Digital Transformation will reshape your industry and significantly impact your business. The age of digital transformation rewards early adopters (and a few super-fast followers), leaving others to play catch-up and struggle to survive. It’s vital for business leaders to have a clear understanding of Digital Transformation and the right way to approach it. Too many companies get caught in the hype, are misled by the wrong guidance, and don’t really understand the true business value and the right approach. Let’s clear up some of the common misconceptions.
Digital Projects vs. Digital Transformation:
Some companies mistakenly think that implementing a digital project, such as a new ERP, CRM, or financial system, is the extent of digital transformation. While those projects may provide an incremental improvement, they’re far from the full potential a digital transformation can provide. Merely implementing a technology/system is not the same as Digital Transformation. Let’s better define Digital Projects and Digital Transformation, and take a closer look at the differences.
Technology initiatives typically take the form of either digital projects or digital transformation. These different directions deliver two very different types of results in value:
Improving the operating or business model is the key to achieving business-changing value and changing a company’s competitive position. At the same time as a company designs and builds its digital platform, it must reengineer its operating model, including their mindset, resources model, customer experience, organizational structures, and end-to-end processes.
A recent cautionary example:
For an example of how digital transformation affects businesses, let’s look at the retail industry. Years ago, local family-owned retail stores dominated most of the market. Then Walmart came along with their “just in time” inventory system that facilitated lower prices and an ever-growing network of stores. They looked unstoppable… but along came Amazon. Though at first it seemed like just an online bookstore, Amazon had ambitions of expansion and a well-thought-out digital transformation plan.
As a result, the once-dominant Walmart has been significantly impacted, and has closed stores across the country. In this instance, Walmart has been relegated to the role of “superfast follower.” In an effort to compete, Walmart purchased online retail startup Jet.com and revamped their leadership team to fast-track their plans to catch up to Amazon.
Amazon’s digital transformation has changed the way the retail industry works, and they’ve left big-box retail stores struggling to stay in business. All it takes is a look around the empty shopping malls and shuttered outlet malls to see the impact of digital transformation on the retail industry as a whole.
There are similar examples in other industries, and eventually every industry will be impacted, including your industry.
Seize the opportunity
Which role will your business play: the digital transformation market leader, or the straggler? What should you do now to make sure you are in the right market position?
The following recommendations can help you get on the right track:
Identify and acquire the required resources
To win this digital transformation race, you need to have the right tools, expertise and team. Assess your ability to execute your digital plan with the resources you currently have. Typically, the technological solutions that brought you to this point won’t be the same ones that will drive your future success.
You also need to determine whether your current internal resources can continue to run the day-to-day aspects of the business while effectively driving your digital transformation. Engage a seasoned digital transformation expert/advisor who can provide an unbiased review of your current systems and operating model, identify opportunities, and drive timely execution. Digital transformation is a new concept for most people, and many companies struggle to figure it out on their own. The right advisor can help your company avoid missteps on the road to a timely and successful outcome.
Act and execute like your future is counting on it… because it is. Amazon didn’t gain their advantage in the retail industry by merely implementing a new system or developing a great plan; they crafted a comprehensive digital transformation plan and executed the plan in a more timely and more effective manner than their competitors. Innovation and business opportunities have a window of opportunity. Make sure your digital transformation advisors and leaders understand the difference between technology projects and digital transformation, and they are prepared to serve as change catalysts. They must provide in-depth digital transformation expertise, challenge traditional thinking, identify needs, gaps, and opportunities, drive changes where needed, and consistently execute the plan. Take action now, start fast, and execute to win this race.
Mark Johnson is the Chief Executive at Xtrii. He is a proven, 10x CIO, renowned, global technology advisor and business leader.