Three Digital Transformation Fundamentals Every Business Must Adopt

Three Digital Transformation Fundamentals Every Business Must Adopt

The ongoing digital transformation trend has created “superbrands”; brands that dominate multiple industries and operate at a scale no other industry leader has ever operated. These are companies like Google, Facebook, and Amazon that each touch the lives of over a billion people at any given time. For such companies, digital transformation has created an unprecedented competitive advantage that allows them to enter any industry and immediately dominate. This agility at scale has created anxious moments for legacy businesses that wonder, or perhaps fear, what these tech giants will do next.

Enterprises seeking to emulate this level of disruptiveness within their operating models must act fast to leverage digital transformation and preempt competitor-led disruption. While it is true that companies like Google are tech-first and so can more effectively take advantage of digital transformation, there are certain key factors that other non-tech enterprises can adapt to their use cases. In this article, we look at three digital transformation fundamentals, problem definition, ideation, and customer centricity, which C-Suite executives must adapt to infuse the same Super Brand DNA into their organizations to either enhance market dominance or wrest market dominance from the competition.

1) Problem Definition

Innovation is more about asking the right questions than having all the right answers. On June 29th, 2007, Steve Jobs got on stage to introduce the world to the first iPhone. In doing so, Jobs launched an innovation tsunami that is still going strong today. What is important to note from this launch is that the iPhone was not the be-all-end-all solution to mobile computing. Instead, it provided solutions to what was important to consumers at the time: media consumption, access to the internet, and photography. Jobs understood that while other players like Palm and Blackberry focused on solving difficult problems like enterprise mobile computing, the real problem definition was how the smartphone could transform the world of consumer mobile computing and in doing so, blur the line between enterprise and consumer mobile computing.

To emulate this level of problem definition, senior executives must be willing to approach digital transformation from a big picture standpoint. It is not enough to focus on transforming sales and marketing while neglecting manufacturing and logistics. A big-picture outlook looks for gaps in the entire organizational structure optimizable through digital transformation. This approach helps the organization ask the right questions about the right problems. In the case of Apple, Jobs saw the mobile computing problem as an ecosystem problem and not a niche problem. From this insight, the iPhone today provides access to an entire ecosystem of services made possible by a macro-level approach to digital transformation not just to underlying technologies but to a more broad-picture view of emerging customer needs.

2) Ideation

In a 2016 annual letter to shareholders, Amazon founder Jeff Bezos penned three words that perhaps underpin the innovative nature of the company. These three words were “Disagree but commit.” This statement means that everyone in the organization can disagree with new ideas during the decision-making process, but are required to commit to the final decision. One example of an idea that would not have made sense to a legacy logistics company and probably would not have seen the light of day is free unlimited ground shipping. While counterintuitive, Amazon Prime today is a fast-growing billion-dollar business, rapidly gaining market dominance in a space currently dominated by entrenched players like UPS who are still using traditional logistics business models.

“…use the phrase “disagree and commit.” This phrase will save a lot of time. If you have conviction on a particular direction even though there’s no consensus, it’s helpful to say, “Look, I know we disagree on this, but will you gamble with me on it? Disagree and commit?” By the time you’re at this point, no one can know the answer for sure, and you’ll probably get a quick yes.”

– Jeff Bezos, Amazon founder and CEO

Leveraging disruptive digital technologies within their organizations requires leaders to be willing to disagree but commit. The path to disruption is always unclear on the onset, and as such, leaders must not wait for all the facts to align before experimenting with new and disruptive ideas and technologies. To insulate their organizations from failed experiments, they must set up innovation labs that report directly to senior management. Google X or simply X, is an example of such an innovation lab tasked with exploring the next frontier of business for parent company Alphabet, Inc. What is interesting to note is that X has no industry restrictions when exploring ideas. Enterprise leaders will do well to take note of this fact as it is one of the reasons Alphabet can enter and disrupt new industry verticals seemingly overnight (see: mobile ecosystem disruption)

3) Customer Centricity

Digitally disruptive organizations have transitioned from transactional relationships with employees, customers, and suppliers to “interactional” relationships. Today, such organizations view every person that interacts with the organization, whether from within or without, as a customer. This level of customer-centricity is not only a nice-to-have in today’s business landscape but a need-to-have. In a paper titled “The Digitization of Everything,” EY noted that the biggest driver for digital transformation is the disruptive adoption of digital technologies by consumers, radically changing consumer interaction models. These consumers include customers, employees, suppliers, and partners. To adapt to this new trend, organizations must leverage digitally-transformed customer-centricity to avoid disruption by competitors.

Consider how by re-engineering its technology stack and customer service approach through analyzing billions of data points of customer interactions with the platform and automation, Amazon has managed to commoditize customer care, reducing it to a fixed cost on its balance sheet. By doing this, the firm can provide extremely fast and personalized customer care at scale without having to make significant additional investments. Organizations must adopt a similar approach to structuring operations around customer needs, which is achievable by collecting and correctly analyzing customer data, embracing automation tools like chatbots and machine learning, as well as optimizing organizational interaction channels for cross-channel engagement.

Conclusion

Deloitte Consulting CTO Bill Briggs says that when it comes to modernizing the enterprise, building it from today, not just imagining tomorrow is the appropriate mindset forward-thinking organizations must adopt. Leaders tasked with taking their organizations into the new digital transformation age must, therefore, adopt what Amazon calls a Day 1 mentality, one where rapid experimenting and constant challenging of orthodoxies thrives. Failing to do so will expose the organization to disruption either from forward-thinking competitors or agile startups that move fast and break things, as Facebook founder Mark Zuckerberg puts it. Developing a self-disruptive digital transformation strategy around the areas of problem definition, ideation and customer centricity will provide organizations with the impetus to maintain dominance in their existing markets or discover and launch into blue ocean markets.

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