To Be a Digital Winner, ‘Be Water, My Friend’

Yes, I know. The terms “innovation” and "digital transformation" have become so widely used, so gratuitously "named in vain" and broad, that they may have become unhelpful. You may not love the terms but love them or not, both are already a matter of survival in the digital age: due to the massive adoption of new technologies and improved communications, customers will not stop changing their habits, consuming products and services much differently from what they do today.

The convergence of technology and behavior is just accelerating, and the butterfly effect it causes is transformative and disruptive, especially due to the new generations. Centennials and millennials, the first two native internet-generations in history, already represent 59 percent of the planet's workforce, and that means that they have purchasing power. Therefore, yes or yes, they will be our clients today and in the near future, with a much higher level of digital demand than what we have now with clients of previous generations, who represent our current comfort zone. This context turns both innovation and digital transformation from a “nice to do” to a “must have.” We better understand them, then, in order to love them.

Do Not Confuse Innovation With Digital Transformation

Converting into digital what is currently done on paper or with manual procedures or developing the digital sale of a product are not digital transformation. This already has a name and it is called digitization. It could perfectly be part of the Digital Transformation but it is also a very common mistake to stop or to focus on these simple conversions.

However, digital transformation is the integration of digital technology into the entire value chain of a business, fundamentally changing how you operate and deliver value to customers and employees.

It is important to highlight that the pure digital transformation does not usually lead the company to innovation (new markets/business models). However, innovation, that is also a cultural change that requires organizations to continually challenge the status quo, experiment, and get comfortable with failure, will only be possible with a digital transformation. In other words, digital transformation is a facilitator of innovation, it is not innovation per se.

And this is the reason why we are going to replace both terms with a single phrase, which encompasses them and which signifies the real objective of any company: Being a Digital Winner.

The Digital Imperative

Legacy companies need to embrace change as evolution, at least. The opportunity cost of digital inaction can be high, in almost all industries: difficulty in attracting/retaining the best young talent, loss of competitiveness, erosion of brand positioning, inability to take advantage of new business opportunities/markets/segments, among others.

That requires courageous leaders who align the entire organization toward the new goal, having the courage to accept short-term risk to create long-term gain. The benefits are usually not immediate but can be exponential along the way, including the reduction/removal of entry barriers, increased efficiency of the current business, and expanding and accelerating business beyond the current scope.

How To Be a Digital Winner

It is worth remembering some basics for the digital imperative to avoid falling into the "venial sin" of focusing only on technology instead of the goal of being a Digital Winner:

1. Strategy: You don't need a digital strategy. You need an integrated strategy enabled by digital, to be able to innovate. The digital business is a different animal: it is carnivorous, much more aggressive (the traditional one is herbivorous or, at most, omnivorous). And, in addition, it has to "hunt" anywhere, in unknown territories, without having the client physically in front of it. Precisely for this reason, it needs to feed itself with large amounts of data and apply intelligence to them, to see what is not visible, to understand customer preferences, in order to be able to "hunt" and to retain clients, through cross-selling. Therefore, it is important to divide the business strategy model into two parts, always front-to-back, from the very beginning: the digital market model (where you will innovate) and the operating model (where you will apply the digital transformation), which should be organized to fully support the digital market model. Otherwise, you will generate inefficiencies and friction: 

   

2. Customer experience design above all else: It is essential to understand people's needs in the context of their daily lives (not only in their current relationship with your company), to find differentiating solutions: a product, a service, or an experience that addresses their unmet needs.
3. Culture and talent: Attracting and retaining the correct digitally-aware leaders and experienced digital specialists.The skills required to be a digital winner probably can’t be sourced or developed entirely from within. If you had all the talent you needed in-house, you likely would already be a relevant actor in the digital age. Organizations must be realistic about the collective capability of their existing workforce because, with the speed of change and the aggressiveness of digital competition, the company does not have much time to learn.
4. Reframe your operational agility:Once you have already identified the market need, you will need to should redesign processes. Digital innovation needs digital transformation of internal processes to deliver the expected digital experiences for new customers, to develop new business models and to reach new markets.
5. Digital technology integration: You can acquire, for example, the best CRM on the market but if you don't have structured, clean data and processes with optimal digital transactions that provide differential value in your customers’ experience, you're wasting your money (and time).
6. Leadership: Like every new challenge, this transformation requires obtaining full support from leadership by establishing a strong vision, clear and well-communicated goals, with a strategic alignment, because it is always top-down. As structure follows strategy, it will surely also be necessary to lead some organizational changes, putting the right talent in place for each new role.

And, please, always remember: empower the talent that really has the appropriate expertise and seniority. As Steve Jobs said, “It doesn't make sense to hire smart people and then tell them what to do. We hire smart people so they can tell us what to do.”

And, Yes, Growth And Evolution, Eventually, Generate Some Discomfort

Leaving any of the mentioned elements out, will leave you vulnerable to disruptors. And yes, being a Digital Winner means being essentially flexible, in order to create enough space for “the new” in a traditional enterprise to be able to generate new competitive advantages. Otherwise, “the new” neither enters nor remains in your organization. Like Bruce Lee said: “Be water, my friend.”