Digital transformation is the new black

I had my own digital epiphany while talking to a serial Silicon Valley entrepreneur and investor. We were lazing by a pool, watching over our kids, and chatting about rapid change. He made the illuminating point that, since the internet really took, off he has gone from launching 2 businesses a year to launching 12. Given that the same percentage survive or thrive, this means that he is creating value at 6 times the pace he was before digital became so prolific. We spent some time delving into the reasons why.

Faster and cheaper distribution

From Silicon Valley he could create digitally based businesses around the world, with minimum physical infrastructure. Thus he could build revenue faster, or discover the weaker business propositions before making major financial commitments. Both are worth money in a paradigm of experimentation when developing new markets (often known as Minimum Viable Product).

Revenue is a play, but so is cost

To distribute, he does not need shop fronts, or at least fewer of them. He does need great partnering skills (e.g. for local distribution) or bloated contact centres. However, he has these competencies down to a fine art. For example, in contact centres he uses technology to get the work to the next person who is free and qualified to take the call and inform management on both productivity and quality.

Revenue and cost plays work, but this is not the whole story

Naturally, services need to be delivered in customer centric ways, but he was absolutely convinced, as am I, that new ways of thinking about your team and their interactions are required. These are often associated with the digital revolution, and can unleash creativity.

You might be thinking, ‘That’s fine for start-ups, but I have an established business to run.’ It is unquestionably true that established businesses encounter barriers to embracing digital transformation. This is because of legacy systems, processes, and cultures. However, my new friend’s point is that he thinks you can unleash creativity to help you deal with even those thorny problems; the cultural lessons also help legacy businesses.

Since then, I have been involved in some enormous digital projects which have required tremendous creativity from staff. It is not always true that magic happens, but it is usually the case that we can make things better. I have seen new applications, systems, and processes for workflow, measurement, booking, tracking, and service functions that would have blown my mind just 2 years ago. I have also seen organisations build cells of incredible excellence in the husks of old–and supposedly moribund–enterprises. This, in my opinion, is one of the key reasons that digital transformation is the new black. It gives revenue, costs, customers, staff, and exciting cultural options, which unleash creativity.

The answer to why this is so lies in the concepts of systems thinking (see Peter Senge), agile methods, and Minimum Viable Product (read Eric Ries).

Systems thinking encourages us to see how the world is interconnected, and to notice patterns that often repeat (albeit in novel ways). Agile thinking encourages us to bring talented people from a broad range of functions together, and to create solutions to wicked problems in a fixed timeframe. Minimum Viable Product thinking encourages us to experiment and learn. It is grounded in the idea that the first attempt does not need to be perfect (indeed perfect is the enemy of good), and that as long as we learn fast, we can test hypotheses without using the word ‘failure’.

So, what is digital transformation really? In my view it is a way to unleash creativity, much of which just happens to be enabled by a range of emergent technologies.