It starts with an authentic willingness from CEOs and Boards to learn, then act

In this episode of UpSw!ng we explore a holistic and introductory view of digital business transformation, identifying where CEOs and Boards should be thinking to prepare and enable the business towards success.

As we embark on growth in the digital economy the challenge is one of uncertainty, forcing us out of our comfort zones.  If it were comfortable and easy everyone would be doing it (and doing it well) and it would not offer the greatest business growth opportunities of our time.

The digital economy is one of the most significant issues facing any business

We are all seeing the growth rate of the digital economy firsthand as innovation is changing our lives, never more so than through Covid impacting how we socialize, shop, educate and work.

This innovation is ever present in business, where disruptive new companies are arriving in markets with little to no barrier to entry, and customer’s expectations are rising as they are offered business models never seen before, all digitally enabled.  These external factors, combined with internal pressures as we witness new social contracts between employees and employers defining new ways of working, demands a response.

So, regardless of what business you are in, no matter the size or location, you will need to transform in some shape or form.     Don’t be mistaken for this only being a technology discussion, this is about a fundamental shift across an organization, innovating new business models, and nurturing the mindsets, culture, and capabilities to create them.

We are at an inflection point, and CEOs and Boards should be thinking about what this means to their business, and how to transform.  The time is now, and the associated risks of a digital business transformation are arguably far less than the status quo.

There is an important difference between change and transformation

It is important to understand the difference between change and transformation.

• Change – Improving the past
• Transformation – Creating the future without being constrained by the past

Change does not often innovate business models; it replicates the same models and makes them faster or cheaper.  Whilst this is valuable when the difference is not understood there are some downsides:

• Organisations think they are in a transformation when it is just continuous change, often coupled with a sub-optimal culture because of slow and painful incremental change.
• Organisations become so busy with change; they cannot transform as the change programs become the priority.

Without focused and deliberate attention to transformation and growth at the same intensity as the change initiatives and BAU, it is unlikely a company will see impactful growth or the realization of transformation.

This requires leadership from CEOs and Boards to lead the company out of the traditional thinking and mindsets, and to be very clear about what is change and what is transformation.

Transformation means thinking and acting like an industry leader

When we are building a transformation strategy, we need to consider a holistic business shift and think differently to boldly establish our market position and create a culture that attracts the best talent whilst retaining existing super stars.

Let’s look at four places to start:

1. Understand your market

Go beyond traditional thinking anchored to your position in market and your operations, and better understand your customers and how your product flows in their value chains.  What is the ecosystem that they operate within, who are their competitors, customers, partners, products?

Think about where your product plays in that ecosystem today, and where opportunity exists to expand into the ecosystem in a more meaningful way.  A simple example is AirBnB Experiences, a new product range on top of AirBnB which has already disrupted a market.

Take the time to understand the value chain through the lens of the customer, looking around the corners for opportunities and threats.

2. Think differently about digital business models

There are many different ways to innovate business models, and in future episodes of UpSw!ing we will explore these in detail.    These range from subscription models, platform models, shared gains, or experience models to name a few.   If you start to think differently about how your product or service is used by your customers and consider that the ‘sale’ of your product could be the start of new products and services, new revenue streams will emerge.

Value also comes from internal models like safety, effective workforce, and operations.  It is important that these areas of internal value are not considered in a silo as the initiatives will most likely be addressing problems of the past, rather than strategic business wide value aligned to the transformation.   If internal value is considered through the lens of the customer journey you will uncover a competitive edge with innovative business processes and controls.

3. Make confident and timely technology choices

Engaging with technology partners is not typically a place to start unless you are working with an organisation in a shared gains model (where you share the value rather than pay for services as you go). As we discussed at the start of this blog, this is not (just) a technology transformation, it’s a business transformation.

However, as technology plays a key role, it can go horribly wrong without a deliberate and informed approach deeply anchored to the strategy.  Why this is important is that many technologies are what we call technology stacks, they can go deep and wide if you let them, but adoption and value creation come in vertical slices of the stack not requiring the entire stack to be completed.  This requires leadership and talent to navigate.

I have also observed in NZ a desire to build…this is a trap.    Consider optionality;  buy, share, partner, white label, license or build.  Remember, often the value is in how we use technology not always in building it.

 Focus on the foundations first…

• Establish the infrastructure and platforms, find a trusted partner or build an excellent team to ensure this is a quality delivery, secure by design, and operationally excellent.
• Invest in data mastery: aggregating and activating siloed, underused data by embedding it into products, services & operations for increased productivity and customer engagement.
• Develop and build your talent, reskill, redesign ways of working, acquire and retain talent.

Then choose a business function or product and go deep

• Build intelligent workflows:   Implement and continuously transform processes making the most of human and technology.  Ensure you don’t just make the same process intelligent (changing the past), create the processes of the future.
• Strive for a unified customer experience:  Deliver an understanding of your customer experience built around a 360-degree view of the customer that is shared companywide.
• Innovate business models:  invest to test new business models leveraging a wider understanding of your ecosystem and customer journey.

4. Align leadership and culture

What we know is; technology is available, business models are doable, but it’s the people & organisation that remain the biggest challenge.   Leading with vision and transformational leadership is key to success and we will talk more about this in the next blog.  Some questions for CEOs and Boards:

Finally, take the time to be ready

Transformation readiness is probably the most important phase, as excited as you are, working it out as you go and ‘it will fall into place’ if we have a vision and are positive, will undoubtedly end in failure.

Take the time to assess the current maturity of the business, be clear of what sort of business you seek to be and understand the gap.   Be data driven, engage your customers, engage your people, look at external trends and patterns to determine what your future business could look like.

Learn, learn, learn as much as you can.

Engage advisors at the CEO and Board level that are different to execution advisors, yet deeply aligned for strategic and governance advice.

But don’t take too long, if you leave it too long you will create more pressure to move quickly, which creates unnecessary risk.

Final thought… Digital business transformation is immensely exciting and rewarding.  What feels hard today, will be considered visionary in the future.

About UpSw!ng

The content in this series is my perspective, open to discussion and healthy challenge, and welcomes ideas and collaboration should you wish to get involved.

It is my objective to represent diverse thinking and inspirational leadership towards a fundamental shift in the way technology and innovation can grow profitable NZ organisations, whilst making positive impacts on society.

What may feel dramatic now, will be considered visionary in the future!