Due to choosing to study digital transformation as my MBA dissertation topic, I did quite a lot of research and here are some of my key insights and perspectives towards digital transformation. The topic is getting more interesting from time to time aligned with all the exciting technologies emerging, for instance, the evolutionary cloud computing, Artificial Intelligence (AI), Blockchain technologies, and quantum computing etc.
“What is the motivation of digital transformation?”
There are multiple arguments about motivations for digital transformation. Some argue that struggling firms are more committed and have more spare time in designing its digital transformation strategies, while highly-performing firms focus more on short-term goals than planning long-term strategies. Another contradictory argument is highly-performing firms have stronger financial and human resources in driving digital transformation while mediocre firms normally do not have adequate budget for the investment in this aspect. This is subjective owing to firm decision makers depending on the sensitivity towards the urgency in digital transformation, the awareness and influence from macro-environment, risk aversion level and long-term strategic planning one has.
In this digital era, competition dynamics are getting more unpredictable. Firms take measures in planning strategies to stay ahead from known competitors within the same industries but what cannot be predicted much is about unexpected disruptions from start-ups or innovators from other industries. For instance, the emergence of Netflix and Uber were unexpected towards movie entertainment industry and taxi industry incumbents. Sometimes, the disruptor itself does not expect the levels of disruptions that have met. The incumbent firms now should not stay at the stage of hesitating on digital transformation, rather they should take initiative to “disrupt” themselves first before others could threaten them.
“It is not only about technology. It is about cultural transformation”
Change management plays a critical role in the success of digital transformation strategies. While technology integration is significant in digitizing processes and products of a firms, it is not the hardest parts as massive resources and technical expertise are available in the ecosystem. However, the change of people’s mindset in embracing the new organizational culture aligned with digital transformation is rated as the highest challenge in implementing digital transformation. Driving an organizational transformation might involve vision and mission re-alignment, strategy optimization organization structures changes. These involve significant decisions and thus highest management of a firm should lead the changes. Thus, the following question would be “Is the leader of the firm ready to transform himself before asking other to transform?” Leading by role model would be the best way of influencing and executing the implementation strategies.
“Identify the change agent key stakeholders”
Despite the hype of digital transformation, there are massive discussions about the primary roles played by the Chief Executive Officer (CEO), Chief Information Officer (CIO) or even Chief Digital Officer (CDO) and arguments on who should be leading the strategies. Digital transformation is an organizational wide decision that CEO’s involvement and endorsement are keys towards the success. A change-agile leader should have distinctive view and influential to articulate “why” of this digital change to all stakeholders across the organizations to overcome human nature in resisting any change. However, if the change agent is not one of the high management teams, the top priority would be influencing and persuading the management team in embracing digital transformation before any strategy and execution take place. Without endorsement and active participant of key management team, any digital transformation strategy could only be a technology transformation or Human resource activities that impact smaller scope. In analogy, the highest management team is the commander in a team and all functional leaders from IT, HR and operations are the team leaders that bring message across functional levels following instructions from commanders.
“Be collaborative. There is no more silo-ed culture. Forget about competition to embrace everyone towards the same goal”
Previous points emphasize on the roles of leaders and priority on cultural transformation in digital transformation. What exactly culture must we change to align with digital transformation strategies? It is all about the change of mindset in winning competitions and stay in the leader position in the industry, but to be collaborative with all industry peers to create a sustainable digital ecosystem. This could be even more pervasive in countries where digital space is yet reaching developed stage. Without establishing a digital ecosystem, a firm could be the early adopter in innovation cycle, but they might find it hard to drive digital transformation from industrial perspective. Thus, a more holistic digital transformation strategy could be promoting collaborative culture for both internal and external stakeholders. An industry leader should encourage and influence peers to embrace the change by sharing implementation practices and experience, rather than keeping this information confidential, with fear of peers going ahead them.
Digital transformation is not a new term and there is just way too much discussion about it. What are your thoughts on digital transformation?
