Brian Solis, principal analyst and futurist at Altimeter, the digital analyst group at Prophet, renowned keynote speaker and best-selling author shares his conversation about Digital Transformation with Olivia Krauth and hopes that it will serve as a solid foundation for taking digital transformation beyond IT and into a business performance enablement role across the enterprise
Generally, what does it mean to digitally transform?
The definition of digital transformation has expanded to cover everything involving digital trends and technologies. Achieving buzzword status seems to be diluting the importance of digital transformation as a C-Suite imperative and the need to accelerate enterprise-wide investments in digital expertise, capabilities, and innovation.
After years of research, I wanted to help contribute a definition that was more sweeping and, well, transformative to organizations beyond technology, trends and IT. It’s evolved every year with new research, In 2019, I defined digital transformation this way…
Digital transformation is the evolving pursuit of innovative and agile business and operational models — fueled by evolving technologies, processes, analytics and talent — to create new value and experiences for customers, employees and stakeholders.
How are businesses digitally transforming themselves?
After publishing several reports on the subject, I noticed a pattern in how companies evolved in their quest to digitally transform. I called it “The Six Stages of Digital Transformation.” It represents a common, but not linear path of maturity as companies define in their own way, what their journey will accomplish and how they get there. At some point, an organization may occupy several different stages. The goal however is to create a top-down culture of empowerment to encourage new thinking, learning, experimentation and innovation.
The six stages are briefly outlined as follows:
1) Business as Usual – Operate with a familiar legacy perspective of customers and employees supported by dated processes, policies, models and metrics. This foundation limits initial digital transformation efforts by framing it in yesterday’s existing constructs.
2) Present and Active – Pockets of experimentation drive digital literacy and creativity within respective groups. These pockets are strewn across the organization, operating in silos such as IT, marketing, customer service, etc. Each evolve at different paces in different ways.
3) Formalized – Experimentation becomes intentional while executing at more capable levels. Change agents rise to help Initiatives become bolder and reach beyond disciplines. They strive to earn executive support for resources, technology and air cover.
4) Strategic – Cross-functional collaboration becomes intentional to develop roadmaps that prioritize key initiatives beyond any one silo. A center of excellence forms to help guide groups and business units ready to invest in digital transformation while also earning executive buy-in.
5) Converged – Official digital transformation management teams assemble where ownership, responsibility and accountability and assigned. Enterprise-wide initiatives are funded and staffed. Digital transformation teams gain direct lines of reporting to the C-Suite and eventually the board. For example, our 2017 digital transformation survey shows only 40% of responding companies operate with an executive-mandated steering committee responsible for organizational transformation.
6) Innovative and Adaptive – Digital transformation is an ongoing effort affecting all aspects of the organization. It encourages new models and roles to scale digital transformation and also lead innovation efforts. Cultures become less rigid and risk-averse and more agile and progressive.
What are some barriers to digital transformation?
Consistently, one of the top barriers to digital transformation is “corporate culture.” Most organizations operate within management models that are generations old and risk-averse. As a result, digital transformation is initially iterative, based on today’s standards, mindsets and expectations. That changes with experience of course. But this is why many organizations progress stage by stage rather than jumping ahead to innovative. Initially, digital is used to “do the same things better.” Eventually, digital affects everything, operations, leadership, performance, work, etc., to “create new value” and “make old ways obsolete.”
Each year, Altimeter, a Prophet company, studies “The State of Digital Transformation.” And, each year, we ask this very question. What are the top challenges they face? This year, the top challenge was “low digital literacy among employees and leadership” at 31.4 percent. The second top challenge was also revealing, “ digital transformation is considered a cost-center” at 30.9%. Other barriers include, lack of budget, lack of staff or resources, no sense of urgency, lack of ROI to prove value, etc. Most notably, “human barriers” such as egos, politics, fear, are consistently high ranking in digital transformation and innovation initiatives.
The human side of digital transformation led me to create “The Digital Change Agent’s Manifesto” to help digital champions breakthrough these hurdles.
If a business chose not to transform, what would happen? Would they be OK, or would they fall behind?
I refer to these times as digital Darwinism, the evolution of technology and society. Every day, times, trends, tastes, behaviors change…some incrementally and others dramatically. Customers evolve. Employees evolve. Values evolve. Organizations either keep up or try to stay ahead of this evolution or they don’t. This is why digital transformation must have a vision and purpose, one that matters to customers, partners and employees, now and as they progress.
It’s a matter of adapt or die. Disruption is a choice. Either you invest in evolution and in some cases revolution or the gift of disruption is given to you by someone else as they invest in surviving and thriving in digital Darwinism. At best, the (misleading) momentum that companies are enjoying will yield profits for the foreseeable future…until it doesn’t. At worst, companies experience obsolescence as markets move on.