Oxford Dictionaries recently chose the word “post-truth” as the 2016 word of the year, after events such as the Brexit referendum and a contentious U.S. presidential election. “Post-truth” refers to “circumstances in which objective facts are less influential in shaping public opinion than appeals to emotion and personal belief.”
As far as I know, there is no equivalent word or phrase of the year for the technology and business sectors. But if there was, “digital transformation” might be the one.
Everyone is talking about digital transformation. Yet, fewer are doing anything meaningful about moving ahead on a true digital transformation journey. There’s an element of “post-truth” – or a disconnect from the facts – in many discussions. Let’s see if I can help you sort through the hype and move a little closer to gaining a realistic understanding of your digital transformation journey.
Defining digital transformation
The term digital transformation means many things to different people, but companies who have successfully embarked on this journey share common elements and cultural characteristics.
From my experience, every real digital transformation includes the following elements:
- A new customer experience – Companies either perform an extreme makeover of customer interactions or, more likely, create an entirely new, innovative experience
- A new business model – Companies go beyond simply optimizing existing business processes and significantly shift their models to take advantage of untapped technologies or unmet customer needs
- A new value creation model – Companies use co-creation processes to focus on the interest of all stakeholders, rather than just the producer and the consumer
Successful digital transformation also requires important inputs such as organizational alignment, digital technology, and careful prioritization. Yet, when I look at the companies that have truly transformed, I believe the real secret sauce behind their success is culture.
These companies are:
- Risk-tolerant as they understand that each experiment is a powerful learning opportunity and that exponential rewards tend to be associated with increased risk
- Rapid, valuing speed over perfection and using quick iterations to support more experiments and higher-frequency development and feedback cycles
- Receptive to change, with a culture that thrives on feedback, even if it runs counter to conventional wisdom
Creating the right culture
Building a culture that supports digital transformation requires a new mindset (see image). Among other qualities, executives need to encourage people and teams to become hands-on and persistent.
Change is chaotic and difficult to predict. It does not always occur in a linear fashion. Successful transformation requires exponential thinking, in which you adopt a mindset of abundance rather than constraints. Exponential thinkers consider what they want the world to be and innovate accordingly. For example, most people are unable to fathom a world where people cannot buy business software as easily as they purchase retail goods on Amazon. So we’re taking steps to make that vision a reality.
Exponential growth takes more time to show results than linear growth. For that reason, your team needs to be persistent – ignoring nay-sayers and overcoming inevitable obstacles. Digital transformation requires dogged determination and a willingness to repeatedly try to solve the same problems.
Take, for example, my team at SAP Digital. We have been working hard to create a streamlined way for our customers to find and purchase third-party software. It’s been a long process, and we’re not finished yet. But we won’t give up until it’s the right model for us and our customers.
Conducting continuous assessment
Digital transformation requires a detailed understanding of your ultimate destination. You need to know not only where you are today, but also where you intend to be. To move forward, you must include continuous assessment and improvement stages in your digital transformation journey.
Separate the market hype from your reality by helping to ensure you are on a productive journey. Assess your organization’s digital readiness with our digital innovation and transformation assessment tool. In just 20 minutes, you can perform a gap analysis to identify the steps needed to move toward true digital transformation and compare your results to industry benchmarking data.