Society is undergoing a revolutionary transformation in the way it communicates and interacts, and it is taking technology along with it.
Digital transformation is driven by cultural changes seen rarely in recorded history — replacement of scrolls by edge-sewn or “codex” books, instant voice communications via the telephone, and voice and visual transmission via radio and television.
Not everything qualifies as a transformative change. For example, early computers that weren’t much more capable than electric accounting machines would not.
Digital transformation brings with it change at every level of organizations, from the executive boardroom, to middle management, to the workforce, to the customer base and beyond.
Sometimes Top-Down Approaches Work
Digital transformation must flow from the top. The initiative must come from the highest levels, from those who establish strategic directions and who hold the authority to grant and fund major change.
Without this strategic foundation, the process will likely become a series of disconnected — and often antagonistic — technology efforts by different parts of the organization, yielding some tactical improvements but failing to support the widespread change that is the key to true digital transformation.
This isn’t an easy concept for many bottom-line oriented executives to understand. The popular concept of “management buy-in” actually reverses the process, with executive management getting behind initiatives developed and presented from below.
While things can sometimes work that way, the result is too often more tactical and limited than should be the case with digital transformation.
The Role of the CIO in Digital Transformation
For many organizations, the Chief Information Officer (CIO) can play a key role in helping the boardroom develop the strategy.
Organizations that don’t have a CIO should get one. And those whose CIO is merely a technologist with a different label will need to augment the position with a staff that understands the cultural changes underlying digital transformation.
For example, a Chief Strategy Officer (CSO) can be a valuable addition to an organization’s executive staff. And the Chief Marketing Officer (CMO) is a valuable resource when it comes to understanding changes from the customer side.
Properly staffed and directed, all of these positions — CIO, CSO and CMO — help an organization balance the cultural, strategic and technical aspects of their operations and planning for digital transformation.
Long-Term Planning, With a Whole New Meaning
Organizations generally don’t like planning for realities they can't predict.
Digital transformation doesn't offer that luxury. It requires new, over-the-horizon thinking. We can’t predict exactly how the connected world will shake out over the next several decades, but organizations must still develop their digital strategies on this kind of timeline, based on the best researched and educated guesses they can make.
This is never easy: Fred Smith, for example, lost nearly all of the $70 million in venture capital he had attracted before bringing Federal Express into the black, and Tom Monaghan couldn’t have seen what Domino’s Pizza would become when he borrowed $900 to purchase a small pizza store — named DomiNick’s — to help pay for his education.
But it is just this kind of visionary thinking that businesses will need to plan and execute a successful digital transformation strategy, with the knowledge that the benefits won’t be immediate and may be difficult to identify when they materialize.
Jeff Bezos started Amazon with an admission that profitability, if it occurred at all, would be at least five years down the line. Amazon made its first profit of $.01 per share nearly seven years later.
Executing a Digital Transformation Vision
Once the business has executive support for transformational change, it must tackle three broad dimensions of transformation. These three dimensions, and their relationship with one and other, are the key to understanding digital transformation's importance and will offer clues on how to approach it:
- Customers and users are demanding more direct digital interaction with each other and with the organizations in their lives. People have an active and direct relationship to technology, and they want to continue and control that relationship as they live, work and buy. Even if the organization doesn’t have a social media page, it is living in and must deal with a social media world. While technologists often see themselves as the drivers of changes like these, that's not often the case. At its core, this is human behavior. And while organizations will face challenges getting technologists to share their preeminence with human factors experts, it is a must.
- Users want more and more of their relationships with businesses concentrated in one place — and it's usually their mobile device. Shopping, buying, returning, troubleshooting, even repair in some cases — users expect all of these (and more) when they log on, wherever they log on. Answering these customer demands requires cooperation among the organization’s previously separate automated sectors. Among these requirements is a need for interoperability, at a level which many organization are unprepared.
- As technology vendors rapidly organize their research and productization to put more digital devices and applications in peoples’ hands, firms that have traditionally focused their automation efforts on internal productivity are being forced to turn those efforts outward to their digital presence with users. The days of impressing users at anything online are long gone, replaced by a community much more demanding and difficult to impress… and hold onto.
Digital transformation, properly understood, offers us a rare opportunity to be part of — and to profit from — a major change in human society, if we can see it for what it is and give it the attention it demands.