, , , , ,

Dwight D. MooreDwight Moore is an information technology executive with a career spanning more than 25 years. With large consulting and CIO leadership experience, he bridges both technology and business P&L experience. His multi-industry exposure implementing IT strategy, data centers, architecture, operations, application development, and project management provides a unique point of view in solving today’s challenges.  He is life-long learner who enjoys innovation, learning about new technology, and creating strong, cohesive teams to drive change.

Digital Transformation Required (Innovate or perish)

Merriam-Webster defines “innovation” as

1) the introduction of something new

2) a new idea, method, or device

Derived from the Latin “innovat” meaning renewed, altered.

There were more than 80 million millennials born in the U.S. between 1982 and 2001.  By 2020, they will represent 40% of the U.S. consumers. These are the customers of the future, and they are digital natives. Growing up with technology, they are savvy and comfortable online – mobile or web. They expect speed, connectivity, access anywhere, transparency, and data security. Organizations must meet expectations, or they will go elsewhere. Digital transformation required.

Digital transformation isn’t about the technology, it’s about business innovation. It’s about the customer. It’s called “digital transformation” due to technology being an integral component of a growing digital world. Yet the important aspect of transformation is thinking differently.  Digital transformation is about leveraging technology to improve the business as well as the vision to look beyond today. In my view, this is the essence and distinction of “innovation” and “Innovation”.

I like to call “Innovation” (big “I”) as those who redefine. It is creation.  It’s inspiration. It’s about forgetting what you currently do and re-think the business.  It’s looking at a customer or market in a completely new way. It’s not uncommon that it is an invention. This was the essence of Uber disrupting traditional taxi/limo business. AirBnB disrupted traditional vacation rentals/time-shares and arguably hotels. Apple’s iPod/iTues disrupted the music industry. RedBox disrupted Blockbuster (and is now a digital company). Amazon’s Kindle disrupted books/stores/distribution. They redefined the traditional business, and market.  It wasn’t that these services were new, but they rejected the way it has always been done. This is a topic for another time.

What I call “innovation” (small “I”) is the need for businesses to invest and adapt over time. Teams introduce new, incremental changes to improve sales, products, performance, or service.  Much of digital transformation is changing processes by leveraging the fast-moving technology landscape. We witness our digital journey opportunities through:

  • Reaching new markets, e.g. millennials, new geographies, digital products
  • Inserting automation e.g. CRM/ERP, AI, IoT, cloud infrastructure/virtual machines/containers
  • Improving responsiveness e.g. customer service/support processes, cloud infrastructure, “agile” business (all the organization, not just IT)
  • Increase quality e.g. IoT, digital user experience (and closely aligned with automation)
  • Creating disintermediation and transparency, e.g. blockchain, digital products/distribution

Startups are simpler. Their primary focus is finding the product or service and getting to positive cash flow. Second, they focus on scaling the business. Few processes, less overhead, simpler technological needs.  I’m not saying it is easy, just less complex initially.

For established businesses, they have existing customers, processes, infrastructure. The larger the organization, the more challenging. For many business areas, not just technology, the more integral to operations the greater the risk. The scale of customers are orders of magnitude higher. There are more products or services. Processes have been created to create quality, responsiveness, repeatability, and reliability.

Organizational entropy grows over time. Inconsistency or increased complexity in processes. Loss of corporate tribal knowledge. Growing lists of priorities that create potential for different departments to work against each other.  Multiple, overlapping technologies with increasing cost. Increasing ecosystem complexity as the number of external partners or services grows. Technologies reach end-of-life (unsupported) becoming obsolete. The higher the entropy, the greater the effort, larger the cost, and higher the risk to remediate.

When there is more at risk, executives become increasingly risk adverse. The irony is avoidance to change increases overall risk. Transformation can span multiple years, and often runs into complexities because people can see the broader picture, and yet no one sees all the areas of impact in detail.

However, every complex problem starts by identifying the problem, and then breaking it down to solvable parts. Organizational leaders can start with challenging the established belief systems, and processes. Large change requires communicating the vision and gaining employee support.  The basic steps involved are:

  • Create cross-functional teams, led or supported by senior leadership.
  • Define a strategy and create a vision of the future.
  • Identify the areas where there are opportunities for process improvement, automation, or technological negligence, or new product/service opportunities. Often the line level employees can shed light on where there are challenges.
  • Prioritize by need and importance. This is often one of the hardest tasks. People often have varying ways to define this, and all politics are local in the office.
  • Create a team mindset. To be successful, this is one of the most important tasks. The transformation succeeds or fails together as a team. Leave the egos at the door. Create dialog, and constructive conflict.
  • Demonstrate leadership and courage by looking for opportunities to sunset where the value is declining. This is threatening when someone loses scope or responsibility. However, as one door closes, another opens.
  • Create a plan and execute rigorously. Hold people accountable and be an agile organization focusing on simplicity (no more or less than what is needed).