Three Ways to Better Approach Digital Transformation
By Jim Sinur
(Aragon Research) – It’s time that organizations step it up when it comes to digital transformation – in ways that are not only beneficial to the internal organization, but to customers and partners as well.
While I see many organizations taking steps to becoming digital and succeeding, many of them are doing so without looking at their customer journeys, employee journeys, and partner journeys. What I see is the sharpening of internal organization efficiencies in the short term. While these things are all digital baby steps, the bottom line is that many organizations are increasing productivity and increasing revenues while neglecting to leverage digital in a creative and balanced manner. This blog examines the three giant steps that organizations can take to step it up when it comes to Digital Transformation.
The Problem: Customer Journeys and Strategy Are Not Top of Mind
Most organizations are stuck in incremental mode. This means they’re leveraging low hanging digital capabilities, while increasing profitability to keep their CEOs and boards off their back. We know digital works, so now it’s time to commit to digital as a business and IT team. Traditional processes and applications are aimed at inward productivity at the expense of customers and strategic advantage, which spells unhappy customers if these processes and applications aren’t fixed.
There is a basic decision organizations have to make: “Do we shoot for a new business model or do we incrementally get to a more balanced approach?”
Let’s take a look at how to leverage digital in a more balanced matter.
1. Competitive Advantage (Committed Digital)
This is a “shoot for the moon” approach that basically causes a significant shift in values, goals, and competencies that considers change as a fact of life. There is a deep analysis on new business models and/or radical ways of supporting the existing business model. It is focused on providing value to the customer, employee, and partners while value to the organization builds slowly over time. At the same time, care is taken to plan for future change and scenarios that could cause changes in goals or behaviors of people, processes, and machines. Most organizations don’t start here, but end up here eventually.
2. Try Balance First (Balanced Digital)
This is more incremental, but difficult approach that interjects outward value and digital capability into processes. This approach delivers happier customers, employees, and partners because it considers each party’s journey and optimizes on the intersections and touch points of all participants. There is no advantage to one party over the other. The internal organizational model then has to change to serve the customer’s goals along with the organization’s goals in a balanced fashion.
This is a huge shift in mentality that can, in turn, leverage digital to enhance the experience for real instead of paving over existing cowpaths. This approach sets the table for a natural set of steps to competitive advantage and strategic advantage that leverages business and digital change. This is not a bandaid approach to digital; it is a planned approach.
3. Keep Optimizing (Bandaid Digital)
Organizations that are run by “bean counters,” i.e. old school CIOs and lawyers, will try to stay put and outflank their customers and competition through savvy internal optimization. This is a bet that says incremental improvement of existing products and services leads to survival over the long term by expecting to evolve to something better. Digital is used as a bandaid in this approach. This is a very inward-facing approach that leads to exposure to competitors with new business models. The optimized and abused will revolt when given a chance.
No organization can sit still when it comes to Digital Transformation. It’s a matter of picking a proper target and making smart adjustments. Stepping up to digital is a reason to become more outward-focused and strategically agile.
Digital Business Platforms (DBP) are one of the ways to support this. They’re ideal for supporting incremental digital approaches that focus on agile adaptation to balanced internal and external goals.
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