Orchestrating Digital Transformation – Three Key Takeaways
Last week, The Strategy Group hosted our Fresh Perspective Series on “Orchestrating Digital Transformation in the Digital Era”. The event provided a platform for James Macaulay and Joel Barbier from The Global Centre for Digital Business Transformation (DBT Centre) to share their fresh perspectives as they launch their new book, “Orchestrating Transformation”.
As Macaulay and Barbier shared the analogy of a ‘vortex’ to help us understand digital disruption, they shed light on how market incumbents can be the disruptors and not the disrupted. Here are my three key takeaways:
1) Digital disruption is increasing in significance, speed and stake; yet market incumbents are floundering
95% of digital transformations fail to meet expectations. 40% of executives believe that their organisations do not recognise or is not prepared for digital disruption. Only 31% of organisations actively respond to these changes.
Macaulay and Barbier’s research show that if you are a sector at the centre of a ‘digital vortex’, anything that can be digitised is being digitised. If you are in a sector that has not yet felt the unrelenting impact of digitisation, you will within the next few years.
The “wait and see” approach that many organisations have taken towards digitisation of products and services is costly. Rather, a proactive, transformative mindset is required to keep pace with such an ever-changing, turbulent landscape.
The threat of digital disruption is real. It’s time to turn aspirations of being digital into real actions. How? Well, this leads to the next takeaway.
2) It’s about the disruption, not the disruptor. It’s about value, not value chains
Historically, creating and capturing value was seen through the internal corporate lens of vertical integration (owning the supply chain), cost or differentiation.
Asset light digital upstarts are changing the game. Rapid digitisation allows smaller players to pry open the tightly guarded value chains of market incumbents and deliver the same or even superior value to the end customer without having to own the whole value chain nor invest the same amount of capital. These smaller players are great disruptors because they have a relentless focus on delivering a combination of cost value, experience value and platform value.
Knowing the competition (disruptor) is important but understanding the ‘why’ of disruption is far more powerful. At the end of the day, it’s about delivering superior value that will win customers over, and not merely owning the value chain. Hence, it is about the disruption, not the disruptor; it is about value, not value chains.
3) Digital transformation isn’t about changing one customer touchpoint. As such, a more dynamic and networked approach is needed, a la ‘orchestrating’ digital transformation
True digital transformation – the kind that delivers superior value to customers and results in the longevity of an organisation – needs to resonate with your customers, help (re)define your customer value proposition, channels and operating model.
This requires an integrated view of the organisation’s go-to-market strategy (channels an offerings), it’s engagement strategy (customer, partners and workforce) and the organisation make-up (structures, incentive and culture). Digital transformation is strategic in nature.
In addition, digital transformation isn’t a one-off event. It’s an ongoing process that requires the right skills, focus and mindset. From a structured change management approach, we now need to think in terms of ‘orchestrating’ a transformation, much like a conductor in an orchestra. This shift in mindset means looking at the organisation as an ecosystem of interconnected and interdependent parts; and not a rigid, hierarchical, linear chain.
To bring about meaningful and lasting digital outcomes require the ‘conducting’ of different units and functions of the operating model. This will allow you to create a ‘symphony’ where there is synergy and connectedness for a remarkable performance.
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