Successful Digital Transformation

A survival guide for managers and executives

Marc Beijen

• Publisher: Van Haren Publishing
• Year: 2021
• ISBN:
  9789401807739
• Topic: Éducation
• Subtopic: Éducation générale

This book is, as indicated by the subtitle, intended in the first place for executives and managers. But actually its is essential reading for all who are faced with digital transformation. It offers a valuable reflection on knowledge developed and experience accumulated in daily practice, focusing on the approach to contemporary digital business challenges.Written in understandable language and with a powerful, logical structure, it has become a very accessible book that remains fascinating from beginning to end. It teaches you to understand topics that matter such as the need for digital transformation, the connection with business strategy and the essential differences in starting positions between organizations. What to do next is made concrete and practical by identifying five necessary digital breakthroughs and working them out into clear goals, which should be included in the change cycle as part of your digital strategy.The phase model presented includes three distinct steps - from product focus in the first phase to customer orientation in the second phase, followed by a third phase in which the customer is at the center. The book describes what is required to take these steps - the checklist that is included provides organizations with direction. This helps in setting up a strategy and developing an effective roadmap for organizations to transform."The book 'Successful Digital Transformation' reads like a modern fairy tale. It's clever how the essence of the field of digital transformation is captured in barely 100 pages. But the theme has also been made very practical, the underlying topics (such as data management, enterprise architecture, change management) have been tied together and explained in a comprehensible way. I think the book fills a great need, because many books and articles on this topic are either full of buzzwords that are not further described, or lapse into academic jargon that is incomprehensible to the average reader. This book sits nicely between academia and practice, without falling into compromises." – Frank Harmsen - Associate Professor of Digital Transformation, Maastricht University

1 Digital revolution in the 21st century

∎ 1.1 CHALLENGES FACING ORGANIZATIONS

The world is changing rapidly. Organizations from all sectors are facing enormous challenges. Whether it’s retail, healthcare, financial services, transportation or government, radical changes are occurring everywhere. The needs and behavior of consumers are fundamentally changing. They demand faster response times, transparency, excellent value for money and 24-hour service. Customers are increasingly organizing themselves, becoming more assertive and less loyal to suppliers and service providers. And customers want to be sure that doing business is safe.

New organizations are appearing on the market with new business models, positioning themselves ahead of the original service provider in customer contact. They steal your customer contact and push you into a supplier role with marginal revenues. Your position as the original service provider is lost forever! How will you respond to all this?

At the same time, technological advances are accelerating at a dizzying rate for organizations. This in turn raises new questions. What gives value to customers, employees, society and shareholders? What should you keep doing and what should you say goodbye to? What opportunities are you going to take advantage of in terms of market approach, business models, efficiencies and technology? What choices do you need to make?

The speed of change in society and technology means that organizations need to dramatically increase their flexibility, resilience and pace. An agile way of working certainly contributes to this but more is needed. The biggest obstacles for corporates, who have been in the market for a long time, are legacy problems. Not only of outdated systems and technology but also of associated processes, organization, practices, even culture. How do you ensure that this legacy does not block your strategy? How do you create overview and insight into which measures you need to take; which projects can continue or where you need to take drastic action?

The Greek philosopher Heraclitus proclaimed it long ago: panta rhei. This means, “everything is in motion,” freely translated, “change is the only constant.” This requires a trade-off between renovation and improvement of the existing, often side-by-side. So, renovate with the store open. How do you ensure that your organization smoothly transitions to the intended situation? In such a way that customers do not experience any negative effects and the organization retains control? And do you ever reach that intended situation, or is it an ongoing journey to Utopia?

∎ 1.2 ASSIGNMENT FOR MANAGERS AND EXECUTIVES

In today’s society, digitization is an important factor to stay in business. More than ever, organizations will have to think and make choices about how digitization can create and contribute value to product offerings, services, chain collaboration and business operations. Optimal use of modern information technology can make the difference between decisive competitive advantage, survival and loss. In addition to focusing on the short term, one must also look to the future: what structural changes can you expect and how do you respond to them? Which (new) technology offers value to stakeholders? What opportunities do you seize in market approach, efficiency improvement and technology? Is what you want feasible? And how should you organize digital innovation?

Dependence on digital technology is increasing daily. If online banking is not available, the world quickly comes to a standstill. A failed ERP implementation can mean the end of your business. Developing digital channels too late can result in your customers switching to competitors. Investments in digital technology are, therefore, a significant part of the budget. Digital innovation is no longer a priority, it is a necessity. So, it requires structural attention from, and control by, managers. Every manager and director must therefore have the necessary knowledge, insight and decisiveness regarding digital technology. You can’t leave this to specialists in your organization, or outsource it to a supplier or consultant.

Managers and executives need to know and understand the world of robotics, IoT, big data, blockchain, machine learning and artificial intelligence. Make the right choices from a sharp view of market developments, technological possibilities and business perspective. And having a clear picture of how to organize and manage this transition successfully. This is called digital transformation: an integral business transformation in which digital technology plays a dominant role. The goal is to create an agile organization and to use the opportunities, possibilities and expectations of digital technology in the utilization of data, the optimization of processes and with the focus on the customer. Digital transformation starts with the formulation of a resistant and successful digital strategy, a strategy in which digital technology is the main driver of change.

Literature on digital transformation has appeared with regularity in recent years. Often with promises and (often recurring) success stories about disruptive business models, for example in tourism (Airbnb, Booking.com), transport (Uber), media (Spotify, Netflix) and retail (Amazon, Alibaba). While we can indeed learn a lot from this, in practice it appears that organizations are struggling immensely with digital transformation. Research firms such as IDC predict that global spending on digital transformation is expected to reach around $2,300 billion by 2023. However, several studies show that only a minority of all initiatives will succeed. Why is it so much harder than described? What are the reasons for this?

There are answers to this. First, the success stories are often nicely polished; little or nothing is written about failures (and there will be many more). And that is a pity because it would provide many more and better insights and learning moments. Secondly, the case descriptions are almost always about newly established companies that have the “luxury” of a greenfield environment, which does not detract from their achievements. This contrasts with the established order, the existing corporates, that usually carry an opaque amount of ballast from the past. They are burdened with complex products, historically grown business processes, outdated information technology and even outdated competencies and culture. Complexity over which no one has the overview anymore. And we all know unlearning something is much more difficult than learning something new.

The digital vortex

1. Media & entertainment

2. Technology

3. Retail

4. Financial services

5. Telecoms

6. Consumer goods

7. Education

8. Business services

9. Tourism

10. Manufacturing industry

11. Transport & logistics

12. Real estate

13. Healthcare & pharma

14. Energy & utilities

The Global Center for Digital Business Transformation describes the “digital vortex”¹. A vortex illustrates the disorder and complexity of digital disruption. Some industries are hit faster and harder by digital disruption than others. Sectors in the middle of the vortex are hit the most, while the effects on the outer edges are still light. But the vortex exerts a rotating force. As a result, sectors such as healthcare, manufacturing and energy are also drawn into the vortex. Sectors that are the first to be affected still have a great deal of work to do in terms of efficiency, convenience for the customer and transparency. More and more organizations are having to deal with the disruptive forces of digital disruption. Leaders of these organizations are increasingly aware of this, but a large proportion of them are still taking little or no action.

How will you approach digital transformation? Why, where and when are you going to work on it and how does it connect to the goals you have? How do you create an overview of the whole and determine what is relevant to you? How do you divide scarce means and resources between maintaining the current operations and implementing structural improvements and radical innovations? Do you organize renewal within the existing organization or deliberately outside it? But shouldn’t you then integrate this at a later stage? Or do you, upon proven success, let the existing slowly die out? Which customer relations, services and business processes will be improved by all this and how does this relate to ongoing change processes? Where should (dis)investments be made? What choices must be made from the various change options?

These are just some of the practical issues that require a solution, it has become enormously complicated. Nobody has the overall view anymore: if you pull one string, others move with unknown consequences, everything is connected to everything. How do you get out of this? The core of the solution is making complexity manageable again. By applying structure, disentangling things and considering them holistically, in context. By distinguishing main issues from side issues, using the 80/20 rule and setting clear priorities. That is what this book is about.

∎ 1.3 DRIVERS FOR CHANGE

Making complexity manageable again starts with properly defining the problem. Or rather: the opportunities and challenges you are facing. This starts with recognizing drivers for change, the search for the WHY.

Many drivers - in the sense of triggers, motives and incentives - can be identified that provide impetus for digital transformation. These have been clustered into six groups for ease of reference. However, these are not entirely isolated, there are interdependencies and they will interact:

1. Emergence of new markets and business models

Organizations, machines and people are increasingly interconnected, forming a web of digital connections. These real-time interactions and data flows create new values that enable new products and services to be delivered more quickly and efficiently. There is a shift from traditional, technically closed infrastructures to open ecosystems that break down organizational barriers. This still sounds somewhat abstract but think of booking a flight with an airline: in a few clicks you have also purchased a hotel, rental car and tickets for the amusement park. Within a minute it’s settled, and you have confirmations from all the organizations involved. These transactions not only involve the suppliers of what you purchase (airline, car rental company, amusement park) but also a digital platform, one or more insurers, a payment service and your bank. Organizations are changing the way they operate by becoming part of this “connected economy”. Value chains are being unbundled, traditional business models are transforming to digital platforms at the top of the chain or to “low-cost” providers of partial solutions, more at the bottom of the value chain. The boundaries between industries are blurring, competition is becoming asymmetrical: companies are competitors and partners at the same time. Links in value chains are made redundant and pushed away or, on the contrary, new forms of intermediaries appear.

2. Customer needs and expectations are fundamentally changing

The digitalization of society has led to an increasingly smaller world and this trend is continuing. It is becoming easier to find each other, regardless of distance. Organizing meetings between large groups of people has even become a matter of mere hours, if not minutes, due to social media. The masses can exert a great deal of influence, which can have both a positive and negative effect. Customers are becoming more vocal and demanding. The loyalty of customers to suppliers and service providers is decreasing, thresholds to switch are hardly there anymore.

3. The changing relationship between man and machine

Digital developments have led to an information age in which new technological advances lead to new uses of people and machines. Developments such as “human enhancement”, a collection of technologies that improve human productivity or abilities, facilitate our daily lives. This can focus on intellectual, physical or emotional abilities. The internet of things (IoT) is a network of physical objects such as cars, machines, household appliances and the like, which use sensors and software interfaces (APIs) to connect to, and exchange data over, the internet. Machines are becoming more intelligent and can take over human tasks more an...

Table of contents

• Cover
• Title
• Colofon
• Contents
• Preface by Erik beulen
• Preface by Marco keim
• Recommendations
• 1 Digital revolution in the 21st century
• 2 Digital transformation in perspective
• 3 Digital strategy as a starting point
• 4 Digital breakthrough 1: Data-driven organization
• 5 Digital breakthrough 2: Smart, Digital processes
• 6 Digital breakthrough 3: Brilliant Customer experience
• 7 Digital breakthrough 4: Agile and Resilient organization
• 8 Digital breakthrough 5: Digital business models
• 9 Moving successfully from digital strategy to execution
• Literature list
• Epilogue
• About the author
• Index