I took our clash of viewpoints on the road, testing them against customers knee-deep in their own transformations.
I won't review all of part one, Is digital transformation sticking to the wall, or losing its meaning? But one point from Solis' data stands out: digital transformation is NOT a point solution. Solis:
Digital transformation is forcing business to look at the world through a digital lens, from the outside-in, inside-out, and at an enterprise-wide level.
Agreed, though the need for quick wins to fuel the effort - and maintain buy-in from pesky bean counters and the like - cannot be underestimated. Solis and I also jousted on whether or not digital transformation is just a spiffed up version of change management. Lately, I've been convinced that the two terms are fairly distinct, though your transformation effort will surely falter if you haven't accounted for culture change via a formal change management plan.
Digital transformation may be real, but it's a slick sales tool
But we do have a problem. If there's one constant across the spring event season, it's that digital transformation is the arguably the slickest enterprise sales tool/framework ever created.
Transformation goes hand-in-hand with "modernization," which, conveniently, seems to translate to loads of new software - even if some of it might be open source. Get your customers to buy into transformation, and software dollars are likely to follow. So the question I posed to Solis about digital transformation hype takes on new urgency. Customers should be motivated by market realities, not digital fantasies.
Here's what I wrote to Solis:
One of the big findings from this year's report is: "Companies largely don't see disruption as a threat. Only 37% of businesses view digital transformation as an investment in the fight against market disruption." Do you think that is a fair assessment on the respondents' part? In other words, are the respondents correct that digital disruption is overhyped? Or are some respondents underestimating the impact?
Solis' response makes a big distinction: the hype of digital transformation versus the reality of the underlying disruption.
Surely, "digital transformation" is overhyped... Disruption is not overhyped. In fact, digital transformation as a business mandate is woefully underappreciated. Times, tastes, and trends are evolving. Most organizations are not. "Digital" is just the latest flavor of creative destruction. But it is the first in a long while to completely challenge the conventions of executive mindsets and traditional business models.
Solis doubled down:
It's blatantly apparent to those with open minds, experience and/or data that digital is affecting customer and employee behaviors, mindsets, values and aspirations. At this point, it's not even a non-argument, it's a distraction from the more important conversation of change and relevance. It's like the misdirection or deflection we see in the news today.
Then Solis turned the tables on me:
On the other hand, what's overhyped is…business as usual. Why is this still a thing? Executives and managers are holding on to it for dear life…
The threat and impact is real. The fact that only 37% of companies are doing something about it is not promising. At the same time, 31.4 % of companies say that the top challenge to digital transformation is low digital literacy or expertise among employees and leadership. We also learned that 31% of companies view digital transformation as a cost center.
So, I don't see digital disruption as being overhyped. I see that there are very human challenges that get in the way of seeing disruption as a threat. Ignorance is bliss until it's not.
Don't repeat the processing re-engineering bog pit
Since I spoke with Brian Solis, Frank Scavo of Strativa wrote a landmark post on digital transformation in the enterprise, defining five categories of digital transformation. Scavo sees transformation as ongoing and business driven, not a discrete IT project:
Digital transformation should be something practical and tangible, something in reach of all organizations - provided business leaders make a sustained effort.
We need to distance today's transformation efforts from the bloated "process re-engineering" fails of the '90s. As I said to Scavo:
- Digital transformation almost always extends beyond enterprise walls. Even internal transformation projects should usually have an external stakeholder group (customers, suppliers, app developers, potential new customers) firmly in mind.
- In past decades, attempts to "extend" projects to stakeholders outside the enterprise ran into deep technical barriers. Those barriers have lessened considerably, via mobile/cloud/APIs etc.
- If you can't launch your first digital projects quickly and affordably to gain traction, you're probably on the wrong track.
Over on Third Stage Consulting, Eric Kimberling reviewed a series of digital transformation failures. He points out a common thread: the lack of an external focus.
Solis surfaced a similar problem in his data. Here's what I asked him: Even though businesses cite "evolving customer behaviors and preferences" as the top driver of digital transformation, fewer than half invest in understanding digital customers (42%). That's a problematic gap. What is your best explanation of that discrepancy?
Solis sees a few problems, including the flawed pursuit of "CX".
There is no holistic view of the customer because there is no holistic business model to approach customer experience. The 42% attempting to understand digital customers in this year's survey is a start, but it's not enough.
At the same time, only 34.8% have mapped out the customer journey in the last year. Yet, most companies are investing in digital transformation with an emphasis on customer experience without having access to real customer insights.
Human barriers and lack of standard protocol are getting in the way. Solis again:
Going back to the first report I published on the subject in 2014, the truth is that digital transformation is often met with very human barriers. Executives don't know what they don't know. Their purview is focused on shareholders and/or stakeholders. Evolving customers (and employees) is so radically different, that there isn't standard protocol for response.
The silver lining - cross-departmental initiatives are growing
There is some silver lining. This year, Solis found an increase in structured, cross-departmental transformation.
After three years of conducting this survey, I am encouraged by the level of which companies are diversifying their efforts in digital transformation. While it's still debated among CIOs and CMOs as to who owns digital transformation, among the more progressive companies, digital transformation is owned by a cross-functional steering committee where ownership is shared and enterprise-wide.
Alas, executive backing remains a sticking point for many:
We found that 59.1% of companies surveyed in 2017 rely on a steering committee or workgroup with cross-functional representation. While this number is noteworthy, these groups lack formal executive sponsorship.
That conflicts with what Solis sees from market leaders:
Companies further along what we documented as "The Six Stages of Digital Transformation," employ formal, cross-functional committees with executive support and resource allocation (40.2%).
In my response to Scavo, I overlooked two points. One is that "external/customer focused" should not be limited to your end customer. A big part of that external focus could be your suppliers.
When it comes to digital transformation, there is no back office. Virtually every process you want to optimize touches some type of external stakeholder. It's not a front office versus back office thing. It's an insular mindset issue.
Geographic/industry differences aside, Solis is right about the business-as-usual problem. I'm worried about the amount of complacency I still see. There is a competitive penalty for inertia. That doesn't mean, however, that responding to disruption is about loading up on the next batch of vendor offerings. Our partner Rimini Street makes a potent argument against that in Declare your independence from vendor-dictated roadmaps.
The other thing I left out came up in Solis' research also:
After three years of customer experience serving as a top catalyst for digital transformation, employee experience is also rising as a top driver.
When you consider the sorry state of morale amongst underpaid retail workers, you can see how customer experience breaks down. That's going to take big changes to fix; I'm not sure many companies have the appetite. At least, according to Solis' research, the topic is becoming a priority.
I'll have more content on these topics this summer, but if you want to go further now, there are two relevant podcasts I haven't yet written about on diginomica yet:
- Putting digital transformation and cloud to the project test - a chat with Belden and Mansfield of UpperEdge
- Applying Digital with Impact - Brian Sommer on how to put his book to use on project sites
End note: Solis has now released another book, Lifescale: How to Live a More Creative, Productive, and Happy Life. I recommend it.
Updated, June 29, 8am PT with a few small clarifications and resource links.