Kathy Gibson is at Gartner Symposium in Cape Town – There’s a recognition that digital business transformation is necessary in every organisation – but not everyone is doing it right.
Every industry is in the process of being digitally remastered, says Mark Raskino, distinguished vice-president analyst at Gartner.
Organisations that have not yet begun their digital business transformation can learn from early adopters about the mistakes they should avoid.
At the level of corporate governance, the most common weakness, says Raskino, is that people have simply misread the situation and tried to apply a solution when the world, the customer and the industry has changed. They are failing to understand how digital forces are affecting the industry. Or they think of digital business as e-business on steroids.
“They may miss the point that data is the new pivotal asset in value creation and competitions,” he says. “And sometimes there could be insufficient corporate mission and ambition to see and seize the product and business model innovation possibilities.”
The corrective action for this is to think in terms of reinvention, Raskino advises.
The next problem at this level could be too much inward thinking – where companies think they can set the agenda internally.
This happens when leaders think digital business transformation is simply another operating model change and efficiency play that can be defined internally.
Often leaders are not analysing the full competitive market view, Raskino says. This would include other players including new digital competition. In addition, people often look only to their own industries for examples and learnings.
“And there is often an assumption that we can make the journey with the same leadership team in place,” Raskino says. “And that is quite an ask.”
The corrective action is to start the transformation journey by looking outside.
The final point at the corporate governance level is disassociation, where directors distance themselves, and treat digital transformation purely as a management issue.
An evasive CEO could stick to conventional matters and fail to lead digital business from the front. Or they could hire their digital management from outsourced companies to delegate the transformation.
The avoidance of technology is a big issue, where leaders avoid the subject or treat it like another technology thing, Raskino points out.
To correct this, digital business transformation needs to be made a core issue.
The first issue at management level is that it is unguided. The term digital itself is undefined and its strategic purpose is unclear. “There is aspiration, there is will, there may even be money. But there is no specificity about what this journey is about,” Raskino says.
The goals are often vague, with the desired outcomes unstated. This leads to measures and targets that are defined and that everyone buys into. Key performance indicators and bonus drivers that are unchanged in the executive team and upper management will stymie digital business transformation.
The correction action for this issue is to define, measure and target the digital transformation project.
Incrementalism is another roadblock, with initiatives aimed at improving today and PR projects that are not scaled.
It happens when financial resourcing comes within existing budgets and savings, Raskino says. This ties in with legacy systems and capabilities that are not replaced.
“If it’s hard to tell the difference between digital transformation and what a leading CIO would recognise as just good IT, you are probably not transforming,” he points out.
A fixed mindset is a transformation inhibitor, but can be corrected by developing growth mindsets.
When it comes to execution, transformation could be overplanned, technology-centric or culture blind.
Overplanning can be quite common, but a transformation to digital is more about doing than planning, Raskino says.
“Getting on with it is what needs to happen. And to do this, you need to institutionalise lean, start-up thinking.”
Making a project technology-centric is a mistake organisations make all the time, he adds. New technologies constantly come to market and they may or may not be relevant.
“It’s not just about doing the next big thing – that is not how you make transformation happen.”
The key is to aim at addressing the unmet needs that customers have, that no-one else is doing, Raskino says.
Culture blindness is a big issue. “In the end the culture has to change. The way you do things now is no longer fit for purpose; and new activities cannot be seen to conflict with old behaviours.”
The solution is to think in terms of purpose and beliefs. “What is the purpose of the company, and what does it offer the world?”
These things are hard, Raskino adds, but they have to be done because the consequences of avoiding or missing your industry’s deep digital transformation will be slow and painful.
“The transformation is inevitable, or you are setting yourselves up for a long, slow corporate death,” Raskino concludes. “Everyone has to realise this: if we don’t think like entrepreneurs, someone else will.”