You have been hearing about Fourth Industrial Revolution. It's probably the hottest topic for businesses, thought leaders, policymakers, scientists and of course technocrats.
Klaus Schwab, the Founder and Executive Chairman of the World Economic Forum, who coined this term, writes – “The First Industrial Revolution used water and steam power to mechanize production. The Second used electric power to create the mass production. and information technology to automate production. Now a Fourth Industrial Revolution is building on the Third, the digital revolution that has been occurring since the middle of the last century. It is characterized by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres. ”
He makes a very important, pertinent point – “Neither technology nor the disruption that comes with it is an exogenous force over which humans have no control. All of us are responsible for guiding its evolution, in the decisions we make on a daily basis as citizens, consumers, and investors. ”
While Digital Transformation as a term is still misunderstood, today, digital transformation as a business imperative is widely agreed upon. What then is a digital transformation in practice? Is it an IT project? Or the introduction of a few cool tools in the company? Or the addition of a mobility is driven customer relationship management (CRM) initiative to engage customers better?
As an organization, if you are looking to embark on the digital transformation journey or trying to stay away from it, there are still a few myths around digital transformation that you need to steer clear of. If you want to lead your organization through digital transformation, the first step is understanding the realities of digital transformation – rather than getting carried away by the hype.
In this article we use excerpts from a few, prestigious industry reports / white papers to dispel a few myths.
The reports / white papers that we quote from include:
- World Economic Forum (WEF) White Paper on Digital Transformation of Industries: Digital Enterprise, developed in collaboration with Accenture
- Forrester's Report, The Digital Business Imperative, co-authored by Martin Gill and Nigel Fenwick
- Digital is a fad; a trend that my business need not think about
- digital transformation process
Digital has transformed the market context for every business, and the pace of change is accelerating.
The WEF White Paper says – There is widespread recognition among leaders in most industries that the role of digital technology is rapidly shifting, from being a driver of marginal efficiency to an enabler of fundamental innovation and disruption. Digitalization is the cause of large-scale and sweeping transformations across multiple aspects of business, providing unparalleled opportunities for value creation and capture. Business leaders across all sectors are grappling with the strategic implications of these transformations for their organizations, industry ecosystems, and society.
Digital Transformation means exceptional customer experiences powered by new technologies
Digital has impacted not just channels and customers. It is disrupting organizations from within – changing the way they do business. Digital brings new opportunities for organizations that can embrace the technology fast enough. It speeds time-to-market, reduces costs, and unlocks new revenue streams.
Forrester Report says – Digital business isn't just about customer experience; It's also a way to drive operational agility. Digital operations can increase speed-to-market, make employees more productive, promote leaner processes, and maximize asset utilization.
Let me build an app. My digital transformation is done.
Digital transformation is not about the introduction of a few tools that are geared to change a particular facet of your business, be it employee collaboration or customer transactions.
Forrester Report Says –
- Digital fundamentally changes your relationship with your customers. You can't address this change with a bolt-on digital strategy that adds an app here or a site there. To remain competitive, you must re-engineer how your business creates value for your customers in the digital age.
- Re-envision your business not as a set of products and services but instead as a part of the personal value ecosystems that your customers assemble according to their needs and desires. Learn to increase value by expanding your company role in your customers' personal value ecosystems.
Digital Transformation can only occur through disruptive technologies
Every digital transformation exercise need not take the examples of Uber and Airbnb in terms of the use of emerging technologies. The technology stack that you would use depends on your business context and technological leverage is just one part of the digital transformation. Sometimes, you may achieve significant enhancement of productivity, agility, and customer-centricity through the use of tried-and-tested operational technology (networking and databases) and strategic technology (enterprise resource planning or customer relationship management) or mobility.
WEF White paper says – A truly digital enterprise stands for more than just using new technologies for the sake of it. Rather, what truly distinguishes and gives a digital enterprise its competitive advantage is its culture, strategy, and way of operating. Digital enterprises strive continuously to enable new and leaner operating models underpinned by agile business processes, connected platforms, analytics and collaboration capabilities that enhance the productivity of the firm. A digital enterprise relentlessly searches out, identifies and develops new digital business models, always ensuring that customers and employees are at the center of whatever it does.
Digital transformation: I need to get this done this year so I am not falling behind
Digital Transformation cannot be and need not be a sprint. It is a long journey with multiple touch points and milestones; dependencies and synergistic endeavors.
Forrester Report says – You need to transform your business by applying digital thinking across everything you do – how you win, serve, and retain customers; how you operate your internal processes; and how you source business services.
For example, your answers to the below questions alone will help you craft a roadmap that takes digital transformation beyond the realm of IT.
Digital transformation business success
- Have you identified areas in your business where automation is most relevant?
- Is your existing workforce consistently improving productivity and quality?
- Which steps have been taken to convince your investors about your digital vision and the long-term value-creation of your digital transformation journey?
- How much of your revenue is coming from new sources of digital business?
- Do your company leverage analytics around customer data, operational data, and compliance?
- Do you have a digitally literate leadership team?
- Have you established training programs to overcome the digital skills gap and reskill your existing employees?
- How are you empowering employees through digital channels to enable faster decision making and encourage greater agility within your organization?
These are just a few myths we have tried to address. We invite you to share your take on these as well as other myths.