Digital transformation is not just about previously unimaginable technologies. Strategic digital transformation is about realising the value that can be achieved with the unique combination of people and technology that is found in every organisation. The goal is to become a people-focused and data-driven organisation.
For most businesses, the prevalence of consumer digital technology has become the driver for initiating processes of organisational transformation. These processes are, in turn, a pathway to continuous improvement across the entire organisation. Strategic transformation is an ongoing programme for the entire organisation not a discrete project or something that can be kept confined to a single business function.
Much of the existing literature, both academic and practitioner, around digital transformation point their attention towards the larger businesses and multinationals. Often this bias in focus has been supported by the large consulting firms whose rapidly produced whitepapers are inevitably targeted towards their key and highest value clients. In contrast, we see the future as being found among the aspiring startups and with the students of today. Inspiring the next generation of business leaders and decision makers who will find themselves in small to medium sized organisations are the key for the holistic and substantial change that are required for the way currently conduct business generally. Organisations can no longer succeed by being isolated islands of activities. The future is about the collaboration of individuals and organisations in fluid, even organic, ways.
Startups and small businesses may be the powerhouse of new ideas but they are also the most constrained by restricted budgets. What is needed are clear statements and models to support the definition of a roadmap that sets out the how, why and when of transformation, starting with the basic fundamentals of understanding the digital in business.
Our new book, Strategic Digital Transformation: A results-driven approach is due for release in December 2019 and picks up on these issues and challenges with the goal of supporting the development of these roadmaps by small and medium-sized businesses. We have written with a number of industry experts in digital transformation to blend theory with real-world practise to discuss examples of digital transformation and to create useful models for the reader’s own organisational transformation.
As academics, we regularly find ourselves being the external (and critical) eyes looking in on different organisations. The most common situation we see is a lack of critical self-reflection with no strategic perspective in these smaller organisation. These gaps and holes present themselves as disconnections between the day-to-day operational reality and stated strategic objectives or wider vision. The first part of our book tackles these shortcomings by offering guidance on the necessary preparations to get ready for transformation. The focus is to bring the robust and well-established approaches of strategic planning into the context of becoming a digitally mature organisation.
The second step in digitally transforming businesses is to identify the internal and external drivers for change as well as identifying the potential roadblocks for that change. A challenge of legacy in all of its forms is given particular attention. The challenge of legacy is regularly presented as a disabling feature of existing organisation in their attempts to transform. But legacy is also at the core of the distinctive and unique features of the organisation and not necessarily something that should be willingly or consciously lost.
The final sections of the book take the reader through how to make those plans happen and how to evaluate the successes that subsequently happen. Recognising the importance of evaluating digital transformation reinforces that this is a continuous long-term programme that never has a final completion date but is rather constantly revisited and revised as the internal and external environments change. The book itself can be used either as a roadmap to transformation or as a primer for the key challenges encountered along the pathway to digital transformation.
Drivers for change
Modern day leaders and organisations are struggling with the impact of digital transformation and ignoring these changes brings a real risk of inertia with the consequence of bringing real impact on the organisation’s ability to succeed or, indeed, to survive. All organisations in every sector can benefit from strategic digital transformation while also minimising the risks associated with this scale of change through careful planning and by adopting an evolutionary approach. We see the goal of digital transformation as being to create a positive working environment that fosters innovative thinking and flexible new business models that are also sustainable.
Innovation is a very important driver for the digital transformation inside organisations. The opportunity of new technology, faster Internet speeds and 5G, GPS, affordable smartphones and ever increasingly expectant and vocal customers creates many new opportunities. The digital transformation of a business therefore recognises the need to create an environment that embeds innovation, the changing behaviours of managers and the expectations of an increasing number of millennial employees.
4 Vs of big data
A key underpinning concept that helps to explain and systematically reveal the differences between new and traditional style businesses are the 4 Vs of big data (Variety, Volume, Veracity and Velocity). Thinking about an organisation as a system that is made up of people, communications, data and procedures/processes working with hardware and software can then be individually examined through the lens of the 4 Vs. We also use the broadest possible usage for the traditional terms of a system. This means, for example, that hardware should not just be seen as a computer holding software but also the room, building and physical environment that supports the digitally mature organisation. Viewing the system of the organisation through the lens of the 4 Vs also recognises the tension between rapidly changing consumer technologies with easy interfaces set against the less dynamics but more robust and secure enterprise technologies. The presence of consumer technology in the organisation make even mask the progress of digital transformation and present an overly optimistic view of the situation. A system based view assists in providing a more realistic perspective of the overall progress of the organisation.
A key tool in understanding an organisation’s transformation situation is the Digital Business Maturity model. This straightforward tool is intended to quickly assess and present a snapshot of any organisation’s status and its potential to become a digitally mature business. This type of benchmarking also lets an organisation understand where it sits against competitors and with tis current capabilities.
A key technical objective for digital transformation is to reach a common level of digital maturity across all areas of the organisation. When this shared level of maturity is achieved, the entire organisation can be seen as having achieved this level of maturity. The result is that an organisation can only be considered as digitally mature as its least digital function. This observation is further acknowledgement of the importance of seeing the organisation as a cohesive system. Similarly, pitching the level of organisational digital maturity at the level of the least digitally mature function will come as a surprise within many organisation’s marketing departments where so many day-to-day functions and activities have been entirely digital for so many years.
How to become digitally mature overall is then a further challenge for an organisation. We use a further model for implementing new innovations and change that is called HINGE. HINGE breaks down the activity into five stages of Horizon scanning, Internal audit, New business models, Gap analysis and Evaluation. It is a practical approach intended to be applied in order to manage the steps of an organisation’s implementation of new innovations and digital transformation. The model is based on our combined decades of experience and is usefully applicable to micro-, small- and medium-sized organisations. The HINGE breaks down complex stages in a phased but flexible approach to digital transformation. It builds in the need for continuous development (doing) and multiple iterations rather than the older linear (waterfall) approach.
People, people, everywhere. In 2019 there are a reported 7.5 billion on the planet and 5 billion of them have access to a mobile device. This has major consequences for every business, as these digitally capable people will either be a customer or an employee and they carry the fate of your business in their hands. People are therefore fundamental to digital transformation and this is a major challenge for managers and entrepreneurs.
We consciously focus on people for this reason. People come in lots of different categories in the digital transformation context: millennials, leaders, visionaries, consumers, customers, recruits and talented employees. People need to be integral to any organisation’s long-term vision and this requires critical self-reflection within the organisation to be successful. Employees need to be prepared to change and ready to listen, be flexible and sometimes work in new ways. This is also true of managers. Full commitment to digital transformation across the organisation is required.
The risk of not engaging people internally is also high. If employees are dissatisfied they will collect skills and then move away if the workplace in not conducive for collaborative working. Being a visionary and people-focused leader is a fundamental aspect of successful digital transformation.
As we have been writing Strategic Digital Transformation we have had conversations with a variety of people from employees and entrepreneurs to small business owners and C-suite executives to public servants and third sector leaders. We have talked to developers, marketers and change managers. It became evident very quickly that there are many different ways to tackle digital transformation and there is definitely no single right way. However, there is one consistent message that came out of every conversation. Once started, digital transformation is a continuous process.
Our key takeaways for successfully managing the digital transformation process:
- Managing digital transformation within an organisation is firstly and primarily a people challenge
- Multiple (and different) push and pull factors exist within every sector for doing strategic digital transformation
- Communicating the purpose of the transformation across the organisation is key to its success
- The messages being communicated across the organisation should vary to consider the specific audiences
- Do not transform (or just migrate) existing business processes, look forward and reinvent
- Develop a shared vision as part of the programme: digital transformation must be strategic and organisationally aligned
- Grassroots transformation should be encouraged when it aligns with the overall strategy (and doubly so when it addresses key points of pain for people inside the organisation)
- Projects should be managed through short cycles with highly defined quickly delivered outcomes that bring value to the organisation.
About the authors
Alex Fenton is Lecturer in Digital Business at Salford Business School, UK. He has authored a wide range of academic and practitioner articles relating to digital transformation, digital business and digital marketing. He has won an array of industry and teaching awards for his practical approach to enterprise-led, experiential education.
Gordon Fletcher is Head of Directorate at Salford Business School, UK. Gordon’s research focuses on examples and experiences of digital business, culture and practice. Gordon has published work around conflict with online finance communities, economies within virtual game worlds, digital marketing and digital transformation.
Marie Griffiths is Reader and Head of the Centre for Digital Business, Salford Business School, UK. Her research focuses on the role of digital technologies and the convergence of the ‘real’ and digital worlds and the social influences of technology. She also writes and teaches in the fields of emerging Technologies, Security and Information Systems.