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The 10 pitfalls of digital transformation – #2: What success looks like

The 10 pitfalls of digital transformation - #2: What success looks like

Walt Disney once said: “Of all the things I’ve done, the most vital is coordinating the talents of those who work for us and pointing them towards a certain goal”.

In my last post, I outlined why it’s important for organizations to take a business outcomes-focused approach towards their digital transformation, and not just to run projects for technology’s sake.

That’s what Disney has done. Although Walt Disney himself might not recognize Disneyland today, I’m sure he would strongly identify with the way in which the theme park has used digital transformation to enhance the visitor experience, making it more magical than ever. What’s key is that Disney has recognized that digital is the journey, not the destination.

On arrival at Disneyland, you get a wearable band. This is a digital device, but again, that’s not the point. For the visitor, it is their food coupon, their hotel room key and the pass to their rides. The band helps them track progress around the park, and can be used to summon expert assistance just by touching it on any help point dotted around the theme park. What’s more is that your wristband will even give you surprises and little extras throughout the day. What Disney has succeeded in doing is to use digital processes at the back end to transform how visitors feel and interact with their brand. It is true end-to-end digital transformation, and it’s a success.

This is in part due to the recognition that digital is all about delivering business benefits. My advice to anyone thinking about transformation of any kind is: Be absolutely clear as to what your proposed program is supposed to achieve. Ask if you’re aiming to actually transform a business model or trying to create a new product or service? Because the approach is very different, depending on the answer.

You need to recognize which type of transformation you’re aiming for.

Broadly speaking, there are four types:

  • Product transformation or innovation
  • Business model transformation
  • Back office transformation – of the underlying processes that power your business
  • User journey or customer experience transformation

New technologies have enabled many companies to transform their business model – Netflix started out by renting DVDs, then changed to a subscription-based model streaming movies over the internet. The end result for the consumer is still the same: They get to watch a movie at home, although now, the delivery is faster and more flexible than ever before, and there are no late fees. Amazon started as an e-commerce portal, but as digital increasingly enabled its business, has grown into what is now the world’s largest cloud service provider. However, it still sells books. Again, digital has enabled them to transform their business model

The Apple iPhone was a product transformation, combining a phone, a camera, an internet browser, an emailing device – and many other things besides – into a single unit. Apple’s end-point with the iPhone has been to take advantage of convergent technologies – to have a dream and use digital to make it come true. Disney clearly has dealt with customer experience transformation very well.

What does success look like for back office process transformation? It really depends on your end goal. This should not be to improve the process itself but be a business benefit – such as speeding up time to customer, reducing OPEX, improving end-product quality or freeing up staff from doing mundane tasks so that they can instead focus on value-add customer interactions. Optimising or automating a process has wide business benefits beyond simple cost reduction.

Whatever your project, set your goal upfront: Be very clear on the type of transformation that you’re trying to achieve. After that, go down one level and scope out the benefits, the return on investment so that you know what to call a success, then establish what can be measured – these are the quantifiable business benefits.

Remember also that digitalization should be underpinned by flexibility, in case a new opportunity comes along. Never say that an end goal cannot be moved – I’ll come to that later in the series, by the way. However, what you will have to accept is that failures do happen in digital. This means that one or more of your ideas may or may not work. On the other hand, this gives you a chance to adapt, because one of the beauties of digital transformation is that you can quickly test things out, and choose the best outcome.

What to expect? Well, here is a good example of how not to do it: Get your IT team together and tell them: “Let’s do a digital transformation program”. Clearly, that approach doesn’t work. Instead, you need to start by working out what is your biggest pain point:

  • Are you seeing a declining market share? In that case, you need to change your product innovation.
  • Is your business is being “Uberized” by some new-age digital company? You need to change your entire business model.
  • Perhaps your profit margin is dropping – in which case you need to look at optimizing business processes.
  • Are you losing customers? It’s time to do something to improve your user experience.

Start with what you are trying to achieve – your end goal. Digitalization of your business is about actually engaging with your users, your customers and employees. In other words, take an outside-in view.

In many cases, the biggest surprise for companies is when they actually realize what they needed to do was really obvious all along – just by taking this outside-in view, they have been able to pinpoint processes that might have – on paper – seemed to be just fine, but in reality were frustrating for the customer. In this way, every organization can learn from Disneyland, where a little magic goes a long way.

In part three of this series, I’ll explain why sometimes, failure is a good thing – as long as it’s a fast failure.

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