Avoiding Common Pitfalls of the Digital Revolution
Several decades into the digital revolution, and there’s still so much myth and hyperbole surrounding digital transformations. I can’t say that I’m surprised. It’s a nuanced and complex subject, and many executives have simply been too busy managing their own sandbox to notice the avalanche headed their way. Maybe the last time they had to deal seriously with technology was buying desktops for the workforce, or greenlighting an ecommerce site. So they see the headlines, hear the anecdotes, and relate it to what they know, but can’t get into the granular issues. Here are a few of the biggest myths that I think need to be dispelled once and for all:
Myth #1: Digital Transformation = ecommerce
This one has been largely dispelled in corporate circles, so if you are way beyond this myth, bear with me. I still find it important to point out because it runs rampant among many mid-size businesses who only think of digital in terms of e-tailing. I find this a shame because integrating technology into their operations is a fantastic way for them to actually be on par with their bigger competitors. This is especially true when you consider that as a smaller business they can be more nimble and responsive. I recently had breakfast with a cousin, a sole proprietor who runs a plumbing business. I was amazed when he told me the ways he had incorporated technology into all aspects of his operations. When I asked if he was referring to finances, he chuckled and told me they were a long way from Quickbooks. I listened intently as he told me of the tech-based services he used: apps that used geolocation to optimize staff’s routes to customer’s homes and enable them to visit more clients per day; a virtual answering service during his off-hours; and card-readers that allowed him to instantly invoice and transact with clients at the job site.
A long way from Quickbooks, indeed! My breakfast with my cousin, although simple, illustrates that a digital transformation is something that has value to all businesses, in all areas of the operation. The key is integrating them in a holistic way that has benefit for you and your customers. You may be thinking to yourself: “Hey, I’m no dummy! This isn’t the 90’s. I know that digital isn’t just a webpage and an online store.” If that’s the case, great! We’ve cleared the first myth. Which brings me to my next common myth.
Myth #2: Digital is a separate “thing” that is added onto your existing business model.
I get it. Your firm has likely spent decades perfecting their business model. You like things the way they are and you are good at what you do. The only time you thought about technology is when your email stopped working and you had to call the “IT guy/gal”. What was their name again? Now that everyone is telling you that you have to lead a digital transformation, you’re going to do it right, call a prestigious
IT firm and have them build you a solution.
A digital transformation is not just adding more tech to your current strategy, a side project for your IT department. It means rethinking your entire business model. Starting from the value proposition you have with the client/consumer and designing your processes in a way that leverages digital technology to increase productivity and employee performance. Companies that don’t consider this holistic approach initially are in for problems down the line as they face making company-wide changes several times over. You don’t have to turn your company into a tech firm, and it doesn’t have to be all at once. But the more thoughtful you are in how to implement and get the most out of digital transformation the more successful it will be. I was recently talking with a friend who worked for the massive healthcare supplier Cardinal Health when they went through a successful digital transformation in the early 2010’s in their supply chain.
Although costly, they saw immediate gains in efficiency and cost savings. I couldn’t believe that prior to the transformation, the company was still manually inputting their contracts with clients and had whole facilities of teams that were working to correct problems caused by this manual input.
Myth #3: So, Digital Transformation = $.
“Sounds great!” you say as you begin daydreaming about taking the credit for immense savings and efficiency gains in your supply chain. “This will be easy to justify to the board! The ROI will be off the charts!”
Not so fast.
A digital transformation is not a magic bullet that will give you a sustainable edge over your competition. Think of it more as a necessity that will bring your firm into the new normal. All the efficiency in the supply chain, better designed customer experience, will lose their value as your competition implements their own transformations.
Myth #4: Digital isn’t relevant in my industry.
“Ugh…” Is all you can think to yourself. This whole thing doesn’t sound easy. Its unfamiliar, and will mean potentially lots of changes. “Wait a minute!” you say. “My industry isn’t tech related, it isn’t B2C where some end user experience needs to be designed. Maybe I really don’t have to be worried about this stuff after all.”
This just isn’t the case.
Whether it’s a manufacturing business increasing efficiency through an automated line, or governments reducing bureaucracy through connected-interagency databases and increasing overall better user experience for citizens, all sectors have much to gain through digital transformation. Even businesses that have been slow to come around will be affected by the new technologies around the corner. The mining industry has leveraged the Internet of Things by tracking and monitoring equipment in a way that increases efficiency and responsiveness.
Myth #5: A digital transformation is risky and expensive. A “wait and see” approach is wise.
“OK, fine!” You exclaim. “You’ve convinced me! A digital transformation is about positioning my company strategically to compete in the digital age and dealing with new market realities. But a process this expensive and important will take time and is very risky. Maybe I’ll hang back and watch how other companies respond before I try convincing my board to take the plunge.”
You may want to reconsider.
The landscape is littered with the carcasses of businesses that waited too long to implement the kind of changes needed to thrive in a digital world. Because the pace of technology keeps advancing ever so rapidly, delaying taking the plunge can put your firm in a position where it only gets further and further behind the competition. Learning from failure and finding what works for your firm takes time and is something that needs to be built into your company as you evolve with the consumer. Besides, any learnings gained by watching your opponents’ successes and failures may not even be relevant as the market changes.
If all of this is a little disheartening, all I can say is: Don’t despair! We live in exciting times where technology is breaking down barriers and challenging us to rethink what business is. By coming to grips with the issue and showing real leadership, you can put your firm in a position to leverage the transformation as a way to better design your value proposition and operations to be successful in the future.