Digital Transformation: Focus on three underappreciated outcomes

It's good that the concept of digital transformation is being talked about at senior levels in industry and in government.  Digital transformation - the transition of our businesses and operations from a somewhat digitally enabled capability to a fully digital enabled capability  - will change a lot about how people work, how they interact with others and the insights and offerings created.  The continuing COVID-19 epidemic will in many ways simply accelerate the transition to a more digital world.

Every business is going to change, and the outlines of that change are not hard to see.  Whether we are talking about manufacturers or companies dedicated to the service economy, or even government agencies and other large entities, every organization will need to change, and pay close attention to the four factors that I've hinted at in the title, and will explore in this post.

The four factors are not necessarily new, but aren't being carefully considered by larger entities, as to the amount of change, or the impact if change does not occur.  The four factors are:

• Data - how much more data will be generated, and how that data empowers more digital transformation, how we'll extract new insights from the data.  This is the "obvious" factor.
  Less obvious are the following factors, which will be empowered by the data:
• Experience - customer experience, user experience and what digital does to improve these
• Business models - how digital sustains and reinforces existing business models - occasionally, and how it reworks or creates new business models - more frequently
• Ecosystems - what partners you have you need to keep, and what new relationships and partners you are going to need, which partners can evolve and add value, and which cannot.

Note that these don't operate in isolation, and we built from the bottom up.  New data and new insights from data can drive new experiences and create new business models.  New data or the need for data may increase the need for new ecosystem partners.

I'm not going to say a lot about the data component, other than to note its importance and the explosion of the volume and velocity of data.  We will all learn the many Vs (Volume, Velocity, Variety, Veracity and Variability) of big data soon.

What's less explored

Experience
What we are at risk of overlooking or ignoring are the secondary and tertiary factors of digital transformation.  As our activities, processes and businesses are more data driven, we have the opportunity to radically rethink experiences - at each touchpoint at a minimum, but rethinking and rearchitecting customer and user journeys as a whole.  With more data we can move from merely reporting on activities and journeys to predicting and prescribing activities and journeys, which will improve customer experience.

Prediction:  When digital transformation happens in your organization, customer experience professionals will be as important as data scientists.

Business models

How do we shift to "transportation as a service" as one example?  We need the digital transformation of self-driving or autonomous vehicles married with the power of data and connectivity.  Uber and Lyft are but a half-step toward full autonomy, and all of these are powered by data and drive new business models.

Resistance, as they say, is futile.  Larger organizations which have an existing model to protect may ignore or try to enforce existing models through regulation or legislation.  Ask the hotels and taxi companies how that is working.  Every organization must be willing to rethink and restructure its business models or construct entirely new models.

Question:  Who in your company or organization is thinking about the new business models that must emerge in your industry, and the implications for your existing business model?

Ecosystems

The new business models and experiences will spawn new ecosystems.  No firm today can provide all the features and functionality required - partners are essential.  As more data is created, there is more to hack, so cybersecurity will become more important.  As new experiences become important, understanding and managing the customer experience becomes critical, so having partnerships with companies that understand customer experience is vital.  Your ecosystem needs to grow, and increasingly ecosystems will be built around key infrastructure partners or technology backbones.

Question:  what capabilities does your product or service require that others can provide more effectively or at less cost than you can?  What new ecosystem do you need to sponsor, or what ecosystem do you need to join?

Digital Transformation Maturity

When I hear companies start talking about improvements or opportunities in experience, in business models and in ecosystems, I'll know that they are moving into a higher order level of maturity for digital.  Talking only about data when considering digital transformation is far too narrow and does not consider the components that will add the most value over time.