What is Digital Transformation?
…and how do I lead an effective Digital Transformation initiative?
After reviewing this article, I was reminded of the gaps that still exist in DT understanding, execution and business impact. So, to assist in your Digital Transformation Strategy & Execution, I will be publishing a couple of blogs to share a DT Framework developed to amp-up your strategy; from Optimization to Transformation!
What is Digital Transformation?
After reading a small library of Digital Transformation books and articles, my top 2 MUST READs include:
Leading Digital (Westerman, Bonnet & McAfee, Harvard Business Review Press) presents the MIT research and analysis of 400 companies, across industries, designed to identify key attributes of Digital Masters; those companies who clearly distinguish themselves in the use of technology to drive differentiated business performance. In addition to the research, the authors also provide compelling stories and real-world experience that serve as a strong foundation for anyone embarking on a Digital Transformation initiative.
The Digital Transformation Playbook (Rogers, Columbia University Press) is a journeyman’s reference manual for both defining and executing a DT Strategy. In addition to a variety of Digital Transformation examples and stories, Rogers also provides a link to Columbia Universities own Digital Transformation tool chest.
With these two books in your back pocket, you will be equipped to easily answer the ‘What is’ question and also share some great insight into the ‘How’ of Digital Transformation.
“The best managed companies in the world, those that significantly out-perform their peers in both revenue and profitability, tend to manage their digital activities in a common way. They build both digital capabilities and leadership capabilities that are better than other companies”
Source: Leading Digital
To clearly define the scope of Digital Transformation for our discussion, I have adopted a more expansive definition of Digital Transformation; including both Digital Optimization and Business Model Innovation. This definition is, I believe, necessary since much of the work that must be done to enable Digital Transformation requires planning and investment to develop a digital infrastructure, processes and fully equipped people. And then, with a digital foundation in place, you can quickly architect and build your digital dream house.
Digital Transformation Framework
To build our Digital Transformation Framework, we start with the MIT Research Results highlighted in ‘Leading Digital’. The chart used to present the Digital Transformation research serves as a great foundation since it clearly communicates the core competencies of a digitally adept organization who (1) Proactively invests in technology to advance the business and (2) Engages both technology and business leaders to deliver business impact.
With the MIT Research as a foundation, we super-impose the pillars of Microsoft’s Digital Transformation Strategy directly atop the research. I am a big fan of Microsoft’s DT Strategy because they map so well to the fundamentals of effective technology use.
Optimizing Operations Empower Employees
Engaging Customers Transforming Products (& Business)
The resulting, graphical representation of our Digital Transformation Framework is provided in the graphic below with
· the Leading Digital research presented in the upper left,
· the four pillars of Microsoft’s Digital Transformation Strategy on the lower left, and
· the resulting Digital Transformation Framework presented on the right.
We plot the pillars of Digital Transformation Strategy along a theoretical Business Value curve from lower left to upper right, with the pillars of our Digital Transformation strategy clearly driving incremental value to the business as we move up the curve.
While this simple, graphical representation of the framework is interesting, it is far more compelling when we take the final step of mapping the framework back across our P&L.
By mapping this framework back to our P&L, we create a very immediate link between investments made and results realized via each Digital Transformation initiative. In addition, our Digital Transformation financial impact reporting serves the clear purpose of binding our senior leaders to our Digital Transformation goals & objectives, with measurable results for both I.T. and the Business.
So, this is our foundation. A Digital Transformation Framework, built atop the digital capabilities research of MIT, leveraging the pillars of Microsoft’s Digital Transformation Strategy and tied back to the performance measures of our own Profit & Loss Statement.
Our next steps, to be discussed in future blogs, include use of the Digital Transformation Framework to:
· define & prioritize Digital Optimization projects
· identify and assess Digital Transformation initiatives, with the goal of establishing new revenue streams and/or new businesses.
Until then, I hope that the recommended reading and the Digital Transformation Framework serve to advance your own DT Strategy.