Evolve or Transform

It's a sink or swim situation: Digital transformation - a buzzword, necessity, or last resort - depending on how your company has evolved. To add some spice to it, digital transformation now also encompass a combination of semantics, AI & AR - but I'll go into that soon enough in my mini series on digital transformation.

Having managed lean start-up strategy and operations at an innovation-driven IoT company since 2014, I have noticed a degree of confusion as to two major phenomena: IoT (Internet of Things) and Digital Transformation. This time I’ll focus on the latter, aiming to clarify what digital transformation entails and why it’s a buzzword – although it's been around for decades and started with computers and wireless communications (you probably heard the old school term “digitisation of business processes”). In a previous article I referred to IoT as an evolution. On that note, think about why we now have new terms like FinTECH, InsurTECH, MedTECH, etc.

Major consultancy firms transform large organisations by managing their programmes in highly resource intensive endeavours inter-departmentally pulling together knowledge, people, processes, in the sort of way we know from the big boys, with a chunky .ppt at the end of it. Then we have agencies which help organisations avoid the need for digital transformation by offering consumer-centric solutions based on new technologies adapting to changing markets and environments. This increasingly involves the implementation of new systems rather than coming up with mere strategies.

Behavioural change, innovation (For titbits around innovation-related topics, check out Raj Sark's blog), and technological advance has constantly accelerated, leaving virtually no industry unaffected, impacting business models and creating new ones whilst making others obsolete. IoT is a major force now, also (see previous articles).

So, what does digital transformation actually mean, is it new or just a hyped-up revival? Disecting the term we see that technology connects people and machines with each other or with information. The focus here is on people, machines, and information. To obtain the latter, naturally, you’ll need to mine data first, meaning you’ll need the technological ecosystem in form of databases, campaigns, apps, websites, analytical tools etc. Transformation, in an organisational context, is a “process of profound and radical change that orients an organization in a new direction and takes it to an entirely different level of effectiveness” (definition by Business Dictionary). Transformation implies a basic change of character and little or no resemblance with the past configuration or structure – note that this is not a 'turnaround', which would imply incremental progress on the same plane. A business undergoing transformation will see all of its functions touched, from procurement of finance, over operations to sales and HR. Ideally, businesses evolve by market penetration, diversification, market development, and product development, as well as mergers and acquisitions, or benefiting their value chain by exchanging value – not to be confused with transformation. Transformation can be costly and involves risks, which is why you don't exactly choose to do it - it is a necessity for businesses that didn’t evolve (and there is no shame in not evolving as long as you can transform).

In a way it’s business 101 – play the cards right with your suppliers and customers (Porter’s five forces, anyone?), and ride the market and technology wave (consider the whole PESTEL), and you’re on the right track. Failing that, an organisation may want to transform, considering the main drivers for transformation: changing consumer demand, changing technology, changing competition (markets are now getting disrupted across all industries).

Generally, it's useful to get into the habit of trying to spot opportunities and avoid getting to the point where you aren’t the one either disrupting your market or maximising your advantage’s yields. The tools you get handed in 1st year business, such as the Boston matrix, Porter’s 5, McKinsey’s 7, PESTEL, MCDA, and CPA, (perhaps (Ansoff's matrix) really can help you stay ahead of the curve or at least help you not lose traction. From what I see, however, many traditional businesses fail on that as they become overly comfortable focusing on their core activity, quickly developing a certain myopia.

My take on the above - and we revert to the lean start-up principle with focus on the build-measure-learn feedback loop - testing hypothesis, and split-testing projects as you go along. Data plays a major role, and the prime source for data is the consumer –any organisation should naturally have measures in place to mine data across all activities and turn it into information, upon the knowledge derived from which your decision making should be based upon.

During my time at innovation-driven IoT start-up Connect-In, I have been exposed to numerous cases where digital transformation had become imminent, and knowing how to evolve significantly helps transform. This is why I now offer my expertise – to help your organisation transform and, long term, aid your own evolution. The idea is to help you nail down key factors including, but not limited to, the four big ones: customer experience, superior offering, efficiency, security.

Get in touch on www.klemt.co.uk for more.

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