The term “digital transformation” has become overused, with little agreement on its actual meaning. A definition of digital transformation should be based on its business outcomes, with a focus on achieving significant benefits, such as a 10x improvement, rather than incremental improvements.
Despite various estimates of success rates, it is generally agreed that – of digital transformation efforts – only 10% or fewer are successful. To improve the chances of success, eight principles have been codified, and their importance is illustrated in the following eight laws of success.
1. Law of Digitalization: This law mandates that all transactions must be captured digitally, without any manual intervention or data entry. This is a critical requirement for digital transformation, especially when real-time data is needed for effective decision-making. With the proliferation of advanced sensors that can capture a wide range of information, such as faces, voices, vehicle numbers, production numbers and weights, there is no excuse for failing to comply with this law. Neglecting to follow this principle can severely jeopardize the success of any digital transformation initiative, particularly if data is captured in batches after significant delays.
2. Law of Intelligent Systems: This law asserts that the system should be equipped with live data from both internal enterprise sources and external events, enabling it to predict the next event and propose the optimal course of action to decision-makers. Moreover, given the real-time nature of this process, the alerts and notification engine must reach decision-makers on their preferred devices immediately.
3. Law of Digital Transformation: This law states that companies must take the initiative to embark on digital transformation in their core business or operations. Too often, companies fail to do so due to the fear of disrupting their core operations. However, in order to achieve spectacular results, it is essential to transform the core business or operations, whether it is manufacturing for a manufacturing firm, banking for a bank, or other relevant areas. Transforming non-core businesses may not yield significant outcomes, and thus it is imperative to take the bull by the horns and implement digital transformation in the core operations.
4. Law of Digital Assets: All digital assets improve with more usage, whereas physical assets depreciate with usage. For instance, using the same data and model for sales, order tracking, supply chain monitoring, and factory scheduling can lead to exponential benefits due to a consistent set of data, assumptions, real-time predictions, and reactions to changes. Therefore, it is essential to use a set of data, algorithms and models in as many use cases as possible to maximize the benefits of digital assets.
5. Law of Digital Capacity: The more systems an organization has, the more challenging it becomes to adhere to the previous laws. I have witnessed companies with as many as 80 systems, which severely hinders a holistic view of the organization. While it may not be practical to have a single system for all processes, as many vendors claim, it is imperative for all systems and individuals to operate in real-time as one. To achieve this, a well-designed workflow and real-time integrations are crucial.
6. Law of Customer Intimacy: The Law of Customer Intimacy states that the success of your digital transformation is directly proportional to the level of interaction your systems have with the end customer. Companies that have little or no contact with their customers during or after the sale are less likely to succeed in their transformation efforts. To reap the benefits of digital transformation, it is crucial to ensure that your systems interact with customers before, during and after the sale. With the widespread adoption of social media and advancements in AI, achieving this level of customer intimacy is achievable with the right focus and intent.
7. Law of Cultural Empowerment: The field of digital transformation is largely unknown to many. Even if one is familiar with the technologies and successful use cases, it can be difficult to apply them to one’s own company. Furthermore, even if a successful approach is discovered, it may be dynamic and not work in the near future. This necessitates many experiments and failures before success is achieved. As such, the culture of the organization should reward innovation, risk-taking and learning from failures to encourage a culture of empowerment and continuous improvement.
8. CEO as the Change Maker: The success of all the aforementioned laws is contingent upon the CEO assuming the role of a change maker. Establishing a culture of innovation, setting a clear direction, and supporting digital transformation initiatives can only be accomplished with the CEO’s approval and involvement. Ultimately, the CEO stands to gain the most from such endeavors, either by becoming a leader in the field or by risking obsolescence.
If we analyze the failures of the digital transformation we see, one of these would have been missed. Follow these, and you will be more equipped to digitally transform your organization.
Mohan Madhurakavi is chief evangelist-digital transformation for Kissflow.