More and more companies and organisations are working on digital transformation. What does that mean, exactly? And as a business leader, what needs the most attention to make your digital transformation a success? Ultimately, every industry will go through a digital transformation, so don’t wait too long to think about where you want to take your company. And don’t base your thinking too much on the technology.
New and disruptive business models; a better, personalised customer experience; optimal business processes: these are some of the numerous opportunities for digital transformation that are emerging at the point where large amounts of data meet technologies such as artificial intelligence (AI), blockchain and robotization. The general expectation is that many companies and organisations will increasingly turn into software companies in the coming years.
First, let’s set something straight: digital transformation isn’t a new thing, per se, says tech consultant Frieda van Belle. “Customers always want things to happen faster, better or cheaper – and that’s how it has always been. What has changed is the number of possibilities that data and technology offer to help you better serve your customers.”
That change has brought with it a change in customers’ expectations, as Van Belle explains. “If you, as a consumer, order something from Coolblue in the evening and it arrives the next morning, you expect that at work too – for example, if you’re a buyer at a B2B company.
“Of course, industries differ in terms of technology and regulation, but at the core, they are the same. So research what the needs of your customers are – if you digitally transform, what customer problems or frustrations are you going to address?”
According to Ting Li, Professor of Digital Business at Rotterdam School of Management, Erasmus University (RSM), consumer-based industries such as retail, telecom and the banking sector are frontrunners when it comes to digital transformation.
“These are pre-eminently sectors that mainly revolve around users. The technology offers increasing possibilities – for example, for interaction and personalization. The acceptance rate of new technology in these sectors is therefore a lot higher than in others, such as the B2B sector. Many B2B companies are still waiting to see what the competition will do.”
Li thinks that is unwise. “Ultimately, digital transformation will take place in every sector one way or another – it’s inescapable. So don't wait too long to think about where you want to take your company. At the same time, don’t base your thinking too much on the technology; in a few years, a whole new technology that we don’t even recognize yet will have been developed.”
It is much more important to develop a sustainable digital strategy as a basis for change, Li says. “What is your long-term goal, irrespective of which technology is involved? In the end, the business aspect is far more important than the technology itself.”
“Ultimately, digital transformation will take place in every sector one way or another – it’s inescapable. So don't wait too long to think about where you want to take your company.”
Prof. Ting Li
Van Belle also emphasises the importance of primarily seeing technology as an enabler. “Even business leaders are sucked in sometimes: I have all these technologies at my disposal, what can I do with them? Look at it this way: they’re ignoring customer needs. How can this be changed? Are there perhaps existing needs that we could not meet previously? And what does this mean for our organisation?”
Let’s look at the technology itself for a moment: Van Belle sees that many organisations underestimate the impact of the implementation on business operations. “Whether it concerns artificial intelligence (AI), robotization, drones or voice recognition, implementation requires a drastically different way of working and managing within a company.
“While a relatively large amount of time and energy is invested in the question of which technology to choose, there is often a lack of a well thought-out, logical plan and the right capabilities and investments for successful implementation – even though the implementation has the greatest impact on both employees and shareholders.
Van Belle also sees that many companies are currently looking at new applications at the intersection of data and artificial intelligence. “Data-driven working also has a significant effect on your organisation. Getting started requires a clear customer need that you plan to solve – only then will you know when your data process has been successful.”
For this, you don’t just need data specialists, but also translators. Van Belle says: ”These are people who form the link between the potential of all the algorithms and data on one side, and the business and customer demands on the other.”
Governance is also an important aspect when setting up the data in a company, Van Belle emphasizes. “Can everyone claim data and analysis capacity? Who makes decisions about any adjustments? Who keeps all the data in order? And who is responsible for cybersecurity? These are all things you need to think carefully about if you want to make data-driven working a success.”
Ting Li emphasises the importance of experimentation. “Digital transformation is a long-term process: it can sometimes take as long as a decade to reach your goal. At the same time, technology is advancing, making it even more important that you experiment with new technologies – in the short term and on a small scale – and monitor how customers react. Short-cycle adjustments prevent you from staying on the wrong track for too long.”
Van Belle also thinks that a short-cycle, experiment-oriented approach will ultimately deliver the greatest yield. ‘Many organisations still make experiments too big. Experiments must be able to fail without immediately putting millions at stake. This means that projects will need to be a lot smaller than they often have been until now.’
Van Belle also advises business leaders to ensure that they develop a familiarity with the technology and data operations that are relevant to their business. ‘A shared language and basic expertise in data and technology are extremely important if you want to make your digital transformation a success.’
‘In smaller start-ups, most business roles have a background in – or at least an affinity with – technology and data. But this is often not the case, especially in larger organisations.”
Business leaders must therefore dare to question and learn, Van Belle says. “As a CEO, it’s no longer acceptable to not understand exactly how the technology environment of your company works. You have to be able to spar over the direction in which you want to go, without pride and ego getting in the way.
“This attitude is often at odds with the traditional hierarchy within companies, where the higher you are in the tree, the less you ask and the more you tell. But nowadays you won’t make it with that attitude.”
Finally, Li emphasizes once again that CEOs must have a very clear long-term goal in mind. “At the same time, you have to keep a close eye on what technology is available in the short term to achieve that goal. A good leader knows how to connect short and long term par excellence. If that connection is successful, it will naturally result in innovative digital business models.”
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