learning, natural language processing and others are improving at exponential rate and converging at the same time. Effective transformation requires us to augment human intelligence with the combinatory power of such technologies. That means reskilling and recruiting a different type of talent. 

Reflection: Is your organization capable of absorbing and exploiting the combinatory power of digital technologies? 

So what did you discover about your organization, and its approach to digital transformation? Are you working within one of the rare companies that have not only recognized the transformative power of digital technologies but have put in place actions to win in the digital future? Most likely not. Wherever you find yourself on your digital transformation journey, there’s always more to be done to meet the moment and prepare for the future. The pace of transformation will only quicken. 

Digital transformation—more than a catchphrase—is the single most important leadership challenge facing this generation of managers across all functions and levels. It will define winners and losers in every industry, in every geography over the next decade. 

Join me on October 24th where we will address these questions with Filippo Catalano, Chief Information & Digitisation Officer at Reckitt and Dirk Ramhorst, Chief Information Officer at Evonik who represent progressive market leaders in their respective industries.  We’ll share digital transformation best practices and a series of practical, action-oriented steps that will help your organization harness digital disruption for advantage.

N. Venkat Venkatraman

Posted by N. Venkat Venkatraman

Prof. Venkatraman is widely regarded as a leading authority on digital strategy. He studies how established companies recognize and respond to digital technologies. He believes we have seen the first-wave of transformation in asset-light settings such as software, music, media and entertainment and we are likely to see asset-heavy, information-rich sectors such as automotive, logistics, healthcare. agriculture and logistics go through significant shifts. He is currently extending the work published in his book, The Digital Matrix: New Rules for Business Transformation Through Technology into a new book focused specifically on asset-heavy sectors.