Organizations are advised to start with introducing small changes in their processes and incremental innovations using emerging technologies, with a long-term goal in mind.
Digital transformation, also known as DX, has become a necessity for every organization to meet the changing customer expectations and needs.
If you don’t embrace the change, you will likely be left behind. But before embarking on the digital journey, you need to have a solid process in place.
In conversation with EFY bureau, Dr. Rajeev Papneja, Chief Growth Officer, ESDS Software Solution Pvt. Ltd, spoke at length to throw light on various aspects of digital transformation: what it is, why it matters, and what are the key success factors, etc.
Q. What are the major components of digital transformation?
Digital transformation comprises of multiple components depending on the type of industry, and there is no magic number that define the count. Customer, employees, operations, business, emerging technologies, etc. may be seen as some of the components but what is more important is to understand that DX starts and ends with the customer. It is about providing seamless experience to the customers across various touchpoints in the journey.
Employees are the strength of any organization and clearly one of the focus should be on enabling the current workforce to sail through the changing times and add value as this requires a very different mindset. In the last decade, technology had been a driver of business but once again technology has taken the role of enabler while businesses try to change the way they work. We have entered into an era of “output based economy” and this has given rise to new business models.
Automation coupled with AI/ML in operations is freeing up more resources to work on innovations and strategies than ever before. It goes without saying that leadership vision and cultural transformation still remain the leading components for a successful digital transformation.
Q. Why has digital transformation become the need of the hour?
While there are many reasons for digital transformation becoming a necessity for every organization, one of the biggest reasons is that the customers of this generation are digital.
To explain in simple terms, let’s take an example of a pacifier. When I was a kid, I remember parents using pacifier to stop us from crying. If I look around today, most of them show funny videos on mobile to kids. The end result expected is same, but the way has changed. Unintentionally, we have wired the brain of the kid to respond by using different means.
“Digital transformation is not about just using technology to make products cost-effective, rather it is about developing and embracing new business models”
If we look at it more closely, we will realize that the means to obtain end result have changed but the “Why Behind the Buy” remains the same. For bigger industries, this is giving rise to different business models that are more focused on the need. Digital customers are not interested in buying bulbs as they realize that their need is light and how it is served to them is not their botheration. This is giving rise to a new economy what is commonly termed as “Outcome Based Economy”.
Q. Should small and medium size companies bother about the DX revolution or is it applicable to the big players?
This is a very interesting and relatively debatable question. Nevertheless, as far as I can visualize, SMEs are not only required to take immediate steps in this direction, but also are the ones that can change the course quickly due to their agility as compared to bigger organizations.
SMEs are also the ones more vulnerable to disruptions in their respective industries due to the sheer number of competitors. Smaller companies need to focus on hiring CMOs who can build their long-term digital strategy because it is not about reaching people anymore, but it is about engaging them. Organizations should start with introducing small changes in their processes and incremental innovations using emerging technologies, with a long-term goal in mind.
The rules of business are changing, and it is no more about making a cheaper product or a better product. Traditional ways of business were to change reactively based on market situations, but today’s era is demanding changing business models proactively to create markets. It is very necessary to start challenging the status quo rather than thinking on what is working fine. There has to be a group thinking on what can kill your business tomorrow and work on launching that model before someone else does.
However, big companies too are not immune to disruption. If we go back a decade, the decade of innovation, and look at companies such as Motorola, Nokia, Sun, etc., we will realize that the giants that failed to innovate at right time, lost their market share in a matter of years and were taken over by innovative companies.
It is advisable to identify critical areas to start with and then keep building on and working on the roadmap by setting up a defined budget and team for these initiatives.
Q What are some of the key points to take care of while embarking on digital transformation journey?
Most of the time the word “Digital Transformation” is so tightly coupled with emerging technologies, it seems that DX is all about technology, which is really not the case. DX is a journey of an organization where emerging technologies are simply enablers and, in some cases, they play a role of catalyst to speed up the journey.
It is very important to understand that DX starts and ends with the customer. Using appropriate technologies, organizations need to deliver the “WoW” experience to its customers at every touch point. It has to be understood that customers can enter the system at any point in the organization’s journey and the experience has to be seamless.
DX is not about just using technology to make products cost-effective, rather it is about developing and embracing new business models. We all know about OLA and OYO Rooms, and how they completely transformed the industry. In this journey, the leaders have to learn to reward failures because DX is a journey of continuous experimentation and not all initiatives are going to succeed. To promote experimentation, it is necessary to eliminate the fear of failure amongst teams.
“Digital transformation when done right can transform a caterpillar to a butterfly, but when not done properly will only end up giving rise to a faster caterpillar”
DX journey must include automation as a big part to challenge the 80-20 rule where 80 percent of today’s budget & resources goes in keeping the lights on and only 20 percent towards innovation. The aim of automation should be to decrease the resources used for routine activities and use them for new initiatives.
Last but not the least, it is very important to have people in team with the right mindset. Resistance to change is our birth right and DX world is a very different one. Very few people would like to embark on the journey. Build a team of people who understand its value and drive them to success. Digital transformation when done right can transform a caterpillar to a butterfly, but when not done properly will only end up giving rise to a faster caterpillar.
Q. What are common roadblocks for any organization to embrace DX journey and which is the most prominent?
I am not sure globally, but what I see in our nation, the biggest hurdle is non-conducive organizational culture. Especially if we look at small and medium sized businesses, they are so much human driven (less system driven) like a mom & pop shop, with the structure of rewarding people for motivation, rather than their work or value addition. More than 30 percent of the time goes in politics and self-brainstorming to secure one’s position rather than embracing positive change and contributing to new initiatives.
While you will always find dynamic people in any organization, who are ready to embrace change and are always fighting for betterment of ways with their innovative or fresh ideas, less than 5 percent survive in culture where non-conducive human traits are tolerated. In bigger organizations, it is the same story in different form, where the new generation ideas never find their way through the hierarchy all the way to the management and even if it does, it is shredded at the top.
Additionally, skill gap is a big obstacle today, in times when half-life of study has come down to less than 4 years, which really means that what you study in first year of college becomes irrelevant by the time you complete fourth year.
While on one hand, digital transformation starts and ends with the customer, on the other hand it starts and ends with the right leadership in any organization. This kind of leadership is not technology centric but the one that looks at the pain areas of customers (internal or external), the market potential and then take digital initiatives to provide solutions.