Digital Transformation: Six Foundational Principles
Sometimes I’ll be in a restaurant where so many choices on the menu look good that I’ll tell the waiter, “I want everything.” Digital transformation sometimes looks this way too, with seemingly everything thrown into the definition of that phrase. What does it actually look like to create digital businesses when we’ve been working in a digital world for so many years?
Digital technology has brought us new ways of solving problems, working with data, and communicating. While this digital transformation began with the replacement of infrastructure and technology, the most significant changes in recent years are through business processes redesigned into digitally-enabled solutions. Entirely new sales channels have formed based on digital technology. Nowhere has this been more visible, or the impact greater, than in the retail space where traditional shopping has been encroached by digital competitors. With technology constantly evolving, businesses are keenly aware of the urgency to implement, optimize, and even transform their digital strategies.
SIX FOUNDATIONAL DIGITAL TRANSFORMATION PRICIPLES
How exactly do you determine what’s essential and what’s hype? Do you need to convert development processes or re-architect applications? Think about this as a journey —one that that may have many turns, and one in which you’ll want to be able to adjust course quickly.
1. DEFINING STRATEGY
Strong strategy work starts with a foundation of industry knowledge. Assess your competitive environment, including what your peers are doing today and what trends are likely to take hold in your sector. Also, consider the emerging trends in your customers’ lifestyles and any other situational factors in your business and industry. Mapping these factors in graphical form, along with any visualizations of hard data that you have available can help you to define and communicate the business challenge. Next, define the goals of your digital transformation strategy so it’s aligned with your enterprise-level mission statement and goals, and build your go-to-market plan for digital channels. Be creative in thinking about what opportunities are available through digital to enable deeper engagement with your customers.
Another part of digital transformation strategy involves thinking about your business’s strengths and weaknesses and how it fits into a larger interconnected marketplace. What other services and businesses are complementary to these objectives that you can design into an ecosystem? Or, perhaps there is an existing digital ecosystem that your business aligns to.
2. CUSTOMERS FIRST
Remember, it’s not where you want to go, but where your customers want to go. As you transition from strategy into the specific programs and tactics that will realize it, take a good hard look at customer experience. Tools like primary research, customer journey mapping, and personas are powerful ways to create a clear picture of how your customers understand their business relationship with you and the goals they’re trying to accomplish. Your digital strategy may start from a mobile user perspective exclusively, or it may take more of a multi-channel approach – considering the web, phone, and in-store experiences. Some of our clients in traditionally brick-and-mortar businesses have created new sales channels based on digital purchasing ecosystems that integrate with the in-store experience. Many others are looking to create new capabilities along these lines. See, for example, a recent WSJ article highlighting how a restaurant chain has used digital solutions to streamline everything from ordering to table delivery.
3. TEAM EFFORT
Success depends on everyone working toward the same goal. Reinventing how you do business can put a lot of demands on an organization, whether it’s committing time and resources, or integrating changes into existing processes. At the people level, change can be naturally stressful but also has the potential to inspire and reinvigorate individuals in an organization. From the beginning of strategy formation, include key stakeholders across business functions that can offer a broad perspective as you plan for change. Seek out leaders with a can-do perspective who will form a core team of advocates who can also help in resolving problems that emerge in the course of implementation.
Develop a comprehensive vision, along with a communication plan that employs a variety of tools including visual diagrams, timelines, goals, and metrics to get your message across to an audience with varying perspectives and learning styles.
Collaborate with your core team to review existing processes that are impacted and those that may be refreshed or enhanced with new digitally-enabled concepts. Reach out to the parts of your organization that are included and impacted in these changes. Don’t rush this part, either— take the time to communicate with the leaders and individuals who are essential to successful execution. Make a strong case for your vision in a way that builds them into the story. Can they clearly see the importance of this vision as it relates to their own understanding of the overarching business goals, and do they see they see their part in it? Do they understand priorities in the same way that you do?
4. BE NIMBLE
Whenever you tackle something ambitious— whether developing a new product, service, or internal capability, it is not always clear what the end state should be, and there’s not always time for lengthy planning. Agile practices lend themselves well to digital transformation, because they are designed to build applications using small, self-managed teams, a customer-centered approach, and an iterative process that integrates customer and team feedback. Agile isn’t a mandatory component of transformation, nor does it guarantee success, but, when implemented in an organic way that fits with the business, it’s a great tool for developing a steady flow of incremental business value. Ask yourself if the motivation for shifting to Agile is coming from your teams themselves or if it is a top-down mandate. Positive long-term results are more likely when the team is invested without coercion. Customer Experience techniques and Continuous Integration/Continuous Deployment are a great fit with the iterative and feedback-driven cadences of Agile development.
If you decide that Agile just isn’t right for you at this time, you can still incorporate agility into your processes by embracing customer and team feedback, using milestones for reflection and course corrections, and setting expectations with stakeholders about allowing room for learning.
5. FUTURE IN MIND
Having a flexible, scalable, and measurable services architecture is an essential foundation of mobile and web applications. If you are creating a new backend or replacing an older web-based application, focus first on breaking the solution down into focused services that integrate together and APIs that expose those services to devices. Developers can utilize tools such as API gateways, reverse-proxy servers, and NoSQL caches to provide a more responsive, decoupled service platform with improved scale compared to older transactional databases and tightly-coupled web interfaces. If you have many deeply embedded applications that are part of critical workflows, you might start by building a microservices layer in front of legacy services, rather than replacing them all at once.
You’ll find another benefit of breaking down a complex solution into services: this architectural model fits well with small teams using Agile development practices. Each team may own a handful of services and are empowered to develop and release functionality on their own schedules, isolated from interdependencies by versioned APIs. Coordinating all of this will be a product owner, who is focused on delivering business value through technology, using tools such as product roadmaps.
6. METRICS MATTER
As revenue increases through digital channels, greater pressure mounts on IT to support the continual release of incremental service improvements— keeping those solutions running smoothly and collecting the massive amounts of data gathered as customers interact with your services, so you can analyze and adjust your strategy in real-time. DevOps, which couples development and operations disciplines together, supported by a new generation of tools including logging and analytics, helps to smooth out the speed bumps on the way from development to release.
Treat data collected from digital engagement as a valuable, yet perishable resource that decreases in value over time. You might think of it as part of your circulatory system that flows through business processes to feed your Customer Experience process and keep your strategy relevant. In your continuous deployment processes, take advantage of data through A-B testing to immediately validate assumptions and adjust strategy in real-time.
WHAT’S RIGHT FOR ME?
Many of these technologies and methods have come to the forefront because the most successful players have leveraged them strategically. While you might benefit from adopting the same practices, this isn’t necessarily a sure thing. The best digital transformation strategy for you will involve building a portfolio of capabilities that are uniquely suited to your business needs. The pace that you start on this journey may vary and you might be able to transform incrementally, but competitive pressures might mean that rapid change is needed to survive.