Digital Transformation is a journey and not a destination! Digital Transformations are defined as an organizational change through the use of digital technologies such as cloud, mobile, social, blockchain, 3D printing, big data, advanced analytics & visualization, robotics, digital twins, IoT and AI combined with new & revamped business models to drive value & growth. Here is a strategic equation for driving digital transformation successfully:
Change = Sense of Urgency + Dual Digital Transformation + Approach
In today’s connected world, consumers are leveraging and adopting new & emerging digital technologies in new ways. Their needs, actions, and habits are changing. They are better informed than ever and they expect higher-quality, frictionless customer experiences and enhanced services at lower costs in a timely manner.
Digital disruption has the potential to disrupt incumbents and reshape markets quickly due to rapid changes in the marketplace and rise of new and emerging digital technologies. No industry is immune to this digital disruption as shown in the Digital Vortex below, with the five most vulnerable industries at the center of the vortex. Speed and scale will vary for each industry.
Digital Vortex - Source: Global Center for Digital Business Transformation, 2017
The following are some examples of how some companies are leveraging digital technologies in new ways, transforming and disrupting the business.
Manufacturing companies are leveraging 3D printing, AI, and a shared economy to create and manage custom manufacturing parts.
Tire companies are embedding their tires with IoT sensors to provide customers with 'tires-as-a-service' on a kilometers-driven basis.
Retailers are providing customers with sensors to replenish commonly used household items automatically.
Media companies are using robot journalists with machine learning and natural language processing capabilities to write about college sports and quarterly financial reports.
Automotive companies are printing 3D cars and have been operating autonomous electric shuttles without a safety driver.
Real estate companies are leveraging blockchain for securely recording, tracking, and transferring real estate titles.
Energy companies are leveraging digital twins to create digital replicas of their equipment, and facilities to do real-time monitoring and analysis to get insights for providing proactive and preventive services.
Hotels are leveraging robots at concierge desks to greet guests with recommendations and directions for local dining, tourist attractions, and will soon have the potential to recognize and greet loyalty club members by name.
As you can see from above examples, new entrants and incumbents are leveraging digital technologies in new ways and coming to the marketplace with better operational efficiencies, value propositions, offerings, customer experience and engagement models. You need to leverage and apply the right digital technologies and capabilities to create and capture new business value, keep pace with external change, and stay competitive in the marketplace. Some of the questions you will need to ask to determine the sense of urgency at your company are:
What’s new? What type of digital disruption and trends are happening in your industry or other industries?
Which of your products and services are still relevant in the digitally connected world?
What customer touchpoints are digital? What is the percent of revenue derived from the digital products, services, and experiences?
What type of change will you need to take? What is the impact if you don’t drive the change?
What are the drivers, blockers, strengths, weaknesses, opportunities, and threats?
How fast do you need to act and transform? Who will need to sponsor, lead, and drive the change?
Do you have the right leadership, organization and digital capabilities to drive the change?
Driving digital transformation successfully requires leveraging the right digital technologies & capabilities to both reposition & improve today’s core business models as well as create new business models, products & services to drive new growth business for tomorrow.
Apple is a great example of this dual digital transformation model. Apple repositioned the iMac with new designs (core) and introduced iPod/iTunes/iPad (new) that became the company's new growth engine. Netflix is one more example of the dual digital transformation model. After disrupting the classic video rental business, Netflix continued to reposition DVD by mail (core) and introduced the online streaming service (new) and continues to introduce new services like creating and distributing original content. There are many other companies like Amazon, Priceline, Airbnb and my current company Salesforce who all are driving dual digital transformation models.
Source Inspiration: Dual Transformation, HBR, 2017
The following are some areas where you can leverage the right digital technologies and capabilities to drive dual digital transformation
Customer Experience: A complete 360-view and understanding of your customers. This will help provide personalized, guided engagement, and frictionless experiences for your customers across all touchpoints and channels.
Open Innovation: An open collaboration eco-system and network for your employees, customers, and partners to drive innovation. This will help bring new products and services to the market quickly and drive new growth.
Connected Products and Services: Augment traditional products and services with digital content and AI- and bots-infused offerings. This will help provide great personalized and engaging experiences for your customers and partners.
Business Insights and Performance Management: A robust analytics platform to get a better diagnosis of the business and drive business insights – what happened, where it happened and why it happened. This will help to monetize existing assets, reinvent existing business models and drive operational efficiencies.
Predictive Business Insights and Prescriptive Recommendations: A robust AI-driven analytics platform understands what will happen to the business, what decisions need to be made, and what the prescriptive recommendations and actions are. This helps to focus on key areas, create new products, services, and business models quickly and drive growth.
Process Digitization, Integration, Automation & Excellence: Revamp current business models and processes with better automation and integration across the ecosystem. This will help drive more operational efficiencies, productivity and better data for business insights. This will also free resources to focus more time on strategic programs, innovation and creativity and create new growth products & services for tomorrow.
Employee Enablement: A robust collaboration and networking platform for employees to connect, share, collaborate, and learn from any location, device and time. This will help create global synergies and respond to local market needs quickly.
Driving digital transformation requires strong leadership to drive the organizational change. You also need to have a good understanding of the digital trends – what’s new, see the bends in the road before others and generate insights, set the vision and big picture, and execute on the vision. The following are some steps and best practices to drive digital transformation.
Frame the Opportunity and Challenge: Build awareness and business alignment, do user research and discovery, assess ‘As-Is’ process, journey and experience, assess digital maturity and readiness, and develop a high-level vision and strategy.
Focus, Plan & Design: Ideate and develop the future state journey and experience, do feasibility, desirability and usability analysis, determine the right digital technologies & capabilities, do experimentation to prove the concepts, prioritize and develop the overall digital transformation roadmap with a crawl, walk and run plan, execute the plan in an agile and iterative manner.
Engage the Organisation: Generate awareness of the digital transformation programs, communicate on changes, business impact and benefits, engage the teams and mobilize the company at scale.
Sustain the Transformation: Drive adoption and usage, get feedback and ideas, measure and monitor, and continuously improve the process and experience, and rollout new features & capabilities.
At Salesforce, we have taken the above approach and model for our internal Digital Transformation programs to drive customer success, business value, growth, and innovation. I will share more details and examples in the future posts.
About the Author
Karthik Chakkarapani is currently a Vice President of Digital Transformation at Salesforce. Karthik is an accomplished digital transformation leader with 20+ years of experience and has lead many customer-centric digital transformation programs. In his current role, Karthik leads the digital transformation & innovation team for the Customer Success & Growth organization’s internal digital transformation programs. Karthik is also a Salesforce Certified Technical Architect and an expert in leveraging new & emerging digital technologies to drive business value, growth and success.