Friday, October 6, 2017

Build Digital Transformation Framework with Three Components

A seamless digital transformation requires a vision to convey 'WHY,' a solid strategy to clarify WHAT and a technical specification to articulate HOW you want to transform radically.

Organizations are transforming from doing digital to being digital. There are systemic consequences and impacts of thinking and actions in terms of digital interconnections and interdependency. At the higher maturity level, companies need to embed digital into the very fabric of the business, explore digital in a structural way. It is critical to build a comprehensive transformation roadmap and do the routine checkup in the journey of digital transformation to ensure they are moving in the right direction with steadfast speed.

WHY component - analyzing the current state and clarify “To Be” state of the business: Organizations in the industrial age are often run as the mechanical system with reductionistic management discipline, with the goal to improve business efficiency. Digital organizations are more like living thing, with organic cells to keep growing. The difference between the mechanistic system and a digital system is the business purpose. Mechanistic systems serve a purpose, but the parts don't have the purpose. Digital System is where the whole has purposes of its own as well as the parts. It is important to apply holistic management for both improving business performance and maximizing its potential. Analyzing the current state is important, business management need to do the periodic state check: What is the current state? What are the concerns with the current state (costs, inefficiencies, top line impacts etc)? What is the proposed state? What is the cost, time; other resources needed to get to the proposed state? What is the financial impact of the proposed state in terms of ROI, etc? To manage a seamless digital transformation, it is important to envision “To-Be” state first, because it creates a paradigm shift in your management approach. When building the future state, make sure that you break it down into looking at the ideal future first, followed by the practical one via resource and schedule assessment. And then ask questions to clarify: What does revenue look like? How has the business model evolved? What is the desired position in which markets? How to fill the gaps in building business capabilities, how to overcome barriers, and how to manage risks, etc. The goal is to clarify digital transformation vision and objectives and make the proper adjustment for driving changes.

“WHAT”component of required business transformation: A roadmap should then contain more comprehensive management methodologies and practices to get the “TO BE” state, and what are benefits and outcome. The real challenge is to understand where and how you can and should improve to get the biggest effect and scale up across the digital ecosystem effortlessly. In this step, focus on what the proposed initiative will be doing, In essence, it must deal with cost/revenue /regulatory /or risk. A good business case will demonstrate some measure of ROI, ROA, or ROE. Which benefits will be achieved by addressing the key business drivers? Can these business benefits be measured and quantified? This is the WHAT” component in the digital transformation.  What changes are needed to organizational structure, roles, responsibilities, policies, process and work instructions? “What” can include both from a business perspective and from a technology perspective? What can you learn from the experience? What benefits will these business changes deliver? What changes will be needed from external stakeholders? How to keep curious and nuanced and with enough relativity and reflection facing the transformation? How will the changes be communicated and implemented? Etc. A transformation framework will contain the "people" considerations and organizational change components because digital companies or organizations want to become more customer-centric, the harder component of change will be the positive shift in the culture during the digital transformation.

HOW components - developing the digital transformation design with the logical scenario: The stepwise process from here to there should include a rough timeline and should provide the business benefit each interim state provides. In order to adapt, an enterprise has to be linked to the many and varied ‘touch points’ between itself and the marketplace environment of which it is a part. It is important to apply contextual understanding to dig into the HOW part of an integral design to lead a seamless digital transformation. It should continue to check: Problem context, business options with pros and cons, financial comparison, direct risks, and mitigation approach, how to align change and transformation with organizational directions and visions, how to make a detailed implementation schedule, cost/financial summary, ROI timelines. How to communicate concepts and ideas with clarity and encourage two-way feedback flow seamlessly? How to develop inter-relational interactions management processes for harnessing relationship building and cross-functional collaboration? And more specifically, the HOW component should include: What do you have (people, process, artifacts), what can you achieve in the defined time frame? What element do you add in which fiscal years, what benefit does it provide you? The technical KNOW-HOW enables the business to achieve the defined goals on schedule and on budget.

Digital maturity matters, because the digital transformation is not just a one-time business or a stand-alone initiative, it requires a vision for 'WHY,' and a solid strategy for WHAT and HOW you want to transform radically. From doing digital to being digital, a well-defined digital framework enables developing cross-functional and interrelational management processes and practice to help reducing business tensions, frictions, and conflicts that arise; prioritize important things on the TO-DO list, set reasonable timelines, and achieve well-defined goals via the stepwise approaches.


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