Transformation projects are, in the words of Mugatu, so hot right now! (Guess the movie?).
To be fair, we’ve been calling projects, transformation projects, for quite a while. During the 90’s and 00’s many big ERP implementations were called Transformation Programmes due to the belief that the “system” would be a game changer in some way. Some came good on the promise of change and provided the host organisation with a leap forward, many didn’t.
But, this is the decade for technological and in turn business transformation. And it’s not faddish Hansel (same movie), it’s here to stay, at least until industries consolidate, with the winners successfully entering the digital age and losers exiting the picture.
And of course, todays start-ups, that never had to transform from anything, have the natural advantage. It’s worth pausing to take that in, start-ups have the advantage!
Many established businesses have found themselves in the unenviable position of having to unravel cumbersome business models, outdated and monolithic systems and engrained cultural norms to pull alongside the new digital competitor. These newcomers have none of the baggage, they have lower overheads, are naturally nimble and have the reach of an established business, thanks to the rapid rate of digital adoption by consumers.
To belabour the point, many businesses that enjoyed (and often relied on) an economic moat are being challenged by competitors they’d never heard of 5 years ago. Why? Because the barrier to entry is being pulled down by technology, the result is that the investment required to enter the market is substantially reduced and new business models are taking over the old way of doing things.
It’s all very exciting or scary, depending on where you’re currently positioned.
Here is a slightly tongue in cheek list of warning signs that you are currently on the wrong side of the ledger.
1. Have new competitors entered your market with what your team believe is an “inferior” offering?
It’s possibly not inferior, it’s just the minimum viable product. In other words, your competitors may have realised they’re playing in a more commoditised market and the best way to differentiate is through superior digital customer experience.
2. Have you been surprised at how quickly your competitors are bringing new product to market, while your team is still in “ideation” (don’t you just love that word)?
That will be because they’re utilising agile development tools and practices. And I’m not talking about the IT department here.
3. Is your customer base ageing?
Younger, digitally native consumers are opting for a different buying or service experience, where convenience, control and most importantly personalisation is embedded in the digital experience.
4. Are production outages and performance issues still plaguing your overworked IT department.
You don’t have an underperforming group of developers and engineers. The problem is inherent in the model, and almost everyone with owned and operated enterprise class systems are in the same boat (admittedly, to varying degrees).
The good news is that the industry is becoming more adept at working through these issues.
Business and technology groups are recognising that initiatives such as (pick your poison here):
- migrate to the cloud
- develop mobile apps
- introduce customer analytics
- develop personalised services
can produce disappointing results when upstream and downstream effects are not taken into account. For example, a move to Infrastructure-as-service can relieve a development bottleneck only to highlight the lack of testing automation. Business representatives struggle to define requirements for new product even though we’re “agile now”. Analytical tools are revealing new insights into customer behaviour and preferences, but legacy systems are hampering a meaningful response.
An approach that takes into account the value chain of people, processes and tools so that benefit is realised early is key.
There a 3 fundamental elements to a successful digital change program:
- Well defined digital strategy. The CEO owns this.
- An understanding of the value chain (you can think of it as the production line) that will produce the tactical outcomes necessary to make the strategy real. Typically, departmental leaders own this, lead by the CDO or CIO.
- An understanding of the supporting processes, structures and technologies that will enable the strategy. This is at the heart of the change programme.
A final word:
Long gone are the days where ROI is measured in years. Visible benefit must be baked into the programme so that returns are achieved from the outset.
The only thing it won’t do, is make you really really good looking.