An interesting trend I noticed lately – many of our friends have put “Digital Transformation” in their LinkedIn headline, and the trend is accelerating.
Also, judging from how many times the term “digital transformation” is appearing on The Edge and Business Times, two local business newspapers I regularly read here in Singapore, it is definitely high on the agenda for many.
Another indicator is how many companies are buying this keyword on Google:
Some companies have also approached us at Momentum Works for help in their transformation journey, quite often on specific projects.
The understanding of the term, however, varies. Which is natural – companies are at different stages of leveraging digital technologies. And different industries would often imply different levels of needs and different technologies needed.
The two stages of digital transformation
Many we have been speaking to have already done what some of them call “the first stage of digital transformation” – mapping their processes into a digital system to save costs, improve efficiency and (oftentimes) increase sales.
As the benefits of the first stage are becoming fully realised, and competition arises from VC-funded ‘digital-native’ startups from adjacent fields, many of these companies are now looking at the “2nd stage of digital transformation” – truly leveraging technological capabilities to expand their business or build new ventures from within.
While there are many consulting selling advisory or handholding services related to digital transformation – this journey is not easy.
Compared to the 1st stage, where projects largely have defined scope and measurable outcomes, the 2nd stage is murky, with a lot of temptations (which also means a lot of risks) and results that would sometimes take years to show.
A very painful reality is that during this whole time, the company has to bear the costs of all the investments, and management often questioned by shareholders and media about why they are doing so.
Even for some of the more “successful” corporates in their digital transformation journey, the question still stands on whether to ‘measure’ and how to. If you flip through the business press over the last couple of years, you would see the same companies mentioning they should measure or they should not measure, at different times.
Let’s face it (and how)
So with so much uncertainty, should companies still go ahead? And the more painful set of questions are: What should they go ahead with? How much should they invest? What is the proper way to review the progress and determine whether they are on track or not?
Although we have got ourselves involved in a few projects, in either advisory or venture building capacity, we still believe there is no easy answer to those questions.
However, we have a few tips from our experience, which might be useful for corporate decision makers who are reading this blog:
- Always get a global view first – who is doing what in your industry, both incumbents and disruptors? We see quite often corporate stakeholders are either excited or disillusioned by one or two cases, but not seeing the full picture of what is being done elsewhere. For instance, with so much insuretech innovation across the world, many consultants are still just showing Lemonade to their corporate clients; also, what is the real implication of the WeWork saga for corporates? It is worth having a balanced, global view in both instances.
- Work out all the options you have, do the cost benefits analysis – but also bear in mind that options will lead to more options. Read this Paul Graham blog (warning: quite long) and you will know what I mean.
- Repeat the exercise in 1 and 2 continuously. While planning for the long term, companies should also review their transformation options more frequently (than their current strategic review cycle) – to make sure they are on the right track, and relevant new opportunities are promptly seized.
- Do NOT jump into a project without knowing what you are getting yourselves into. We have seen a number of cases that corporates just copied what is hot outside – blockchain, marketplaces etc. – only to be stuck with a project that cost a lot to develop and also quite a bit to maintain, without any sign of successful spin-off or profitability. Find partners who have done it to advise you – not those who have developed theoretical frameworks.
- Have the expectation that this is much more than just a product/tech play – it would involve operations, marketing/growth, business intelligence etc. Many we have seen stuck with a costly product are where they are because they have not planned the whole suite of operations before commencing product development commitments. Plan everything well – and also do not underestimate the difficulty in recruiting the right people. Good digital talent is in high demand – those who are easy to get … hmm, you know what I mean.
We will add on to the list above as time goes by. At the same time, we also welcome your sharing about your digital transformation journey – the successes but more importantly the pains. Write to [email protected]!