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digital-transformation

09 Oct, 2017

Technology

Sridhar Sunkara

What level are you in your Digital Transformation Journey?

After the Industrial Revolution, the creation of new machines bent the curve of commerce, capitalism, and human history, and today, with everything that is happening in digital technologies at an accelerated pace in new methodologies, new technologies like artificial intelligence, cloud computing, IoT, Robotics, etc, this era is called the second machine age.

Today, most executives believe that digital transformation is necessary, although it is not always clear what digital transformation is and how to approach it. If you ask different companies what digital transformation is, you will get different answers. The majority of business and IT executives refer to technology and technology related innovation activities as digital transformation.

Today transforming your company as a digital organization is not just good to have, it has to happen. If companies ignore and go on with their traditional way of doing business, they are in imminent danger of losing their competitive advantage and ultimately might need to shut down their business. Just bringing in technology into the company is not digital transformation. In order to have a competitive advantage you need be a Digital Master.

Digital Masters excel in two important dimensions: digital capabilities, it is what of the technology, and leadership capabilities, it is how to lead the change.

Digital Masters use digital technologies to transform the way they do business and as a way to change the way they do business, which includes their customer interactions, customer needs, internal operations, and even business models.

Digital Masters see new technologies such as social media, mobility, cloud, artificial intelligence, and analytics as not just goals to attain or signals to send their customers and investors. These technologies are tools used to get closer to customers, empower their employees, and transform their internal business processes.

Having digital capabilities do not make a Digital Master. The other dimension that is very important is leadership capabilities. The only way digital transformation can in happen in a company is through strong, top-down leadership that sets the vision, direction, and builds the momentum.

Digital Masters, leaders, should create a strong governance and coordination. They should have a clear and broad vision of the future, start some critical initiatives, and keep employees engaged to build out the vision over time. The leaders should stay involved throughout the transformation to make the case for change, drive the change forward, and to redirect activities and behaviors that went against the vision. The leadership should looked for ways to extend the vision and move the company to the next level of digital advantage. All Digital Masters should find ways to build a clear vision of a radically different future, engage their employees in the goal, foster strong bonds between technical and business people, and steer the course through strong governance.

The levels of Digital Mastery

So what are the levels of the digital mastery?

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Beginners: These are companies that have just started the digital transformation journey. They generally are in a wait-and-see mode and are making sure they are 100% right before they move forward. A few issues that companies face in this level consist of lack of leadership to lead the transformation, they might think that there industry is not susceptible to digital transformation at this time, and many blame regulations and other policy and privacy issues for not accelerating their transformation. At this stage, the beginners will have very basic digital capabilities that help run the company, so they lag behind their competitors and lose ground on financial performance.

Fashionistas: Companies in this stage do not wait to act, they get every digital product or service out there and feel that by just having those technologies, they are a transformational company and leading in the industry, but do not realize that they are actually hiding behind it. They lack strong digital leadership and governance, so there is not a vision and a lack of digital culture, which leads to wasting money on technologies that could help them. These companies work in silos, so they do not have a companywide initiative, but only initiatives within silos and do not have any mechanisms to coordinate their activities, or create synergies across the company that will lead to incompatible systems with no unified view of customers and operations; so they miss big opportunities and are in a perception that they are making progress.

Conservatives: Companies that are in this level focus on making sure every digital investment is carefully considered and highly coordinated. The leadership focuses on being very clear and do not want to waste time, effort, money, and mainly do not want to fail. This approach will hinder the transformation as they cannot have competitive edge and see the opportunities ahead of them.

Digital Masters: These companies have strong leadership along with strong digital capabilities. They are more agile, failure tolerance, overcome the difficulties that challenge their competitors. They know how and where to invest, and their leaders are committed to powerfully guiding the company into the digital future. They are already exploiting their digital advantage to build superior competitive positions in their industries.

Digital Master have 9% higher revenue efficiency, they are 26% profitability, and have a 12% higher market evaluation.

Every company should strive to be a Digital Master.

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Questions to ask yourself to find out where you stand in your Digital Transformation (DT)

  • Do you use digital channels to market your products and services?
  • Have you automated your internal processes for efficiency?
  • Have you improved the productivity of employees?
  • Do you use insights to make decisions?
  • Do you have one view of the customer?
  • Does your strategy puts technology in the forefront?
  • Is your transformation led by senior executives?
  • Does your company share a common vision on DT?
  • Does your company have a digital culture?
  • Do you have a strong governance?
  • Are your IT and business units integrated?
  • Does your IT performance meets the fast changes of the company?
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