Winning Digital Transformation needs more than the right technology
L to R: Mohan Menon, President Asia vyn, Tony Saldanha, Advisor vyn with Kapil Singhal CEO vyn.
We talked with Tony Saldanha, Advisor vyn, Global IT and Shared Services Executive, Consultant, Founder & best-selling Author of ‘Why Digital Transformations Fail’ to learn from his vast experience in delivering large scale successful transformations. Here are some key lessons.
Tony, thank you so much for joining me today. You mentioned that 70% of digital transformations fail according to independent studies by McKinsey and research group IDC. Why is this?
That’s true. What can you do about it? The answer might surprise you. You see it's not about innovation, nor is it about just technology, it's about discipline. Discipline in setting the right goals and discipline in executing.
Digital transformation is all about getting your Enterprise ready to thrive in the Fourth Industrial Revolution and this involves setting your goals correctly as one of these three choices: creating digitally enabled products, creating a digital core of operations of the enterprise, or about entirely new digital business models. That is not automation; that is transformation.
Secondly, digital transformation involves projects being executed with totally different processes and methodologies than what have historically been done in the enterprise. This is what is missing and that's why digital transformations fail. So, what do you do about it?
Firstly, be much more disciplined in setting the right goals. Success isn't about a few projects, it's about systematically and sustainably transforming the entire enterprise. Secondly, be much more rigorous in re-imagining and executing the transformation. Fix that and that's how you win Digital Transformation!
Tony, does it really matter what you call the Transformation Programme?
Good question. It's a little bit like being clear of the goals in your space program, and knowing whether you want to go to the moon, to Mars or to another galaxy. A digital transformation may not be transformation at all. It might actually be digitization or digitalization and these are very different goals.
- Digitization is about converting the physical to digital.
- Digitalization is about optimizing and improving your processes.
- Lastly, Digital Transformation is about entirely changing your business models or the way your products are delivered.
The first two deliver benefits of anywhere between 15 to perhaps 90 or 100 per cent of the value, whereas transformation can deliver 10 or even a 100 times the value. You therefore need to be very clear of what your goal is.
If you're looking for incremental improvements, then digitization or digitalization may be just fine. However, if you're looking for exponential change and improvements to survive and thrive in the Fourth Industrial Revolution, then you really need digital transformation!
I assume that businesses will need to go through a transition to be successful here. What are your thoughts on this?
In my experience, there are actually 5 stages of Digital Transformation. Before we look at these, I’ll identify some real business examples we can draw on.
Did you know that Shell used to be a seashell trading company, and that Berkshire Hathaway used to be in textiles? Why is it that some organisations constantly reinvent, whereas others struggle on digital transformation?
This is because digital transformation is an ongoing culture revolution and what do you do to get there?
Firstly, ignore anybody that's trying to ‘sell’ you digital transformation, because it cannot be bought - it has to be earned.
Secondly, set your goal for digital to become the living DNA - this is where digital becomes the core foundation of your entire business model and the culture of your organisation becomes agile and constantly evolving.
Figure1: The five stages of Digital Transformation
In addition to being aware of which stage an organisation is, what else should you think of for a big idea transformation?
Well in a nutshell, I believe there are 3 secret components required.
Let’s look at another real-life business example to give us context. Did you know that in the early 2000’s the hotel industry was innovating with really high-tech AI capabilities and yet lost out to Airbnb? Why and what can you learn?
True transformation starts with a really big customer opportunity and then brings together three different elements to totally reimagine what's possible.
One of those is exponential technologies such as AI and more. The second is exponential work processes which is completely redesigning what's possible based on the outcome that you want to achieve and then the third is putting an entire ecosystem to work for you, including customers, suppliers and other people around you.
Figure 2: Three elements to ‘re-imagine’ what’s possible, and win!
For example, in the hotel industry in the early 2000s the company played around with technologies such as self-check-in desks. Meanwhile Airbnb looked at using exponential technologies, new platforms and AI, they also used a completely different work process. Checking in and staying in their hotel was more important than the concierge process.
The third differentiating point, was their use of the complete ecosystem to provide most of their assets. That's how they won!
The mistake most people make is to start with the technology and try and fit use cases around it. Remember that the customer is always King.
These three elements are your winning formula!
This has been a revelation Tony, I’m looking forward to part 2. I’ve gained not only your expert insights but actionable steps to apply. Thank you!
Watch Tony’s engaging 90 second leadership perspectives here on the vyn playlist and subscribe to vyn.
Read Tony’s latest book ‘Why Digital Transformations Fail’, #1 on Amazon’s new releases list for organisational change.
We’ll be sharing Part 2 of this Q&A soon to give you insights on how to succeed with your digital transformation!
Thank you for reading!
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