A recent WEF report suggests that companies spent an estimated $1.2 trillion on digital transformation initiatives in 2019. Yet, only 13% of the leaders surveyed felt that their organization was ready for the digital age. For a world that's becoming increasingly digital and where technology continues to reshape our lives and the way we work, this is a disconcerting proposition. So, how can this digital divide be bridged, and how can the remaining 87% unlock value through digital transformation?
To get a perspective and some answers, we recently invited the "Tech Whisperer," Jaspreet Bindra on CXO CYIENCE, a platform where we engage with key industry voices and thought leaders on highly relevant topics for global businesses today. Here are five key takeaways from his "Transformation Whispers."
Digital transformation is an outside-in phenomenon
It is critical for organizations to understand that digital transformation is an outside-in phenomenon, and at its core, it is the same as business transformation enabled through digital technologies. And more importantly, the customer value proposition should be a key metric to gauge the success or the feasibility of a digital transformation initiative.
An instance of a legacy organization getting this right is LEGO. One of the most recognizable brands in the world, LEGO, was on the brink of bankruptcy at the turn of this century thanks to the shifts in consumer preferences and behavior triggered by technology. To cope with this, the company undertook a transformational journey to reposition itself as a brand that enabled learning through playing and gamification.
In addition to introducing a slew of new products for digital natives, the brand also took concerted efforts to become relevant to the adults who had grown up playing LEGO and had a strong bond with the brand. While the new LEGO kits had elements of science, engineering, and technology, the brand's entry into new segments such as mobile games and apps, as well as movies, reflected the digital-first approach it adopted. Today, the company has emerged as the largest toy brand in the world by sales.
Digitization is just one aspect of digital transformation
Today, it is practically impossible to think of a business function or an organization that has remained untouched by technology. However, such interventions are often rolled out in silos with technology at the front and center. And, while all shifts toward the future are welcome, piecemeal initiatives such as these can be described as digitization at best. In contrast, digital transformation is a more broad-based and fundamental change. So, mistaking digitization with digital transformation is akin to not seeing the forest for the trees.
This is well explained by Jaspreet with a metaphor from Hindu scriptures - and what he calls the "Holy Trinity of Digital Transformation" which focusses on three aspects of digital transformation that go beyond just technology. First is Brahma, the creator, which in this context refers to new avenues that digitally-enabled business models open-up for an organization. Next is Vishnu, the preserver, or what, in our case, is customer experience or an organization's ability to deliver a stellar brand experience irrespective of whether the customer is online or offline. Finally, Shiva, the destroyer which refers to the aspect of digital transformation that could cause the initiative to fail or succeed partially. And in this context, that is the culture and people related aspect.
Culture is the Holy Grail of transformation
Introducing technology and digital tools to a business function requires a fundamental change in the way people work. While certain processes may be digitized, it only achieves the desired outcomes if the humans behind the scenes are able to adapt to the change. In addition to ensuring the success of a digital transformation initiative, a recent study by BCG revealed that companies that focused on the culture and people aspect of such initiatives were five times more likely to register sustainable, strong financial performance as compared to those organizations that did not. So, calling culture the Holy Grail of transformation would not be much off the mark.
A good example of this is from the observed in the banking sector, which is considered among the most conservative businesses and is typically slow to change. However, Singapore-based DBS realized the power of digital and sensed a shift in customer preferences for digital banking. As a result, the company adopted human-centered design thinking early on in its transformation journey and invested resources to ensure that its employees had digital DNA embedded in everything they did.
Transformation has to be the CEO's agenda
For an organization-wide transformation to be successful, a lot of cogs and gears need to work together. It requires the convergence of various functions, technologies, processes, and culture, and as someone who oversees all of it, a CEO is best placed to lead a digital transformation. This not only sets an example for others across the organization to follow, but also demonstrates the commitment of the leadership and conveys the right signal to key external stakeholders, including customers, partners, and investors.
This point is further bolstered by a Deloitte study that highlighted the difference that digitally mature organizations are twice more likely to have a single leader in charge of digital transformation as compared to less mature organizations where it is led by a group. Additionally, employees in mature organizations exhibit confidence in their leader's ability to understand and appreciate the value of digital as against demonstrating their technology chops.
COVID-19 has slowed down the world but accelerated transformation
Finally, the elephant in the room—COVID-19. There is no doubt that the pandemic has shaken the foundations of the global economy and life, unlike any other event in history. Described as 'The Great Reset' by many, the post-pandemic world we are beginning to see is marked by slowing growth across the board, but a need for accelerated transformation within organizations.
A case in point is "working from home." While the concept has been around for some time, the way our brain is wired and the mental association between working and a physical place called office meant that it didn't quite proliferate to become common. Yet, as the world started going into lockdown and companies realized that this would be the new normal for the foreseeable future, work from home became a reality in a matter of days and weeks.
From ensuring the availability of computers at employees' homes to change in policies and protocols, and the introduction of new tools to facilitate work in a safe environment and an efficient manner, companies did it all. And just like that, the future of work was knocking at our doors.
Here is the complete CXO CYIENCE session with Jaspreet Bindra