Digital Transformation – It’s Not About Technology

Gauthier Delmee of Domain Consulting discusses how digital transformation, as well as development and operations, isn’t all about technology. 

Many organisations around the world are undertaking digital transformations in an effort to move with the times and meet consumer expectations.

Working with customers of Cyara, the contact centre cloud solutions provider, the Domain Consulting team has found that this transformation most often involves a transformation in how they think about technology.

In fact, I believe that is critical for achieving a successful transformation. And while you might think technology is essential, in this post I’d like to outline why I believe another factor, organisational change, is more important.

What’s Different About Digital Organisations?

In our experience, the most important difference is their mindset: digital organisations will focus on small experiments versus big bets, scale quickly once they find ‘market fit’, and leverage technology to their advantage.

In his book The Digital Transformation Playbook, David L. Rodgers lays out the five domains of a digital transformation strategy. Digital organisations:

1. Customers: harness their customer and partner network to influence people to buy and use their service, rather than trying to persuade a mass group.

2. Competition: have a fluid ecosystem of partners and competitors, in which competitors will sometimes partner to deliver products and services (an example is Apple and Samsung).

3. Data: use data as a competitive advantage.

4. Innovation: are willing to use innovation to disrupt themselves, and innovation is no longer expensive and time-consuming.

5. Value: are constantly assessing/discovering how they can deliver value to their customers, but it is the customer who dictates what value is.

For each of these domains, digital organisations typically manage their portfolio of businesses using three horizons. The metrics used to measure success at each stage will differ.

1. Optimise (Current Business): this is in the immediate/short term and focuses on optimising by reducing the cost of serving as much as possible.

2. Scale (High-Growth Business): this is in the medium term and focuses on scaling a product or service with which a market fit has been found.

3. Explore (Growth Opportunities): this is a long-term play and focuses on exploration. It involves iterating, pivoting, doing small experiments, and validating assumptions until the market fit is found, or abandoning the idea.

What Does all This Have to Do With Development and Operations?

For the current business phase, organisations are aiming to reduce their operating costs as much as possible. Here, automation is important (though not the only factor) and they have to be able to make changes with little risk and avoid disrupting their business. That is also in the realm of technology.

If an organisation is in the growth-opportunities phase and is thinking about exploring and trying to get the right market fit, they need to keep their options open, consider how they can build experiments quickly and cheaply, pivot if necessary, and have agility. And to achieve this, they need to have the right mindset.

The organisation should start with a low-technology product that demonstrates that they are addressing a problem that people will pay for, then use technology to scale. Here, the focus should be more on experiments, data, and feedback loops than on automation.

For the high-growth phase, development and operations helps with releasing new features quickly, as it involves having an architecture in mind that allows an organisation to scale quickly. This is where technology is most important, for scaling processes to keep up with demand at a reasonable cost; this is sometimes referred to as ‘operational leverage’.

It’s Not About Technology

It’s tempting to think technology is core to enabling digital transformation. However, you’ll note that none of the goals of digital organisations identified earlier revolve around technology.

The key is change management, cultural change, and changing mindsets. While this is by no means easy, as I’ve highlighted in a previous post, it is critical.

Experimentation, organisational change, taking limited risks, and validating assumptions are key to the mindset required for successful digital transformation.

It’s really about letting go of what you’ve done in the past. Rather than optimising past practices, start with a blank slate, set some constraints, and identify what can be achieved within those constraints.

In the past, organisations would spend a lot of time and money on creating business cases, based on non-validated assumptions. Every business case for a new capability was a big bet: if it failed, an organisation could risk their whole company.

Now, an organisation can start validating their assumptions in days or weeks for hundreds of dollars rather than millions of dollars. This means that innovation today, once an organisation lets go of the anchors of the past, is a lot less risky. But they have to adopt the right mindset, manage the business from that base, and be ready to cannibalise their existing business with the next high-growth opportunity.