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The hidden treasures in digital transformation

By January 14, 2017 No Comments

digital_disruption

The hidden treasures in digital transformation aren’t where you think they are.

It’s worth reading Cognizant’s THE WORK AHEAD | EUROPE’S DIGITAL IMPERATIVE, part of a research series providing insight and guidance on how businesses and jobs will evolve in the digital economy.

Whilst reading it a couple of key insights stood out…

Firstly theres a section of the report which suggests that Your Back Office Is a Hidden Treasure Chest (of Money) and rightly that Digital is not just for sales and marketing. It talks about how automation and more specifically software bots reduce costs whilst improving accuracy and reliability.
In essence they fuel innovation in the back office.
How often is it that we look at those processes as areas of innovation?
This is just one aspect of business agility that we discuss in our book.

In their article on What Is Disruptive Innovation Clayton M. Christensen, Michael E. Raynor and Rory McDonald outline their disruptive innovation model, one where incumbent companies focus on and satisfy the high end of the market as you typically do as a natural part of business maturity and progression since that’s where the bigger profits are. But in doing so the business overshoots the needs of the lower end of the market and therefore leaves the door open as an opportunity for new comers.

Since the cost impact (outlined in figure 6 of the Cognizant report) is coming down for digital across front, middle and back office it’s the perfect foothold for a start-up.
The start-up has lower pricing structures, lower set up costs, can move faster and therefore be more agile in providing for the needs of this lower market.
The only way appears to be up for the start-up, its all growth opportunity and therefore investors see the upward trajectory as worth investing in.
Digital technology enables a positioning of “80% of the benefit for 20% of the cost” and the startup appears to be providing a better value service than the incumbent.

Secondly, there’s the blockers to change. In the Cognizant report, there’s a chart (figure 8, in the section “What could possibly go wrong?”) showing the biggest mistakes that companies are making with digital transformation. The three top percentiles for misdirection in leading and accelerating the digital shift are:

1. Lack of clear strategy

2. Moving too slowly

3. Employing the wrong leadership executive

Each of these align neatly with the velocity, focus and flexibility that we believe is so critical to organisational agility. The role of leadership in setting the vision to give direction but also enabling the flexibility to be adaptive in the execution of that vision. And the importance of aligning strategy with implementation, and enabling the culture that can facilitate moving fast.

Todays Digital leaders are not well enough supported to convince the CFO to invest before the business is dislodged by a newcomer. As the authors of the report state, there’s a real need to share, collaborate, iterate and experiment right across a value chain.
There’s still lot of misunderstanding of what digital transformation really means. Stopping at deploying mobile first, multi-channel, customer centric experiences isn’t going to cut it in a digital age that sees relentless accelerating change.
You have to look at how to improve the velocity of the organisation, changing hierarchical organisations where decisions move slowly up and down the command chain, creating innovation, collaboration, flexibility, and agility.

For exclusive content related to the upcoming book on Building the Agile Business, you can sign up here.

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Also published on Medium.

peter abraham

Author peter abraham

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