Part 4: How to Execute the Digital Transformation​
Once the new digital business model is defined, the digital transformation is driven forward in various dimensions directing the relevant governance tools. We show specific areas of focus in finally executing such comprehenssive transformation initiatives.
Part 4
We have organised the digital transformation into four phases. Part 3 of this book covered the first
two phases: phase one of the transformation process revolves around launching and governing the
transformation, followed by shaping as phase two. Part 4 contains driving and then executing transformative activities. In this chapter we take on driving, which is the third phase of the four. Before driving the transformation, we have already completed the following steps.
Part 4
Companies seeking to pursue digital often proceed from very different starting points, with different capabilities, circumstances and degrees of ambition. Some will require a full transformation of their operations, processes and business model in order to fully leverage digital technology and drive revenue. Others may only need to increase efficiency by re-engineering their existing business and operating models. Given the fact that defining a strategy takes valuable time, it is key to start early on with real projects, even before a strategy has been fully defined.
Part 4
It is easy to see that if a business can ‘inspire’ its market, it will have a much easier task of claiming leadership in that market. However, inspiring the market goes beyond attracting the right kind of attention of the customer and includes positively influencing other stakeholders, beyond the primary buyer and seller, including retailers, distributors, partners and suppliers. This section discusses how to enthuse an enterprise’s market environment. When a company has successfully inspired its market, buyers and the other associated parties will have a natural attraction towards that company’s selling proposition and will play their roles more naturally and enthusiastically.
Part 4
The most common reason for organisations failing to succeed, even with good strategies, is the lack of adequate supporting capabilities needed for execution. Conversely, capability-aligned organisations perform at the top of their markets. Discrete capabilities can be more easily mixed and matched compared to traditional departmental functions, resulting in a more responsive organisation (BCG study) – a critical characteristic for digital success. Simply stated, ‘capability’ is the power or ability to do something. Many definitions of ‘what is digital capability’ exist in published literature and these range from very narrow, i.e. use of a specific set of digital features, to being quite broad, encompassing an enterprise’s adoption of digital.
Part 4
‘An organisation’s ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage’ and ‘Change before you have to’ are two valuable wisdoms worth paying close attention to when thinking about appropriate organisational skills for digital transformation, especially for established businesses. These high-level organisational skills are so relevant in a digital context because of the swift reaction of the digital customer and rapid enhancements in digital technologies. Incidentally, the above quotes are from Jack Welch, formerly the CEO of General Electric (GE), a visionary and transformational leader.
Part 4
The ability to apply technical skills is at the root of human superiority over other animals. The simple stone tool, possibly the first technical invention, was used as far back as 2.5 million years ago; scientific methods helped create a formal basis for technology and flourished during the fifteenth century Renaissance; the Industrial Revolution followed a few hundred years later; twentieth-century technologies focused on automation and productivity; and computer-related technologies have been dominating the twenty-first century. Interestingly, the so-called digital technologies, a subset of computing technologies, have surged only for the last couple of decades, yet their impact has been explosive.
Part 4
The digital transformation has been launched in the enterprise, leadership has been established, the digital transformation is shaped and must now be driven forward. There might be appropriate talent already in the enterprise, but very often a gap of suitably skilled and experienced personnel is evident. Bringing sufficient digital talent on board is paramount for the success of a digital initiative. Talent is needed at different levels: Organisations often start with the ‘catalyst hire’ – the person who is going to change the world, for example a CDO hired from another organisation. Imagine they are the pebble tossed into the pond.
Part 4
There are a host of issues to be aware of on your way to becoming a digital enterprise. The most important is your current reality. It continues to consume resources, which you should target on becoming a digital enterprise instead of maintaining your status quo. Capacity must be freed up to redirect the organisation’s focus on the complex task of digitalisation, which has many facets. Firstly, there is the issue of people: you need to supply sufficiently skilled resources to reach your digital goals. This usually means more headcount is required. And a major digital change programme will most likely create uncertainty and maybe even fear among your staff.
Part 4
Once the digital strategy and the roadmap to become a digital enterprise have been defined, putting this plan into action is the next step. Each potential digital project needs to be specified based on common criteria (cost to realise, time to market, expected benefit, necessary resources, constraints, interdependencies, risks, etc.) as a first step in order to assess its suitability in comparison with all other activities. It can then be placed in order of priority. The process is normally described as project portfolio management and is a formal approach that an organisation can use to align, prioritise and execute projects.
Part 4
Digital is causing disruption to traditional business models, and organisations need to adapt to survive. This not only endangers existing business models but also creates new opportunities, and organisations need to evaluate their options for the future. Weill and Woerner found that organisations need to see themselves as part of ecosystems rather than linear value chains, and need to take consumers’ increasing knowledge into account. These two dimensions – business design and knowledge of the end customer – result in a matrix of four options for business models in the digital era, as depicted in the figure below.
