Ep35 – The Different Definitions of Digital Transformation & the Benefits of DX

Solo recording with Floris Blok

What are the different definitions used in Digital Transformation & what are the main benefits?

In this episode, Floris Blok lays out the different definition used in #DigitalTransformation. He also discusses the basics of #DX & how to start a DX program, even if you are a SMB.

As much as #Tech can enable #transformation, it is still more important to focus on having the right #culture in place before attempting a transformation. That is why it is almost always necessary to start a #CulturalTransformation before changing processes or implementing new technologies. That is why Floris mentions the #LearningEcosystem developed by Transform Partners.

Listen to this episode to get all the details about DX & check out the full transcript of the episode below:

Additionally, this episode is available on YouTube from Relevate Consulting. Click here for the link or scroll down for the video.

— Beginning —

Today I would like to discuss Digital Transformation. Many things can be said about the topic but I would like to start with the basics: why, what, how!

A small warning though, I have presented a lot of what I’m about to say in a panel I was asked to sit on to discuss this very same topic. I presented a shorter version of what I would like to talk about today. So if you’ve heard me speak at the Growth Education Institute SMB forum at the end of June, please bear with me as there’s more information being shared today.

By the way, my shorthand for digital transformation is DX. So you’ll hear me say DX quite a lot. It just rolls off the tongue easier.

So let’s start:

If there is one thing the pandemic has done well is shine a light on the need for businesses to be adaptive and employ digital tools to survive, and thrive, in a fiercely competitive market.

Companies need to react almost instantly with new business models and technological solutions in response to ever changing needs, and supply.

In my conversations with other OCM consultants, the quote of the day is “Change is the new BAU”.

How do organisations and their business leaders adapt to these new attitudes and expectations from employees and customers alike?

Digital transformation is the answer!

I would like to start by clearing up some of the terms used in the industry. So let’s look at the different definitions

Digitisation is the process of changing from analogue to digital form – Gartner

Digitalisation is the use of digital technologies to change a business model and provide new revenue and value-producing opportunities – Gartner

Digital transformation is the process of using digital technologies to create new — or modify existing — business processes, culture, and customer experiences to meet changing business and market requirements. This reimagining of business in the digital age is digital transformation – Salesforce

You can see how each one incorporates more areas of change. In short, DX is about “people, process, tech”, in that order, to create innovative solutions to improve the customer experience and employee experience

I have created a little Venn diagram to visually represent this concept using the 3 definitions we just covered. Please check out the link in the description to my LinkedIn post, or in the blog transcript

WARNING 1: nothing I’m saying today is restricted in any way shape or form to a specific company size. The worst misconception I have encountered is that DX only applies to large organisations, for example, here in Brisbane, Suncorp, which has a team of 200 people I believe working in DX.

Size doesn’t matter!

In fact, it’s probably more relevant to SME because small organisations are in theory more nimble, adaptive, quicker to change, if managed properly.

Warning 2: These terms have been unfortunately co-opted by B2B IT marketers.

Anyone selling a document management system, for example, is calling it digital transformation.

What in essence they are doing is installing a new departmental printer, with an automatic ink ordering widget (which is where the money is), and some software that turns documents into PDF’s stored on your SharePoint. I should know, I worked for one of the biggest brands in this industry, Canon.

That’s not DX, that’s digitisation with a hint of digitalisation.

The primary objective of DX is to create positive business outcomes by focusing on customer experience and employee experience.

It’s about creating new business models, being more agile and efficient, being more resilient, and being more customer and employee centric, instead of product centric for example.

DX is intimately tied to the commercial strategy, be it from a business model point of view, or finding more efficient ways of working, i.e. automation.

High intensity, low value repetitive tasks are prime targets for automation, as stated by Alan Priestly, an analyst from Gartner. Here’s the link.

But in order for that to happen, organisations need to focus on their company culture first and foremost.

That’s why a cultural transformation must be tackled first before any new process or technology is implemented.

I will go into more details a little later, but for now, suffice to say that Innovation, self-development, learning, collaboration, creating the right environment to succeed, and fail, are essential elements of a company’s culture that will be the catalysts for DX to happen successfully.

Why celebrate failure? Because they are learning moments. People get to learn not only what works, but also, maybe even more importantly what doesn’t work.

70% of DX programs have failed (some reports state 85%) because the culture was not conducive to change or adopting new ways of working, i.e no grassroots initiatives, just top down imposed changes.

Other reason cited are politics, power struggles, silos, lack of knowledge, etc… I wrote a LinkedIn post about, for which I’ll share the link.

In short, staff appreciate being part of the process, being engaged to ideate and come up with solutions.

Keep in mind that the front line staff are the ones affected the most by archaic processes and they have a wealth of information that is extremely valuable.

Imagine being told what a new process is going to be by some external consultant who hasn’t bothered to research the existing challenges in a specific area of the business.

Now imagine the front line staff are intimately aware of what solutions would be more effective.

Then imagine raising your concern only to be told that the very expensive consultant knows better!

What do you think will happen?

They will most likely switch off, disengage, lose commitment and purpose.

So now there is a compound effect:

1) the new process won’t work

2) the people that can fix it either don’t care anymore, or they have left and taken their wealth of knowledge with them, possibly to serve a competitor.

That’s a risk that needs to be managed appropriately.

On the plus side, organisations that were already relying on digital channels have thrived during the COVID-19 pandemic.

Look no further than Uber Eats, All the hospitality businesses that had a partnership agreement with Uber Eats didn’t miss a beat, quite the opposite, they thrived.

eCommerce businesses have seen incredible growth. Online sport, meditation, chess, karate, etc… Are all businesses that very quickly pivoted to digital channels and have been able to weather the storm.

Supermarkets in Australia had online delivery but it took them close to 3 weeks to ramp up enough scale into their business to accommodate for the surge in online purchases, which demonstrated that their past digital channels simply weren’t up to scratch.

Agreed, no one can predict a pandemic, but every sound business plan and strategy plan should have resilience and contingencies built into them.

Right, so how do we “do DX”?

Let’s look at some of the building blocks any DX leader should focus on.

A lot of what I’m about to list is based on a 2018 MIT Sloan Centre for Information System Research.

However, I “had to” add an element that was not given its due credit, I believe. Also, if you are wondering who should lead DX in an organisation, I wrote a piece on that too on LinkedIn you’re welcome to read.
Organisational chart

So, the building blocks are:

– Culture. This building block was NOT given a special mention, but some elements of it are either implied or mentioned briefly in the MIT Sloan framework. I included in it elements from the The Learning Ecosystem, developed by Transform Partner in the UK.

– They include in the “learning ecosystem that preps organisations for change the following areas of focus:
○ Skill development centre
○ Innovation lab
○ Intrapreneurship
○ External partner
○ Tools and technology
○ Learning resources
○ Community
○ Opportunities
○ and R&D
as the necessary components for a successful digital transformation program.

The MIT Sloan framework goes on to list:
– Operational backbone
Integrate systems and processes that ensure operational efficiency and quality transaction and master data

– Shared customer insights
Organisational knowledge about what customer will pay for and how digital technologies can deliver to their demand

– Digital platform
A repository of business, technology, and data components facilitating rapid innovation of new offerings and enhancements

– Accountability framework
Clear ownership of – and coordination among – a growing set of digital offerings and components

– External developer platform
A digital platform for an ecosystem of partners who contribute to and use the platform

This is all very interesting. But how is this going to translate into real life, into practical terms, especially if you are a small company?

Fear not, it’s not complicated at all. The building blocks I listed are elements to consider when planning and implementing. There are here for your reference, so am I if you have any questions.

But the true art of DX is at the start.

How do you start a DX program? You start by asking the following questions:

– WHY you are doing what you’re doing, or planning to do? What outcome are you hoping to achieve?
– WHO you are doing it for? Is it for the CFO? Or for the customer?
– What you are doing or planning to do?
– How you are doing what you’re doing, or what you plan to do?
– Will this make the boat go faster? Will this new strategy be conducive to improved business outcomes?
– If you’re planning something new, how can you do it by amending existing processes potentially to suit the new outcome, and what existing technology can be used and/or repurposed?
– Who can help you to answer these questions if you don’t know the answers?

Just never start the conversation with, for example, we need a Virtual Reality solution to sell our customers a trailer! That’s just “shiny object syndrome”. And it will lead to a lot of resources being wasted.

A practical example, a client of ours, asked for a new onboarding process for new clients.

Our client was dead set on implementing a workflow management system, despite me championing the idea of a CRM, which they didn’t have.

A CRM system can automate the sales and marketing process, from top of funnel all the way to closing the deal, onboarding and client lifecycle, and beyond, in terms of advocacy, referrals etc…  There are some industry specifics that need to be taken into consideration but generally speaking, the CRM is the best representation of a large part of the customer journey.

For a complete picture, we can discuss Customer Data Platforms that combines information from all systems to paint a more complete picture of the customer journey. But that’s for another time.

We couldn’t get them to change their mind. Once it was implemented, it was very quickly deemed to be insufficient, in favour of a fully fledged CRM that would incorporate all the elements we had just delivered.

In other words, it wasn’t fit for purpose.

I hold this client to the highest regards, because even after some tough discussions about scope, and cost, etc… We both understood that mistakes were made and that this was a learning moment.

We had failed in making our customer happy, they failed achieving the desired outcome.

The key learning here for our client was to avoid tunnel vision next time, and consider “why”, and “who for” first.

Since I do operate in the field of implementing technologies for clients, among other things, it’s maybe a good time now to mention that today’s systems and platforms are amazing.

The name of the game is integration!

If these systems can’t talk to each other, a lot of the benefits of DX would not be achieved.

Luckily, almost all solutions now are fully integratable with other solutions, either natively by vendor delivered “connectors” or API’s, or by 3rd party generated connectors, like Zapier.

The notion of a single piece of software doing everything is a thing of the past, thankfully.

Now, you can get a whole bunch of different software that all talk to each other through API’s to create a seamless experience for both the customer and the employee.

For example, Gong.io to measure and coach your sales effort, integrated with Salesforce or Hubspot for CRM purposes and “one version of the truth” about the customer, integrated with a Shopify ecommerce platform, all of them managed and tracked by Accelo which is tracking your entire operation and counting the $ spent on each billable or non-billable task, with another layer handling the financial transactions, like Xero.

Don’t get me wrong, there are still vendors out there that can provide you everything you need, i.e. Microsoft with its MS365, D365 and Power solutions, but they are modular and you don’t need to get them all.

Of course there are benefits to getting the tech from the same company, for more efficient integration purposes.

But then you’re locked into a much more expensive model, than if you were to “shop around” a little.

If you are a SMB and you don’t have a CRM, this is the best and quickest way to get onto the DX bandwagon.

Deloitte report from 2017 claims that over 70% of SMB organisations in Australia don’t have a CRM.

Getting one is exactly what DX is all about. It requires training people, freeing more of their time for high value tasks, creating new automated processes and simplifying the manual ones.

It creates a single version of the truth, and the insights can be shared across the organisation to improve CX and EX.

It will force you to map out your sales process and customer journey, it will help you communicate with your clients on a one-to-one basis, but at scale.

More shockingly, the same report claims that SMBs which adopt CRM have 44% higher revenue than those with no system or a basic system.

All in all, DX creates a new working environment that is more conducive to business outcomes and customer satisfaction.

Thank you

— The End —