What is Digital Business Transformation?
Digital Business Transformation (or Digital Transformation) is defined as the use of digital technologies to radically improve a company’s performance. However, at present, Digital Business Transformation is not well understood, and many traditional companies struggle to gain transformation effects from new digital technologies.
What is Digital Business Model?
To truly drive value through Digital Business Transformation is to implement a new, successful Digital Business Model. Alternatively, the firm can start its digital journey by experimenting with various digital technologies (to improve its internal operations or customer enhancements) and will thus be better equipped to recognize a new business model (with new service opportunities). One should therefore never underestimate “the power of experimenting”.
Which ever way the organization manages to create its new digital business model, it must keep its existing business model productive (“to pay the daily bills”) and simultaneously introduce new innovative services, products and practices into its new digital business model (“to guarantee the firm’s future”). Managing both business models simultaneously requires that companies will learn to re-organize their current organizational structures, roles as well as working and steering practices.
What is Digital Masterplan?
All the organizational changes (explained above) will need to be systematically planned and steered. Therefore, Digital Masterplan is required. Digital Masterplan should include parts for both experimenting new and streamlining existing. It should also clarify issues related to decision making and budgeting as part of Digital Governance policies. One should also realize that Digital Masterplan is not a one-time-exercise but to be continuously updated to respond quickly to changes in customer requirements, technologies or organizational needs as well as to results of a variety of digital experiments in an organization.
Do we really need Digital Masterplan?
Companies without Digital Masterplan usually end up having either (1) Chaos effect or so called (2) Gatekeeper effect. (1) In Chaos effect, no-one seems to be in charge of Digital Business Transformation. As no-one is in charge, there will pop-up many different “cowboy experiments” that overlap with each other and produce organizational conflicts. As a result company’s budget for Digital Business Transformation grows uncontrollable. (2) In Gatekeeper -effect, the company’s policy is to invest in its existing business model (via streamlining its current services, processes and practices) and investing in new is seen as an unnecessary risk. As the organization is focused on running and streamlining its existing business model(s) and no-one is encouraged to experiment, there will be no green-field development. As a result, new digital opportunities will simply be missed.
What is so special with Digital Business Transformation?
We have noticed that many companies do not know how to manage their own Digital Business Transformations – and even less their parallel business models/services. They either focus too much on technology side or expect their technology vendors to take responsibility for governing their digital transformation journeys.
Digital Business Transformation is however the most important journey that your company will experience and it should not be understood as a one-time project or vendor-steered technological experiment. It should rather be understood as a continuous development of the entire company to which every employee and every unit will take part.
What will change in Digital Business Transformation?
No matter which technological projects are to be implemented (to create new digital services/models or to streamline existing business services/models), these technological projects will certainly affect the entire company.
Each unit (HR, IT, Business units, Purchasing, Process units etc.) will need to look at their existing ways of working and steering. When digital technologies will increasingly take over the routinized office work, work scheduling and quality controlling, the existing process- and work practices as well as steering practices will need to be adjusted.
If the firm does not plan in advance what kinds of consequences there will be to each organizational unit, each employee role and business area – implementing new digital technologies might give more chaos than benefits. Therefore, the firm should plan in advance how to orchestrate its entire digital business transformation – and not only from a technological point of view, but also from a digital governance point of view. This is why Digital Masterplan is required.
How to steer Digital Business Transformation?
In order to avoid consequences of uncontrolled stand-alone technological experiments, the company should establish a systematic and centralized Digital Transformation -program.
Here You can read, what your Digital Transformation -program should include (stage by stage): Stage-1 /Stage-2 /Stage-3.
What are the biggest challenges in Digital Business Transformation?
Like any other transformation programs, Digital Business Transformation has its own specific challenges. These challenges vary depending on the stage of Digital Business Transformation (see below).