The other day, I was speaking with a COO who was very excited about her digital transformation program. As she talked excitedly about her company’s plans to go to the Cloud, upgrade ERP and improve cyber security, I was compelled to interject that I was confused about whether the program was meant to digitize, digitalize or transform her operations. After we talked this further, it dawned on her that he program wasn’t transformational, it was digitalization focused. She concluded that she would need to build further on her program to make it fully transformational.
Do these labels matter? Absolutely! Defining digital transformation correctly is akin to being clear about whether the goal for your outer-space program is to get to the moon, or to mars or to the next galaxy. The difference between the three is huge!
There are three different terms that help bring clarity on transformation goal setting. The first is “digitize”, which is to turn physical assets to digital e.g. Optical Character Recognition scanning of documents, or moving transactions from paper to digital systems. The second is “digitalize”, which is to automate and change work-processes.. The third is digital transformation, which is to re-imagine business and operations.
Organizations who set correct digital transformation goals have a big advantage!
Setting the right end-state is an important prerequisite to achieving digital transformation success. This newsletter offers a couple of examples of successful transformations to illustrate this.
1. Think big, think transformational, and keep it simple. Capital One’s successful transformation program has learned this and other insights after four years. Their lessons include starting with the end in mind, making technology a core component of the program and driving real business transformation. See details here
2. Even if the goal is simple automation, starting with the customer’s needs is a winning approach. Royal Caribbean started with an Ernst & Young generated plan that put the focus squarely on their employees and customers. Their execution is starting to deliver great results.
3. In parallel, you need an HR transformation too. HR leaders need to hire more digital talent, retrain the existing employee base and change reward systems to be more in line with the agile digital world. See Gartner’s five strategies for Chief HR Officers.
Net, be deliberate in choosing whether your business needs real digital transformation or simple digitization/digitalization. Once you’re clear about the end state, work backwards to create a sufficient plan.
Go forth and transform.