How to build your digital transformation strategy?

To build your digital transformation strategy, you have build the right culture, capability, business model, and enable it across your enterprise, consumers, partners, and developers.

Digital Transformation Strategy

Business strategy in the digital era is one of the toughest thing to do. It requires rethinking and scaling the way you work, do business, building new capabilities while balancing the current and future. It is sometimes referred to as Digital DNA, Digital Transformation, Business Transformation in the Digital Age, and others. So how do you go about it?

Creating the enablers

We can think about these digital foundations as 3C’s – Culture, Capabilities, and Canvas.

A typical large corporation is setup to operate efficiently and effectively at scale. Applying the same rules of the road to teams that need to quickly learn, pivot/persevere is simply going to hurt.

Agile and Adaptive teams is the name of the game. It requires teams to have cross-functional capabilities, consumer mindset, organized into pods, effective product management that sets the north star, data-driven approach and courage to try, fail, learn, and change the way to get to the North star at a rapid pace. The organizations need to create the right approaches for these teams so succeed. While this may be intuitive, trying to do this in a large corporation is a different ball game.

To bring the culture to life, companies have to build new capabilities both in people and organizationally. People capabilities include building skills like Design Thinking, Product Management, Data and Analytics, Digital Acumen, and others. Organizational capabilities include modernizing the technology infrastructure and the structure to support the required digital disruption. Something as simple as procurement contract terms has a far reaching impact on a company’s ability to execute its digital transformation agenda.

Canvas refers to the business model and openness to innovating differently. There is always going to be a core but a lot more opportunities emerge in the adjacencies. For example, Warby Parker disrupted the optical wear industry with vertical integration. EssilorLuxottica should have ideally given it a though. Canvas requires being open to partners, activities, channels, customer segments and relationships, as well as cost and revenue models.

Building the catalysts

Digital for Consumer, Digital for Customer, Digital for Enterprise, and Digital for Developers are typically the key platforms of a digitalization strategy.

Digital for consumer refers to new products and services that may be core or in the adjacency that needs to be delivered for the end-consumer. The primary customer for this is your end consumer. For example, no food company or a restaurant company thought about Instacart or GrubHub. They are fundamentally fine creating new food products and pay to deliver them via the channels.

Digital for customer or partners includes building an approach to bring customers and partners into the ecosystem. The primary customer for this is the business you work with to reach your end-customer (or) partners like distributors. Think about this – your customers are probably facing same challenge digitally and sometimes your go-to-market channels are all disaggregated across distributors preventing you from having right data and visibility.

Digital for Enterprise is how you revolutionize your internal digital infrastructure. This is the IT/CIO organization’s migration to cloud, mobility, data warehouse, and others. In a way, all these components need to be in place for a more seamless integration of existing infrastructure with a more future facing infrastructure. Otherwise, like many companies, one risks the existence of two islands.

Digital for Developers is about how a company can enable open innovation. The customer for this is the extended developer population that can use your infrastructure to build new solutions. Open Innovation is the concept of how you can include people outside of your corporation to participate in innovation. Large companies have access to data and capabilities and opening up that to the world can unlock a community that can then help build disruptive solutions.

There is no size fits all rule for the verticals. Companies have to figure out the starting point as well as what works best for them.

Building business digital transformation strategy

Building a business strategy for digital era doesn’t happen overnight. It requires time, thought, failures, and lessons. There are large companies like GE that dedicated $4BN+ to build out a digital department and scaled prematurely and then there are companies like Honeywell and Sanofi that are learning from those lessons and rethinking their approach to scaling. In subsequent posts, we will look into each of the foundational and vertical components in detail.


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