Why Most Digital Transformations Goals are Wrong
OK, so I realize that the headline is provocative. I seem to be condemning a lot of smart leaders who have been courageous enough to set up transformational goals in the first place. My apologies to them; I don’t mean to be an arm-chair critic. My intent is to take aim at the tendency to recast traditional automation and process-change work as digital transformation. That’s just a destructive tendency that causes a lot of damage all around. Let me explain.
Here’s the dirty little secret of digital transformation. It’s a term that has been hijacked by every technology and consulting provider and IT professional with an agenda. If you cannot lock in on the true definition of transformation, how do you expect to get there? There are pitfalls everywhere, starting with the confusion between digitalization (which is the use of technology to automate work processes, using say SAP), and transformation (which is creating dramatically new value for customers via say entirely new business models). Then there’s the issue of anecdotal successes at the fringes of the organization vs. systemic cultural change using digital technology.
As a result of this issue of defining true “digital transformation”, most business leaders become frustrated with the whole topic of digital disruption. It seems to be a moving target. They have invested serious effort and money because they know it’s an important topic. Technology-savvy competitors are already de-stabilizing their existing business models. But, despite the best efforts of their organization and several anecdotal successes, they’re clearly not at the end of the journey. In fact, they’re not even sure they know where they are in the journey, or how long it will take.
Additionally, this can be a corrosive issue for business survival in the digitally disruptive era. Rebranded digital activities can generate a false sense of confidence among business leaders that what their organizations are executing is digital transformation. Meanwhile, the clock of digital disruption keeps ticking inexorably towards business model obsolescence.
We need a common definition of true digital transformation; something that separates true digital transformation from the rebranding of old technology and process improvement efforts into the latest buzz words. We need a failsafe pathway to the ultimate stage of digital transformation. I call that Digital Transformation 5.0
The Digital Transformation 5.0 model puts the journey into context and provides a deliberate roadmap to recognize and move up the stages of transformation including –
– Digital Transformation 1.0 (Digitalization): Getting the scaled benefits of automation
– Digital Transformation 2.0 (Opportunistic): Departmental benefits of disruptive models
– Digital Transformation 3.0 (Synchronized): Critical mass of corporate disruptive wins for customers
– Digital Transformation 4.0 (Migrated): Big competitive win (for the moment)
– Digital Transformation 5.0 (Digitally Native): Ongoing, sustainable win versus your industry
True Digital Transformation locks its sights on Stage 5 i.e. getting to be a digital “Native”. It is truly transformational; in line with the fact that the current Fourth Industrial Revolution demands entirely new digitally based business models. It’s sustainable in terms of changing the culture of the entire enterprise, so that operating as a digitally native enterprise becomes second nature on a going basis.
So, what are the “right” goals for business transformation?
Firstly, they are not just about one-time project success, but about sustainable change.
Secondly, they need to address the following questions.
Has digital operation become your DNA?
Have your organization become your company’s biggest disruptive asset?
Does your organization’s digital literacy compare well with that of digitally native startups?
How easily does your organization accept transformational change?
Is that a high bar? Absolutely! But this is what it takes to survive an industrial revolution.