Issue 20: Digital Transformation is dead ...
Long live Digital Transformation?
Good morning from Martinique
Sometimes these newsletters practically write themselves. With some effort and editing, I get them in to a state worth publishing and with my ideas fully fleshed out. Other times, I’m struggling to finish the writing and it's almost always for the same reason. My ideas aren’t fully baked yet. This is one of those, so I’m putting it out there for discussion, pushback and to get me to drive this thought forward.
On to the issue.
Jony Ive is out of Apple
In an unexpected bombshell of a press release, Apple announced yesterday that Jony Ive, Apple’s Chief Design Officer, was to leave by the end of the year, with Jony setting up a design studio of his own having Apple as one of his clients. This is just massive news and the dollar-store wisdom mongers have already started to spew their shallow conjecture on to the Internet (“Apple is doomed! Doomed I tell you!”).
I’ll start writing an issue on Apple soon, as I think that — thanks in part to Jony Ive — Apple is actually a good example of a company that did a largely successful Digital Transformation.
Digital Transformation is dead
In some ways, I regret using the description “Digital Transformation” as the underlying topic of this newsletter. It’s being overused, oversold and under-explained. Frankly, it has become cliché as is often the case with expressions and buzzwords. Media outlets, Consultants and simple well-meaning newsletter writers like me, flog the term to death, with each manipulating its use to support their own reasoning. It has often been overused or used for the wrong reasons, some of which I discussed in “Issue 5 - Why Digital Transformation is different from standard IT”. Despite this, I am grateful that my newsletter is more about digital technologies and how they affect business rather than regurgitating Digital Transformation! Digital Transformation! Digital Transformation!
Source: Google/M Cowen
What is interesting from an analyst’s point of view, is how quickly the phrase has been adopted, transformed, abused and very soon to be thrown out with the trash and dismissed as marketing spiel. The phrase has been around for many years, but its popularity in everyday use started to increase around 2014. Now in 2019, I’m seeing a change in its use, with it starting to become old hat.
That being said, not everyone or every business is at the same point along their transformation journey. Some businesses have only just started to think about the opportunities and implications on their activity, some are ignoring it completely and others are at a stage where they would say they have completed. They’re all both correct and incorrect in these assumptions as I would like to explain here.
Stages of Digital Transformation
With people and businesses in different states of transformation using digital technologies, it is important to define and explain what some of those stages are. There are essentially 4 stages of Digital Transformation, they are not to be confused with the 5 levels in the Digital Transformation model in detail I discussed in Issue 4:
… Venkatraman and his colleagues developed a model for Digital Transformation in the shipping and logistics industry. Their model discussed 5 levels of transformation whereby the increase in the range of potential benefits to a business corresponded to the degree of business transformation implemented within the organisation.
To recap, the five levels are named as: Localized Exploitation, Internal Exploitation, Business Process Redesign, Business Network Redesign and Business Scope Redefinition.
Builtin to the model is an additional notion that at a basic level of exploitation, transformation is only evolutionary and limited benefits are accrued. It is only when an enterprise commences its Business Process Redesign that the level of business transformation and hence, its potential benefits become ‘revolutionary’.
Source: An Analysis of Digital Transformation in the History and Future of Modern Ports, Heilig, Schwarze, VoS, 2017
Ventrakaman’s model is based on identifiably practical steps to help understand at what state your current digital integration is, and what steps to take next in order to move to the next level, thereby increasing the potential for returns on the that investment. My 4 stages of digital transformation are more about the perception businesses have about their current mindset in digital transformation, whether they are starting out or fully embracing and implementing digital technologies. There are those that I consider are on borrowed time, those that are only just now getting interested in digital technologies, those that have understood and have actively started their journey and lastly those that have got to the stage where they have largely transformed their business. Let’s take a look at each one in a little more detail.
Those on borrowed time
OK, it’s a bit harsh to say this group is on borrowed time, as there will always be some businesses that will survive or even thrive on not being digital, but those businesses will have made a strategic choice and will no doubt ride a wave of fashion for all things handmade, old school or Ye Olde. But aside from those outliers, there are still many businesses that are ignoring this phase of evolution in technology and simply not doing anything to understand what is happening. It’s understandable on many levels.
It is hard to understand Digital Transformation, when you are being bombarded from all sides with information that is sometimes useful, but much of the information out there only serves to cloud the situation for many businesses. I recently had a meeting with a senior manager for a large local company who literally said to me that it is unclear what Digital Transformation is to him.
Created by M Cowen
The other reason I see, when talking to businesses, is the lack of time they afford to the discussion and learning necessary. I get it, everyone is pressed for time, everyone has ten thousand things to do by Friday night, but if you don’t spend the time learning and understanding what Digital Transformation can do for you and business, then you are frankly failing in your responsibility to build and grow your business. The risk for these businesses is disruption. If they don’t wake up to the realities, they risk getting disrupted out of business.
On borrowed time, the Ostriches - these companies have not and possibly will not start a digital journey and as such will almost certainly put their business at risk over the coming years. The best thing to do in this scenario is get an expert onboard as soon as possible and start looking at simple effective ways of digitising basic operations. The small-scale wins will build confidence and drive future projects, moving the business up to the next level.
I don’t mean this as an insult, I mean it in the sense that these businesses are slow off the mark, but off the mark they are. These companies are just getting started with Digital Transformation and are typically huge companies and often incumbents in their respective markets. They have huge inertia issues to deal with, turning the giant container ship around is tough, slow and uses a lot of energy just to make the smallest of incremental changes. The often have very complicated personnel challenges, where change management planning and implementation are often a bigger project than the digital project itself. They are sometimes small organisations, with cashflow difficulties and can’t afford to invest in, what are perceived as risky projects with difficult to predict outcomes.
Interestingly, both types need to start with low hanging fruit projects, ones that provide simple, immediate and cheap returns. I’ve worked with a company who, as one part of their business, fielded problems and site issues like failed air-conditioning units, or broken tiling, in the field for multiple sites. Despite it being the same client, calls were being made, emails sent, text messages and even WhatsApp were all used to record an issue. It was not very efficient. After a short period of understanding their processes, we put in place a work-order ticketing process that centralised the flow of requests into the company and centralised the workflows necessary to resolve the issues. They use external contractors to carry out repairs, and this digital system helps control every aspect simply and efficiently. Other benefits in the day-to-day use of the system became apparent and have been implemented with success, things like automating ticket creation and work-order demands, gaining insight using data models to better understand recurring issues and how to deal with them. Simple, inexpensive and highly efficient in terms of returns on investment.
The Fast Followers are those companies that have fully understood the stakes and have started in earnest their transformation of their products, services and operations. They will likely finalise the most pressing and important aspects of their transformation over the coming couple of years and have already started to see the benefits to their businesses bottom line.
They have successfully embraced innovation and internally run innovation workshops to develop and implement new or evolved products and services. The projects they started with were small and incrementally they gained confidence and experience allowing them to go deeper.
Those that have transformed will be one of two types of business; either a business that has in all essence got far enough down the Digital Transformation journey as to have seen radical change internally and externally to their business and seen the benefits of that throughout all of their value chain, or a business that started from zero and therefore had very little friction setting up and building out their digital capacity because the empty page form which they started afforded the flexibility or their size, meant that change management wasn’t a roadblock. Tech start-ups tend to be the archetypal businesses that start transformed and continue their transformation on a continual basis.
Because analysts can’t pass up an opportunity to diagram our thoughts, here’s my basic Digital Transformation Stage Model:
I’m continuing the reflection, and will no doubt write up more as I clear up the topic in my mind. Your input would be greatly appreciated. You can email me back here, or if you would like a more open discussion ask me for a code to join the Slack Community I have setup (it’s a little too quiet there for the moment 😉).
Source: NY Times
In Issue 12, I discussed management obesity and how middle management had the most to fear from AI and other automation. I think this piece in the NY Times articulates that too, with practical examples and insights in to how business is organising itself to be more efficient at the expense of management. It’s not all doom and gloom though, take a look back at Issue 12 and you’ll see why.
This article is a love letter to statistics and statisticians in the Caribbean. A region that is typically bad at data collection because it is often associated with taxation and snooping. The SSU (Statistical Services Unit) of the OECS is arguing to the contrary and detailing that only with better data are we able to make better judgments about the use of things like public funding for infrastructure and social benefits.
In Issue 8, I wrote a quick snapshot about digital in the Caribbean, it remains the most popular issue I have written so far. I was asked by a friend to research and write something similar about the state of digital healthcare in the Caribbean. I tried, I honestly did, but getting information proved rather difficult. I’m still researching.
“Data a are very important to empower citizens and hold their government to account,” says Dr Gale Archibald, Head of the Statistical Services Unit at the Organisation of Eastern Caribbean States (OECS) Commission.
A fascinating insight to the digital music industry and how it struggles to keep its data clean and how that directly impacts realties payments.
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