So what is Digital Transformation?

Published on

Peter Sparrow

Follow Following Unfollow Peter Sparrow

Sign in to follow this author

Digital Transformation

I was recently in the new Paddington basin area of London, with the mercury topping 33 degrees C in the shade and where loft apartments are going up like crazy, when, I bumped into my old friend and tech guru/journalist, Socrates. He was fresh back from Silicon Valley with worrying talk of a brain drain from Southern California and ‘Investor Fatigue’ with frothy start ups all trying to ‘Uberize’ their industry.

Whereas, in London, the politicians removed any faith anyone may have previously had that they had any answers, and so it will soon be left to British Industry, our European and International Business friends to make a success of whatever hand is dealt post Brexit/Rejoin Europe.

I said “the trouble with you Americans is you confuse change with progress!” Socrates response was “the trouble with you Brits, is you confuse change with revolutionaries!” Touché!

So I responded, I think what we all need is an antidote, which is a good dose of pragmatism, and less talk about digital disruption but more focus on implementing digital transformation.

Socrates: So Peter, explain what is the gig with Digital Transformation, what’s it all about?

Peter: Digital Transformation is all about rethinking business to exploit modern technologies to deliver a step change in performance and help society solve its most pressing problems. Modern digital technologies when deployed correctly have the potential to:

• dramatically reduce the cost to provide excellent, bespoke customer service
• rapidly scale up businesses with super global connectivity
• provide new insights to solve some of our most difficult problems such as finding cures for rare genetic diseases or how to target scarce resources for better outcomes.
• secure intellectual capital and stop counterfeits and improve safety
• reduce the cost of innovation, learning, experimentation and research and so raise education of millions
• automate drudgery and improve processes and elevate human work

Socrates: Hey, so which technologies do you include as “digital”?

Peter: The 9 horseman of digital disruption for me fall in two recent waves. The first wave was

1. social
2. mobile
3. collaboration/connectivity
4. big data analytics.

The second wave involves technologies such as

1. AI (Applied Intelligence, Cognitive Analytics, Deep Learning, Machine Learning)
2. Robotics, RPA (Robotic Process Automation), 3D Printing and Robots
3. Block Chain and distributed ledger technology (but not cyber currency)
4. Voice / Virtual Assistants and Natural Language Processing
5. Virtual Reality – touch at a distance / enhanced human interaction

Of course each of these technologies need to be viewed as building upon and combining with other advances in ICT to identify where the breakthroughs are. To cross the digital chasm requires a combination of technologies to be transformational. You also need an idea of your own organisation’s digital maturity in order to know in what order you should adopt them and how. So for instance I have developed a comprehensive Maturity Curve for Customer Service Organisations and Contact Centre Operations and please send me a Linkedin message if you would like a copy of a maturity curve for your own organisation.

Socrates: Peter, so I get it, it is as much about business as it is about cool tech. So is it all about disrupting your industry?

Peter: No it is not all about disruption, to my mind there are only a few opportunities to truly disrupt an industry. Disrupters, are going to be in the main, new entrants rather than incumbents, they will combine digital technologies with a new business insight to achieve a temporary advantage which enables them to rapidly scale their business and gain such a massive market share before the others can react. Then they will use their scale and free cash flow to build an unassailable position on a global scale.

So this is why we hear a great deal about Uber and AirBnB and Tesla as examples, but the number of examples of true disrupters are small if you disregard a lot of early stage copycat wannabies. Without rapid scale up, a small disrupter is just a small business with a novel business model, looking for customers rather than a true disrupter.

In contrast, very large companies with dominant market share very rarely can achieve any significant disruption. In fact their own culture, structure and reward mechanisms actively discourage the innovation that would lead to true disruption. The famous case here is the folks at Kodak who invented an early digital camera, yet failed to exploit it, and the GPO where they tried to ban the use of email. IBM only transformed into a services company from a hardware company, once it had lost several billion $’s. The threat of extinction is perhaps necessary but on its own it is insufficient for large incumbent companies to innovate sufficiently to disrupt.

However, organisations of any size as well as new entrants can all exploit digital transformation.

Socrates: So, which companies are your stand out faves for digital transformation?

Peter: I really applaud the work Giffgaff are doing to make service simple. They are a telecoms provider and are O2’s little brother. They have really nailed the idea of a golden customer record. That gives them huge insight into serving you as a customer better and without friction. Customer service cannot support an Omni Channel experience until you really nail a crucial bit of technology that gives a single customer record for everything you do with your customer. Others like this include First Direct (HSBC’s little brother).

Another great example, again on customer service, I think is American Express. They have deployed voice recognition software brilliantly and have joined up service processes behind it, so you never have to give your details more than once, and no press 5 to be transferred to our transfer department!

Socrates: Hang on, you are seriously kidding me, telecoms and financial services they are stale and boring right!

Peter: Not when you consider they are rapidly climbing customer satisfaction ratings to be amongst the top in the country and their profitability as a result is 30-40% higher than their peers for what are very similar products. They are transforming customer service, on one hand with no human in sight and the second using technology to enhance the human interaction.

Socrates: OK, but have you got something a bit more transformational ?

Peter: Amazon!

Socrates: OK, really funny everyone knows that story!

Peter: Perhaps, but it is their leadership and culture that is really interesting is it not? Yes you know about their on-line store, next day delivery, personal recommendations, superb logistics etc. But you have to also think what they have done in being able to pivot an internal IT department to create Amazon Web Services which then completely collapsed the economics and time to benefit for application delivery and gave access and flexibility so you can scale up your IT infrastructure. AWS were the real innovators in cloud and that changed the whole IT industry.

They are also in frozen food delivery (sorry, groceries), and what is really disruptive…. is they are opening physical high street stores, some without humans on check outs!

Socrates: Yeah you’re right, way cool. Any others?

Peter: I will leave with you, just a couple of others, this time in healthcare, as that has a big societal impact as well as business impact. Patients Like Me and Project X2.

PLM have used first wave digital technology to create a massive community of people that want help, advise and support to cope with living with a chronic disease or rare genetic disorder by sharing their data online. Patients talking to Patients have brought up really useful insights. They have potential to add a lot of health monitoring and provide very useful information to assist in clinical trial and new product development and drug adherence. Patient bodies like these online could help transform clinical trials as they would greatly reduce the cost and time to engage and recruit patients, also they could develop as an integration platform for health monitoring device and data sharing. They work from the stand point of willing volunteers and so greatly simplifies gaining informed consent.

Project X2 is an on going early stage research into using block chain technologies to end the use and distribution of counterfeit pharmaceuticals. This has been a growing problem with originally many fake drugs entering the supply chain from back street China, but now has spread as a global problem with some serious risks to health.

Socrates: Gee, thanks for such a good explanation on Digital Transformation and examples, as I have to catch a flight to Pune, India, I must run, but hope to catch ten next time to chat some more about how companies can get started on their Digital Transformation journey. Any homework you can give me ready for next time?

Peter: First in order to help you develop a digital transformation mindset I would recommend that you take a look at my list of digital use cases. I have prepared a list of use cases by industry for each of the digital technology areas. e.g. for Blockchain the use cases give practical examples of use of the technology in a particular industry e.g. Banking or Pharmaceuticals or Entertainment etc.

Socrates: Great, I will take them with me to read on my flight, I never do get any shut-eye on planes. Where can I download them from?

Peter: Just send me a Linkedin message with your email and details of which technologies and industries you are most interested in and I will send you the relevant pdf.

Have a great flight see you soon, old chap.

Socrates: laters, must dash bro!