Here are some key insights from articles I’ve read on digital transformation.
The evolution of (Digital) strategy
“My view is that the role of strategist, first and foremost, is the mobilizer. People need to understand where the company is going and take autonomous decisions. ”
“the way to manage a company has changed a lot in the last couple of decades, from “top down, the leader knows it all, let’s execute,” to a model that’s more like a federation, where you expect empowered teams to make the right choices and follow in the general direction. So it’s even more important to have a strategy that allows that federation of little teams to do what they have to do and not refer up the chain every time.”
Be wary of taking a narrow conception of what ‘digital transformation’ is
“what they had wasn’t a digital strategy, it was a list of priorities for digitization. Explicitly, it was how are we going to reduce the cycle time in our end-to-end processes, how are we going to improve the customer experience and build new apps, and so forth. It was about how they digitize. It was not actually the choices they were making about a big disruptive economic force, which is the changes that are made possible by digital technologies.”
“The word ‘strategy’ is used too loosely with digital to mean our priorities for digitization not the choices we’re going to make in terms of where we compete and how we cmopete in the face of a big disruptive force.”
“We found that going back to the fundamentals of economics, trying to understand where there is economic room to be attacked, where your open flank is, or where you could thrust a spearhead, was a much more useful way to approach the problem and simplify the problem and focus on the right priorities.”
“Do not just think digitization. Think digital strategy. How will the economics of my business change in the future? How can I change the economics of other businesses? And, therefore, what should be strategy in the digital age be?”
“incumbents, particularly laggards and followers, sometimes reflexively try to drive digital marketing and sales. They mistake the world of digital for the world of online-selling success. And that narrow set of levers and aspirations for digital transformation is often unsatisfying and unsuccessful. Because there is a lot of opportunity unlocked by digital: the ability to fundamentally change how productive your assets are, the ability to leverage data and your consumer base in a different way, and the ability to actually develop innovative new propositions that you could never have offered before – the world of universal connectivity and ultracheap and ultrafast processing power. the ability to do these things is often a lot more powerful than trying to get a laser-like focus on pure digital- marketing and -sales performance.”
Thinking digitally can be difficult
“One of the biggest changes digital allows is that what might have been product sales become services. … You may have bought a thermostat, but now you’re buying energy management. You may have bought a TV, but now you’re buying entertainment streaming.”
What ‘digital’ really means
“diverse perspectives [on what digital means] often trip up digital teams”
“digital should be seen less as a thing and more a way of doing things.”
- “creating value at the new frontiers”. This could be about developing new businesses in adjacent categories, or identifying and realising value pools in existing sectors.
- “creating value in the processes that execute a vision of customer experiences”. Obsessively seek to understand each step of a customer’s purchasing journey, regardless of channel, and think about “how digital capabilities can design and deliver the best possible experience.” e.g. supply chain to give flexibility and deliver the product efficiently and in a way that the customer wants.”
- “building foundational capabilities that support the entire structure” “Being digital is about using data to make better and faster decisions, devolving decision making to smaller teams, and developing much more iterative and rapid ways of doing things.” [see below on decision making and oversight] I.T. should be delivered in a two-stream model. Legacy systems that support critical functions should work at a slower pace, and a separate stream supports fast-moving, often customer-facing interactions.
Making the cultural case for change
“We should not try to convince management of the importance of digital. Instead we should frame the conversation around their pain points and struggles. Every senior management team has certain objectives that they need to reach or barriers they need to overcome. The chances are that digital can help with those and that is how we should position it.”
Achieving a digital state of mind
“Everybody will say they’re customer oriented, but, as digital leaders would say, they have to be customer obsessed. And that’s something that a lot of organizations still struggle with. So that’s where you should start. Take the customer perspective.”
How to think about building digital services
Digital disruption is impacting every sector, even law firms
Not like creating a building, where you draw up the plans, then build, then do minor maintenance.
It’s more like planting a garden. Start small, then add more elements. Keep pruning, trimming and evaluating as you go.
- Takes a week
- Uses a team of participants from different roles and perspectives in the organisation.
- Define and unpack a problem. Built a shared understanding
- Generate ideas and decide which ones to pursue for testing
- Build a prototype of their ideas, and validate assumptions by observing real people using it.
This helps you escape the risk of designing by starting with a list of stakeholder requirements, which may not be correct. “Unfortunately, because there’s usually no validation process built into the conventional design process, it isn’t until late (sometimes as late as when the product ships) that the team learns they went down the wrong rabbit hole.”
“Trying out what seems like a great idea and discovering that you’re wrong is a fantastic way to learn. Doing it quickly and early in the process mitigates the risks associated with heading down the wrong paths, delivering more educational value to your organization at lower cost.”
“When an organization integrates design sprints into projects, they see a dramatic decrease in outside influencer disruptions and an increase in their design quality.”
Improve your online testing through the following continuous optimisation objectiveS:
- Learn from every possible customer interaction
- Test customer interactions across the entire lifecycle
- Align with a customer-centric strategy
- Deploy testing within every possible digital channel
Failure and experimentation
“failure and invention are inseparable twins. To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment. Most large organizations embrace the idea of invention, but are not willing to suffer the string of failed experiments necessary to get there. Outsized returns often come from betting against conventional wisdom, and conventional wisdom is usually right. Given a ten percent change of a 100 times payoff, you should take that bet every time. But you’re still going to be wrong nine times out of ten.”
Different types of decision need different types of oversight
Amazon’s 2015 letter to shareholders
“One common pitfall for large organizations – one that hurts speed and inventiveness – is ‘one-size-fits-all’ decision making.”
“tendency to use the heavy-weight Type 1 decision-making process on most decisions, including many Type 2 decisions. the end result of this is slowness, unthoughtful risk aversion, failure to experiment sufficiently, and consequently diminished invention.”
There are actually two types of decision:
- Type 1: consequential and irreversible or nearly irreversible. “one-way doors”. “these decisions must be made methodically, carefully, slowly, with great deliberation and
consultation”. A minority of decisions are Type 1.
- Type 2. Changeable, reversible. “Type 2 decisions can and should be made quickly by high judgment individuals or small groups.”
Data-enabled decision-making and the role of top management
An executive’s guide to machine learning
“Frontline managers, armed with insights from increasingly powerful computers, must learn to make more decisions on their own, with top management setting the overall direction and zeroing in only when exceptions surface.”
How companies become digital leaders
“Not doing anything may be the riskiest move of all.”
Rapid development and measurement
Achieving a digital state of mind
“If you’re doing to do a rapid ‘test and learn’ and get those feedback cycles, the whole philosophy has got to be that what we do is measurable.”