The Five Domains of Digital Transformation
By Joe Wheeler, President CX Workout
Columbia Business School Professor David Rogers, author of The Digital Transformation Playbook and one of our strategic alliance partners, makes a revealing point: “Digital transformation is not about technology—it is about strategy and new ways of thinking.” He expands on this to suggest, “A Chief Information Officer’s traditional role has been to use technology to optimize processes, reduce risks and better run the existing business. But the emerging role of the Chief Digital Officer is much more strategic, focused on using technology to reimagine and reinvent the core business itself. ”
During our Accelerating Digital Leadership Program we share five domains of digital transformation that organization leaders must master in order to successfully guide the future growth of their firms.
Let’s take a look at each of them in more detail, as excerpted from Professor David Rogers’s book:
Customers: Digital technologies change how we connect and create value with our customers. The relationship becomes much more synergistic: the communications and reviews provided by customers position them as bigger influencers than advertisements or celebrities; additionally, the dynamic participation of customers has become a critical driver of business success.
Competition: More and more, we are competing not just with rival companies from within our own industries, but also with companies from outside our industries that are stealing customers away with their new digital offerings. We may find ourselves competing fiercely with a long-standing rival in one area while simultaneously leveraging their capabilities by cooperating in another sector of our business. Increasingly, our competitive assets may no longer reside within our own organization; rather, they may be contained in a network of partners that come together to form looser business relationships.
Data: In traditional businesses, data was expensive to obtain, unwieldy to store, and utilized in organizational silos. Just managing this data required the purchase and maintenance of massive IT systems. (For context, consider the enterprise resource planning systems required just to track inventory from a factory in Thailand to goods sold at a mall in Kansas City.) Today, data is being generated at an unprecedented rate—not just by companies but by everyone. Moreover, cloud-based systems for storing data are increasingly cheap, readily available, and easy to use. The biggest challenge today is finding a way to derive valuable information from our ever-expanding stores of data.
Innovation: Traditionally, innovation was expensive, high stakes, and insular. Testing new ideas was difficult and costly, so businesses relied on their managers to determine the most viable options to be built, tested, and launched in the market. Today, digital technologies enable continuous testing and experimentation with a level of complexity that would have been inconceivable in the past. Prototypes can be built for pennies and ideas tested quickly by user communities. Constant learning and the rapid iteration of products, both before and after their launch date, are becoming the norm.
Value: What customers value can change very quickly, and our competitors are constantly discovering new opportunities that our customers may find more affordable or appealing. All too often, businesses experiencing recent success in the marketplace too quickly allow a dangerous complacency to set in. As Andy Grove warned years ago, in the digital age, “Only the paranoid survive.” Constantly pushing the envelope to find our next source of customer value is now an imperative.
Across Professor Rogers’s five domains, we can see the landscape of digital transformation for businesses. Digital technologies are hard at work, truly redefining many of the underlying principles of strategy. Companies that were well established before the technological tsunami of the Internet must accept and address the reality that many of their most fundamental assumptions must now be updated.
[Author’s Note: The content for this article is drawn from CX Workout’s Accelerating Digital Leadership program which is based on the book: The Digital Transformation Playbook—Rethink Your Business for the Digital Age by David L. Rogers.]
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