5 signals your digital transformation will fail…
The future is digital but if your transformation fails, what about your future business? Learn to detect the signals that indicate future failure.
1) IT/digital/change is leading
Your IT department, some times called digital, change, transformation, or similar is leading your digital transformation with only minor involvement from the business. Digital solutions allow to transform how customer interact with a business. Just translating a paper form into an online set of forms will not enable the business to transform. It would be like Blockbuster using a mobile app to reserve DVDs in store, they would still be bankrupted by Netflix. Unless your digital transformation involves a rethink of your digital business with major support from the business, you are likely going to see you transformation fail.
2) The future is RPA
Robot process automation or RPA is a technology which allows repetitive manual processes to be automated by computer scripts which click on the screens or introduce data more efficiently than humans. Whoever is proposing RPA has likely demonstrated that these automated scripts can enormously reduce the dependency on manual work and bring 10x productivity boosts to certain parts of the existing business processes. The issue is that RPA will automate legacy processes for instance in call centres or accelerate paper processing and take away the need to ask hard questions like: “Why do we really need a call centre? Why do customers or partners still send us paper?”. The future of your digital business cannot be a call centre or paper. When was the last time you called Facebook or received a paper form from Google?
3) A Cloud migration will fix all legacy systems
The Cloud is a set of compute, storage and processing services you use on-demand instead of owning them inside a data centre. If you have a legacy system which is lifted and shifted from a data centre to the Cloud then unlikely are you going to see any major changes. Your costs might actually go up. This is because software needs to be written for the Cloud (a.k.a. Cloud Native) to really be able to take advantage of its infinite on-demand scalability. Taking a 10 year old diesel car and replacing the engine with an electric engine does not make a Tesla. Your Cloud Migration will look the same. What is transformative about the Cloud is the fact that you can run one platform for everybody else, I.e. multi-tenancy. Instead of every company hosting their own email solutions, Microsoft or Google can extremely efficiently host email for the rest of the world. This brings new business opportunities for whomever is the platform of the future and industry disruption to whomever is still hosting their own mail servers. Your old system is not prepared to be a multi-tenant autoscaling platform that transforms the world, so lifting and shifting is not going to cut it.
4) Scrum and agile solve any business needs
You will have heard the term agile or scrum team. Although this way of organising technical teams has major productivity advantages, you are still at risk of building a Digital Blockbuster instead of the next Netflix. The reason is that a business performs three types of activities: operate a cash cow, grow and create new businesses. Previously creating new business was done infrequently so acquisition of a smart startup was often the solution if not corporate investment in several. If the pandemic has shown one thing, then it is that transformation needs to happen fast because disruption can come overnight. If the cash cow can easily be disrupted, e.g. diesel cars in the car industry, then the only solution is to have a portfolio of new businesses to take over. If the process of creating new businesses is like a factory belt and nobody is putting any raw materials on it at the start then you cannot produce cars at the end. A company which cannot continuously create and grow new businesses is likely ill-prepared for a period of hyper digital competition in which agile competitors copy, or worse disrupt, the core business quickly. In the digital world anybody can quickly copy a digital solution. Efficiencies and economies of scale are easy to get in a digital world, unlike a world of physical branches, large call centres,… The biggest problems in the digital world are finding market fit, a.k.a. making new products customers love in a world of plenty, and scaling them up quickly. Making a product customers love involves experimenting with new technologies and business models. An organisation where a business team tells a technical scrum team what to do in the next sprint is not an experimentation culture, it is an efficient feature building factory. Often a digital business means doing less of what always was done, or doing away with it entirely. Few business executives go to the board and say: “the part of the business that I have built in the last 15 years is now obsolete, we should do away with it.” “Adding features to a backlog” is unlikely going to translate in “Can we get rid of the call centre?”, “No longer use humans to …”.
5) your top management has few technology knowledge
If your C-suite and board members do not know what an API is, how to use artificial intelligence, what Blockchain is,… then they are unlikely going to set the strategic direction to use technology to compete in innovative ways or to build a global platform for others to use. They are more likely going to consider technology a cost centre which needs to be “optimised”. This leaves the door open for technology disrupters to enter the market.
Conclusion
So your digital transformation is following too many of the signals described above, what can you do? The first step is to recognise that you have a problem. If the organisation or key members do not see there is a problem, then you cannot fix it. The next step is to define a strategy to leapfrog the digital revolution. If it takes you two to three years to execute the current digital transformation strategy while your digital competitors are able to launch new features every day if not more frequently and are accelerating, where do you think they will be in three years time? You need to start driving exponential change.
