In recent years, I have seen a rise in “Agile” and “Digital Transformation” across industries at large. The questions that come to mind are –
To be able to answer these questions, one needs to first understand the underlying drivers that fuel this change.
This blog would be a 6-part series, which would cover the following –
Need for “Digital Shift” –
Before I build the case for the need behind the “Digital Shift” or “Transformation”, I would like to present some industry data that would better describe the need for this in the first place –
“The exponential growth in digitization and internet connectivity is the backbone of the Fourth Industrial Revolution. Digitization is transforming business models, the policy landscape and social norms.” – World Economic Forum
The term “Fourth Industrial Revolution” – also termed Industry 4.0, was first used in Germany, at the Hannover Fair in 2011. Industry 3.0 refers to the age of computing and automation.
Digital disruption is not simply automation as most organizations and leaders still think it is. It has consequences and uses far beyond this. More importantly, “Digital” means leveraging the knowledge that exists across the various channels effectively not only to engage your customers but to “Empower” them.
Gartner, Inc. forecasts that there will be 8.4 billion connected “things” in use worldwide in 2017, up 31% from 2016. This number is expected to reach 20.4 billion by 2020. There is no denying the impact of digitization on business as we know it. Most, if not all, businesses are now converting to (or believe themselves to already be) technology companies.
An interesting example is Domino’s Pizza, which also cites its current trajectory and success by becoming a technology company that also makes and delivers pizzas? around the world. In a 2016 CEO summit, Domino’s CEO Patrick Doyle shared lessons learnt in making the“Shift” or radical changes from the traditional business model to a technology enabled, nimble, category disrupting machine.
All these insights are clearly related, and point towards an immediate need for organizations to closely look at how the changing market dynamics are impacting their businesses. The need to focus on understanding “Digital Shift” has become ever more crucial to their survival in the coming years. This clearly answers the need for the “Shift”.
The next question that now arises begs for a clear definition of “Digital Transformation”, or “Digital Shift” as I would prefer to call it. Before we get into defining Digital Shift, I would like to clarify my reasons for calling this movement a “Digital Shift” rather than “Digital Transformation”. The reason for this is more to do with the approach to change rather than the scope of change itself.
Through my experience of over 17 years, 8 of which I have spent working on “transformation” journeys across multiple organizations, has given me a unique opportunity to observe many of them through various stages of their journey and analyse the differences.
So here is my reason for calling it “Digital Shift” –
The term “transformation” itself is misleading to my mind. What we are looking to enable is a “Shift” – a Shift from the older traditional mindset, working methods, and even simply being in a new way. This “Shift” needs to break existing biases, long accepted mental models, structures and traditions. This can be better illustrated using the model below –
Here is what I think the “Shift” comprises of –
|Managing Outcomes||OVER||Managing People|
|Network and Collaboration||OVER||Hierarchy and Boundaries|
|Self-Driven & Empowered||OVER||Managed and Instructed|
|Data Driven||OVER||Opinion Driven|
While items on the right are important, we value more items on the left, to create a nimble, responsive, digital organization.
As we see in the above model, the “Shift” involves much more than just process and technology. It involves people at the core of it – this would include both employees and customers.
Customers, as we see and experience for ourselves, have already made the shift. Their expectations from product and service have leapfrogged to that of what is being provided by most organizations. They readily and easily adopt newer and better user experiences and services. If you cannot provide your customers with what they require, they will move on to the next person or company who does – and you can be certain there is someone willing to offer them what they need. Reducing cost of infrastructure, easier access to knowledge, and advancements in connectivity create a present and continuous danger in the form of start-ups. Start-ups that are quick, nimble, responsive and glued in to what their customers need.
Given the criticality of the situation, with a clear indication that greater information has made the end customer more demanding, organizations need to look at the change as a “Shift” rather than a “Transformation”.
Let us now get back to defining “Digital Shift” in clear terms. There are many definitions in the market for this, but the one that resonates with me is that by Altimeter, where Digital Transformation is defined as:
“Investment in and development of new technologies, mindsets, business and operational models to improve work and competitiveness to deliver new and relevant value for customers and employees in an ever-evolving digital economy”.
As mentioned earlier, the word Shift denotes the difference in the approach to change rather than the scope of change itself. Hence, I would still prefer to use the same definition for Digital Shift.
Given this definition, one needs to look at Digital Shift as an investment that the organization makes to achieve desired outcomes. More importantly, its need to future proof its business.
The key and most challenging aspect of the “Shift” revolves around the more complex and difficult-to-measure component – “Talent”.
New technology, process and practices are important and essential enablers to making the “Shift”. However what is crucial and often neglected is that of “Talent Shift”. The term being used to encompass this broadly is “Employee Experience”.
Moving from being People Managers to Outcome Owners requires a change in not only the mindsets but also in how people and organizations are structured around outcomes. How people are measured on outcomes delivered or not makes a difference too. Further, upskilling and infusing new talent that can work easily in a networked model, or a more dynamic structure, and deploy the latest technology and processes is also another major investment needed by organizations.
In the next few posts in this series, I shall dwell deeper into the scope of the change itself and the individual dimensions of Digital Shift. I will attempt to help better understand what is needed to be successful in making the required shift.