There is no such thing as digital transformation (and why that matters)

The understanding of Digital Transformation (DT) is a misnomer and there are reasons why digital transformations turn out to be a great failure. According to Dr. Dennis Khoo, there is no such thing as digital transformation as there is no way to completely change digitally. Digital transformation is actually to improve the experiences of businesses at lower costs by leveraging processes, people, IT, and new ways of working.

Transformations are complex

The key point of DT is to expose core business systems functionality to build software that is viable & flexible. In actuality, running a business online is much more than just software.

Other cases that also need attention are-

1. Selling online/offline & its integration.
2. Taking Data-driven decisions.
3. Providing online services to solve customers’ problems.
4. Bringing online engagement.
5. Maintaining Intermediate or raw supply chain.
6. Taking care of Logistics.
7. Manufacturing unit process.
8. Robotics to automate the whole process.

This creates a lot of complexity for businesses.

Three levels of Transformations complexity

Level 1- what/why

Since data is a new gold, the key is to manage it as a strategic resource so that it can be used intelligently. Since the knowledge of such things has become common in all Businesses, it becomes important to get to the next level.

Level 2- What?

The usage of this data to establish the lineage to an entity, how the data can be centralized, maintained, governed, and remain unreplicated to begin to link it to the things, people & places.

Level 3-How?

The major differentiation comes here due to the complexity of how to do transformational changes. This is where businesses are not able to implement it and align with their business goals. This is why most business transformations fail.

According to BCG research,70-95% of the total businesses don't achieve their digital transformation stated objectives and remain a failure.

There are 5 actions for success in achieving better digital Transformation.

1. Focus on the problem & not the solution.
2. Learn the right way to manage complexity.
3. Ensure its desirable, viable & feasible
4. Design & process are more important than Tech.
5. Finding the right combination of internal and external talent

1. Focus on the problem & not the solution

Like a transistor which was invented much earlier but its massive usage in integrated circuits became popular much later.

Most Businesses are not in the pivoting stage to find usage of newly developed technology and they prefer to implement already made solutions. Most companies don't have the risk appetite to invest in new solutions. They want readymade solutions.

This is due to focusing too much on solutions. If we focus ourselves on customers' problems, we can get ourselves a step ahead of everyone. The answer is to know the problem better than your customer and a better way to remain one step ahead of the competition.

2. Learn the right way to manage complexity.

Customer Dimension

What is the problem-Identify the interested Segment and the Gaps these segments are facing Why does it exist - Getting Insights into why these gaps are existing How do you fix it -Construct Experiences and separate them from the process for internal efficiency

• Input-Get insights
• Output- Customer value proposition

Business Dimension

It is inclusive of making money in a period that aligns with the risk appetite. It has elements like-Differentiation, the path to profit, scaling & core competence gap. These elements also interact with each other and these interactions are cyclical. Managing them well is important to maintain this dimension.

Capabilities Dimension

Design,methodologies,data,IT,Ecosystems & new disciplines of which data,design, methodologies and IT are standard for transformation

People & Leadership Dimension

Culture- values,leadership,talent gap and structure.

These things make complex circular loops and the whole thing must be managed very holistically making it complex.

3. Ensure it's desirable, viable, and feasible

• Desirable-Customers want it and are willing to pay for it.
• Viable-Will make a profit at some stage aligned with risk appetite
• Feasible-High probability of successful execution

Like Segway, that is borderline feasible and wasn't a good example in history. For a Business transformation to succeed, it should have all three and lie in the center of the three.

4. Design & Process are more important than Tech

Most issues in transformations concern design and process. A weak design and process cannot bring a strong transformation.

Comparing graphical values of singular performance impact vs ease of adoption and use by the customer we get 4 quadrants of Business impact:

• Small + less difficult Insufficient value and has no singular performance impact on Business.
• Large + less difficult Breakthrough categories as one or two things we do can change the Business game completely and we can state the value proposition of a Business product in a single line
• Small + more difficult Experience led, much difficult to adopt and replicate. The whole ecosystem needs to support the difficult change.
• Large + more difficult Transformational, There is no one or two things to do but maintain a whole ecosystem, and Businesses have a brilliant experience at a premium price with product details focused upon.

This graph showcases that the process becomes very important and obsession with product details becomes important to have a transformational experience

Best practices in Design, Process & Tech

• Design: Pay attention to what's important and irreversible
• Design: Knowing what customers want is good. Why do they want is gold
• Process: Where can you change your process to fit the solution?
• Process: Its the Business process that delivers the experience
• Tech: Flexibility is important
• Tech: Modularity and low code are key to the cost of ownership

Where to learn more

Dr Dennis Khoo shares his expertise and experience in his book Driving Digital Transformation: Lessons from Building the first ASEAN Digital Bank: https://alldigitalfuture.com/bookstore/ols/products/driving-digital-transformation-lessons-from-building-the-first-asean-digital-bank

... or watch Dennis's full presentation: