Wednesday, November 4, 2015

Three Levels of Impact in Digital Transformation

Digital Transformation for businesses intends to achieve a new level of efficiency and lead to the next level of innovation.

Digital makes a significant impact on every aspect of the business from people, process to technology, both horizontally and vertically. Digital becomes the very fabric of high performing business, being outside-in and customer-centric is the new mantra for forward-looking and high mature digital organizations today. Organizations have to create synergy via building a positive culture, achieve operational excellence via IT enablement, and inspire innovation via risk intelligence. There are three levels of impact organizations can make in the journey of digital transformation:

Fundamental: Keeping the lights on is still fundamental for any organizations to gain a good reputation. Improve operational excellence by eliminating all waste from the organization (not product development alone). The organization’s operational capability can be built into IT- business alignment, arrangement, and enablement. Those organizations that have a more mature alignment outperform their competitors and tend to be more responsive to these changes. Alignment goes beyond conformity and order taking, it needs to include a close partnership with interpersonal and cross-functional communication, value analytics, and flexible governance. Organizations with strong operational capability can achieve efficiency and reliability in a cohesive way.

Radical: Compared to change, digital transformation is radical. Change can be a somewhat mechanical implementation of new or different ways to doing something while the transformation is more likely to be a sweeping approach to altering a culture, or parts of it, possibly even to parts of its value system, to embrace such as change and help it become self-perpetuating. That said, it is referring to modification and internalization of new values, behaviors, and culture. When the need for significant change is identified, it's generally naive to think it will succeed without transformation as well. It’s critical to hire the right people and empower them to foster a healthily competitive culture. Appreciate the fact that companies hire people to strengthen the organization. Invest time and money in developing them. Create a culture where every employee is a leader - initiative, collaborative, production oriented, learn and develop others, accountable. IT also plays a pivotal role in leading a digital transformation in their organizations. Because IT oversees business processes, it can help to weave all these important business elements such as process and digital technology & tools into the building blocks of change capability. Radical digital is the strategic imperative, as organizations that do not respond to external environmental changes will quickly be out-competed, and faded into the background soon.

Exceptional: Innovation is the key to being “exceptional,” at what you do and how you do it. It's not enough to encourage innovation - you have to enable it, steward it, protect it. Often it's all of the legacy performance management policies, outdated processes, and "we've always done it that way" culture that stifles innovation. If this describes your organization, then you have a long road ahead towards innovation. Furthermore, if you are a billion dollar organization, you may have the luxury of fostering unbridled innovation utilizing the power of averages to hit upon a great idea that is commercially viable after a period of R&D. However, most of the companies are in a situation of managing budget limitations, demanding clients and organizational objectives associated with revenue, costs, and margins. Innovation Management is more science than art. It is important to build a foundation where innovation could be woven into the cultural fabric of the organization, continue to challenge the status quo, keep the conversation going, finding out what works, what doesn’t work and inched closer to being exceptional.

Transformation" involves internalization of the new values and conceptual model, so that the newly required behaviors don't require the same kind of effort and vigilance. Instead, the newly established behaviors will be in harmony with the internalized values, the transformed person or organization as a whole, and ultimately achieve the new level of efficiency and lead to the next level of innovation. Digital is the age of customers. So lean on customers - focus on creating value for customers in every step. Only via putting more effort and making these three-level impact, organizations could well delight customers via orchestrating hard elements such as process & technology, and soft elements such as culture and communication, and build a unique set of digital capabilities for long-term prosperity.


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