Senior management have to come to grips with the fact that digital transformation is not an event but rather the operating environment of 21st century business.
Like music, photos, TV, and data, once something becomes digital it becomes a consumable and moves from the domain of the specialized expert to a public commodity. As with Blockbuster, Borders, Capital Records and newspapers, businesses based on non-digital product are the hand-crafted hobbies of the 21st century. Craft markets will exist into the future, but they are generally not profitable and rather a labor of love.
Changing the way we work
Here’s the kicker. Digital transformation is now looking at not just the things we sell, which includes services, by the way, but how we do business. From crowd funding to network marketing to blockchain (how Bitcoin works), the basic principles of how we have traditionally gone about business are changing.
Crowd funding, where a population at large is directly involved in the creation of products, also has ramifications for invention and design. Brainstorming on steroids. Network marketing has wiped out traditional sales channels from cold calling and direct mail to bricks and mortar retailing. And blockchain has the capability to render capital-intensive industries obsolete. What Bitcoin did to money, people are now looking to use to undermine energy, insurance and infrastructure oligarchies. One day, blockchain may even be capable of fixing our political system.
See also: 4 Rules for Digital Transformation
Understanding Digital Transformation
What really is digital transformation? Gartner, a leading authority on such things, defines digital transformation as “to leverage digital technologies that enable the innovation of their entire business or elements of their business and operating models.”
So innovating is not just what we do, but how we do it, our “operating models.” In my last article, “Misunderstanding Innovation,” I wrote on how innovation is not invention but rather the application of invention as a solution to a practical need. As such, innovation is the backbone of digital transformation, just as audit is to compliance or controls are to risk.
Digital Transformation as an Operating Model
Back to my opening statement that digital transformation should not be thought of as an event but rather an operating environment, just as industrialization in the 18th century was not a single event but a period of continual transformation. From the introduction of the weaving loom through production lines to mass production, the transformation fed change that has continued for 200 years.
Senior management have to stop thinking of digital transformation as a passing fad, and embrace the fact that the world has changed. As in the 18th and 19th centuries, change will drive change, and as the management in those times developed process management models (see, PDCA is NOT Best Practice) to drive the development of automated production, so, too, managers now have to develop transformation models to take account that disruption and innovation will drive further disruption and innovation.
Transformation as a Lifestyle Choice
The fact that you have transformed your operation today is only a temporary reprieve. You need to redefine your business model to be an agile platform continually identifying and innovating to improve end-customer quality of life: That’s your customer’s customer.
Women as the Mothers of Innovation
The current beat-up of getting more women involved in STEM (science, technology, engineering, math) misses the understanding that innovation has at its root, a deep empathy for the quality of life of others. Developing and elevating women’s inherent intuition as to the plight of others will do more to foster innovation than a plethora of inventions. Hundreds of inventions never see the light of day, yet a handful of innovations have changed the world. Again, please re-read my previous article on Misunderstanding Innovation.
If Malcolm Turnbull truly wants Australia to develop an innovative culture, we should be promoting more people into psychology, sociology, anthropology and statistics. These are the strategic vocations of innovation, while STEM and invention are the tactical solutions. Yes, stats is math, but it allows us to understand bias as well as predictive analytics, which identifies and prioritizes targets for innovation.
See also: Why You Need a Digital Leader
Where to From Here?
Accepting the need to transform your business model is in itself an inherent risk. Just as a window cleaner straps on a safety harness before scaling a building, so having an active risk and compliance system operational is a mandatory prerequisite before embarking on any transformation. You will need systems that alert you to emerging issues and to give you continual insight, throughout the transformation process, without the need to go and look for it. The business graveyard is as full of those who lost their footing on the way as those who did nothing. This is not a shameless plug for what I do but rather the reason I do it.