Digital Transformation in 10 Practical Steps
Part 1: Strategy Definition

Digital Transformation in 10 Practical Steps

Whilst ordinary change projects are often difficult, digital transformation can be be even more complex. The solution for many organizations: they hire an external consultant or change agent. However, you can usually find and apply a better course of action. More often than not your organization is the better position to initiate and operate these digital change programmes. From within. Adapted to your very situation.

Change programmes vs digital transformation

Of course, you need to be aware of the differences between a “normal” change programme and a “digital transformation” of your company. Also, you have to approach digital transformation as a wider, more holistic programme. There cannot be any doubt that digital transformation will impact your organization across the board. It cannot simply be contained to a certain part of your company, unless you deliberately set it up as an autonomous business on the side. Furthermore, digital transformation initiatives tend to put a lot of emphasis on mindset change. That is a discipline which is often not even necessary in ordinary change programmes. And whilst digital transformation will inject some degree of deliberate “chaos” into your organization, your processes, your product development etc. we advise using a stable framework to pull it off.

Adapting frameworks

There are numerous frameworks on offer from consultancies, business schools and suppliers alike. It does not really matter which of these frameworks you actually apply, as long as the framework is reasonably complete. The framework we use in unleash.digital is shown in the above diagram. It covers the three main areas for digital transformation:

Customers (light green)

Because DX may require a fundamental shift of how you interact with your (digital) customers, plan and design products, utilise digital ecosystems and go about marketing and channel strategies.

Strategy (blue)

Areas that help you develop a “living” digital strategy. Your strategy will continually adapt to new digital developments and fosters a collaborative digital mindset.

Implementation (dark green)

Typically modelled along P-P-P (people, platforms and processes). This needs to align you with the digital world you are facing. However, digital transformation potentially requires substantial organizational changes and realignment of your company-wide mindset.

Want to learn how to apply this?

Why not sign up to our Digital Transformation Strategies cookbook? Also, check out our Digital Transformation Delivery cookbook. Now, let’s find out about the steps in your digital transformation journey:

#1 – Analysing basics and getting ready for DX

Every journey starts with the first step. But what direction to take? Digital transformation can be a long-winded road. It may not necessarily be difficult to navigate, though. Rather, many businesses and organizations will need a lot of stamina to sustain the journey. Before you start your own journey make sure you understand your starting point. This may sound simple. However, we see a lot of companies struggling.

Data Mining and Analytics

One of the first steps to take is the collection of a sound set of data that define your current business.  These data will likely sit in different departments. You will rarely find that all required data are in a single place. So, have somebody go out and liaise with your functional units. Understand what they are up to.

Apply the Pareto principle

Do not try to boil the ocean when collecting and collating data. An 80/20 split i.e. gathering the 80% most important data with 20% of effort will do to start with. Make sure your coverage is for those parameters that are essential.

Take an educated guess about the data you need

There will be situations where you need to take an educated guess about what data is most important and what you will need. Again, adapt a simplified approach when gathering data. Ask your employees. Your partners. These are the people that know best what makes a certain function of your organization tick. Interviewing and prompting your employees usually works best in two stages. Firstly, find out what is currently going on at Ground Zero of your company. Secondly, you will need to paint a picture of what your company may look like when digitally transformed. Will the most important parameters change compared to your status quo? And, what will these “new” parameters likely be? Log the data you gathered.

Engage touch points across your organization

Ensure you talk to all main functions in your business. And, if I say all, I mean all. This is not an exercise of just pulling out some financial figures by which the status of your company can be judged. This is for a digital transformation that needs to implement across your business. If you are gathering data in Finance try to determine the most significant factors that drive, for example, profitability. Interview your product development departments and you may need to dwell into parameters around “time-to-product”, first-pass success rates etc. If you are discussing with your HR department your focus may lie on speed and thoroughness to pick up new skills and competencies.

Data Interpretation

Next is data interpretation. What does that mean? Well, with the myriad of data you will have collected comes the chaos. Believe me, you do not want to walk into the boardroom intending to present thousands of data points. You will need to pre-digest and, yes, to some extent pre-interpret the data that you have collected and forecast to be important. Many companies over-egg this part of their analyses. They throw big number crunching machines, big data analytics teams onto the problem and waste lots of money. Do not go down that route. In most cases it is entirely sufficient to do your evaluations manually.

Discuss outcomes

So, you have collected all data you need. Great. Sit with colleagues and discuss your findings. Pull in data analysts. These guys can be hugely helpful. Ask yourself: what is the best way to consolidate your data? Can you see obvious dependencies such as always being 6 months later than a competitor because your productisation process sucks? Where you are unsure whether your current (or projected future) data is “good” seek to benchmark them? What are other companies doing? How did they crack the problem of, for example, a lack of a proper innovation culture? Again, it is important that you do this exercise with your entire organization in mind. Everything needs to  be laid out transparently, because there are many angles that potentially can put your transformation into jeopardy.

Visualise results

When you consolidate your findings, visualise them in an easy-to-digest way. In most cases it is entirely sufficient to map your findings into an adapted “Business Matrix”. The concept of a Business Matrix has been introduced by the Boston Consulting Group (BCG) many years ago. You can easily adapt the axis “Market Growth” and “Market Share” to show the parameters you identified in the first step. We also usually expand the presentation of the Business Matrix with quantitative data (e.g. the size of the data point “bubble”) and the likely future direction of that data point. Have a look at the picture below. You can also find some examples in our Digital Transformation Strategies ➥ cookbook.

Interpret results and potential ways forward

With your knowledge of the status quo, plus the pointers from your fellow employees for necessary future changes you have put in place your basis for a first-pass understanding. At this stage it is just tentative. Remember, you should not let your data gathering become a massive undertaking. Detailed analyses can be done later at the implementation stage of your digital transformation. For now, your task is to get a good and sound overview of the main topics for your impending transformation. Enough information to build trust and convince your Management group to proceed. However, limit this to a somewhat high-level view for uninitiated folks to comprehend. When interpreting the results and mapping out the potential ways forward, organize your presentation around the following questions:

Where possible quantify your findings and suggested actions. Come up with a clear and simple way forward that does not try to eat the elephant in one go.

Digital Maturity Assessment

Many companies we have worked with actually struggle at that first hurdle of digital transformation. Because “digital” has not been their core asset and area of expertise. Quite a few simply miss out on the more holistic nature of their digital transformation. And this is fatal. Though, in some respect this is not surprising. One can regularly find an attitude of viewing digital transformation as something that only impacts a certain part of  a company. This is then often amplified by external opinions. Ask an HR consultant and they will tell you that DX is all about people. Ask your IT vendor and they will point you to the “right” technology platform that is most crucial for DX. For an Operations guy it will all boil down to optimising the company’s working processes etc. etc. Once you have collected all you data across your organizational functions the next step will be to take a step back from these particular DX opinions. Run a thorough Digital Maturity Assessment. There is a free version available from our resource pages. We call it our Quickscan Digital Maturity ➥ tool.  The questionnaire leads you through 30 assessment areas and converts your qualitative findings into quantitative presentations. It is also very useful to get tips and hints for a successful digital transformation.

Marketing Maturity Assessment

A similar maturity assessment exercise might be needed specifically for your Marketing functions. Proper digital Marketing is THE feeder activity for many of today’s digitally transformed companies. Whether you are operating in the B2C or B2B space, marketing has not only become more important but also more complex and varied. So, make sure you understand how to engage with your (digital) customers first. Understand where they hang out. Investigate how well you serve these customers on their journey and the experience they have with you. Look at all aspects from awareness of your products and services to decomissioning. And, lastly, help your customers make the deal and support them post purchase. In short, assess your Marketing maturity.

Digital Vision Alignment

All the steps we discussed so far will need to be amalgamated with your company’s digital vision. It is surprising to see how often digital vision simply do not even exist. The main purpose of your vision is to set out the broad direction. Like the north star is showing you the way to the Artic. Your vision needs to be meaningful. Make it tangible. Direct it to your customers as well as employees, partners, suppliers, stakeholders and eco-system partners. Your vision also needs to be realistic and achievable. The “recipients” of that vision have to come away with the impression that there is a chance to get to the destination. You will want to convert them into true believers and followers. Defining a good digital vision for your company can be difficult. Not many leaders master this discipline. It requires elements of inspiring forecast as well as a dose of realism that comes from bottom-up. And, last but not least, your Management has to communicate your vision regularly and repeatedly. After all, Digital Transformation is much like building your own tribe of committed and engaged colleagues and employees.

#2 – Understanding “digital” customers

The next step is to understand your customer. The “digital” part of your customer. Digital transformation is often associated with terms like “customer centricity” and “better customer interaction”. Clearly, it is true that the focus on the customers’ needs, aims, goals, wishes and pain points is important. But bear in mind it is by no means the only area of transformation. As a company, you may have intensively engaged with your customers in the past. What changes in the digital world, though, is that the concept of customer engagement may even extent into activities such as co-designs. Digital technology has made it comparatively easy to gather customer feedback. You can change direction, redesign products for enhanced customer acceptance more rapidly and launch innovations in record time. The technology that is at your disposal these days is making your products and services more accessible to your customers. And this holds true throughout the complete life cycle stages of your digital products and services. Sounds chaotic? Yes, it can be. However, it is still a good idea to go about understanding your customers in a structured way. Tools and techniques for handling the chaos have been around for decades. These have proven time and again to deliver.

Trend Spotting and Analysis

Trend spotting is a technique that can act as an early warning system in your digitally transformed business. It can also facilitate a huge repository of high level ideas for your new digital products and services. With trend spotting the intention is to identify “macro developments” as well as short term movements. For example, around 2010 it was quite foreseeable that Short Message Service would decrease in importance substantially. This was due to the introduction of modern, more interactive messaging services such as WhatsApp or WeChat. They provided for a better way to serve customer needs. This trend for more interactivity was actually driven by the customer experience of the upcoming social media platforms. Once mobile phones provided data connectivity and a more comfortable user interface customer expectation simply moved towards better interactivity.

Long-term vs short-term trends

But there are not only long-term trends. Remember Pokemon? Whilst the original Pokemon trend died out in the late 1990’s the trend was reborn on short notice, lasting a very short period in 2015. The Pokemon mobile app was widely downloaded by many only to be forgotten soon after. Which goes to show that in some cases you can actually set trends yourself. There are numerous organizations that can help with trend spotting. They also help with the “transfer” of trends from one geography or industry to another. At unleash.digital we prefer to work with trendwatching.com ➥ You want to get access to our FREE templates to do trend watching? Just head over to our Understand the New Customer ➥ templates. 

Persona Evaluation

An absolutely vital aspect of understanding your (digital) customers is the evaluation of personas. Why? Because the experience of your (digital) customer is influenced by a range of potentially not so rational issues. You basically want to know the persona of your customer better than s/he knows it herself. This is not simply demographics. Age. Gender. Education level. You have to dig deeper. Much deeper. If you develop products and services in the context of your digital transformation try to get a sense how your customer feels about your wares. What pain points need solving? Are there unexpressed expectations? Triggers you can pull with your products? What we usually suggest companies should be doing is to get that “intimacy” with their target customer segments. Start with understanding personas first before you put pen to paper generating a digital strategy. You want to get access to our FREE templates to evaluate personas? Just head over to our Understand the New Customer ➥ templates.

Digital Customer Journey Mapping

Equally important is to get a view of the entire journeys your customers go through. A to Z. What is a customer journey? In simplistic terms, a customer journey shows you all the steps and touch points that an existing or potential customer has with your product and service, your company, your organization, your brand, your customer care etc. This can change dramatically when you transform your business to compete in the digital world. You will need to serve your customer through different digital channels. Touch points may change. Business dynamics may change at any step on the way. However, it can be hard to pinpoint the required change. After all, the magnitude of change very much depends on your current situation and many other things.. Again, you will need to do this exercise for each of your products and services that are in scope for a digital transformation. And, you will need to understand all of your customer journeys from the first touch point to the last. You want to apply the approach, at least at a high level, before you devise your digital strategy. There are also the quantitative aspects that you will need to get a good grasp at. You want to get access to our FREE templates to map out your customers’ journeys? Just head over to our Understand the New Customer ➥ templates. 

Value Proposition Development

Value propositions are ultimately what sells your digital products and services. In the traditional, “old” world your selling points may have been parameters such as “value for money”, “ease of use”, accessibility, superior after-sales service and similar. The digital world has injected a couple of sometimes less tangible values into the mix. These values (in the eyes of your customer) may be influenced by brand awareness, a dose of digital tribalism, product uniqueness or simply by the perception of superiority of your products and services. Value propositions and associated emotions drive purchase decisions in the end of the day. Social media will help “spread the word”. Emotions go viral, often amplified by a sense of belonging to a certain group. “Digital” value propositions open entirely new horizons to traditional product manufacturers. For example, if you manage to associate your (digital) products and services with these trends and influencers you have won half of your marketing battle. It’s a battle for the hearts and minds of your audience. We regularly use a value proposition canvas to tease out what buttons your new digital products and services need to push. The main difference to your traditional business is that you will find numerous digital touch points across the customer engagement chain. And, these engagement points are usually very much interlinked. You want to get access to our FREE templates to develop customer value propositions? Just head over to our Understand the New Customer ➥ templates. 

Digital Ecosystem Embedding

In the digital age only very few businesses are truly self-sufficient. That’s why a proper digital transformation strategy will look very closely into the ecosystems that you need to align yourself with. Most digital products and services are complex. They require hardware and software components that can be very specialised. And, these special items may not be your core business. Traditionally companies have simply sourced these components from an external supplier. Specifications were exchanged. Integration tests were planned and initiated. Logistics chains were defined, agreed and contractualized. But for many new breed digital products and services this mode simply does not work anymore. In digital, we are moving into more of a partnership world.

Look for true ecosystem partners

Ecosystem partner cross-pollinate their own respective businesses by teaming up with somebody else who can complement and thereby enhance their own products. Apple is a good example of such a digital ecosystem approach. Very much simplified, Apple relies on a range of ecosystem partners who add value to their core products e.g. the iPhone. Without an army of app developers the iTunes store would have never come to fruition. Apple, on the other hand, provides the platform for these developers and offers billing services that allow for a split of revenues from millions of downloads. Unlike companies such as Nokia and Blackberry, Apple proactively brought in developers as ecosystem partners, not as contractors. Now, we all know what happened to the former leading mobile phone manufacturers. So, when you are devising your digital transformation strategy, put particular emphasis on the development of your ecosystems. Think about who can help you. What additional benefits your customer may gain from it. How an ecosystem can improve your products and services, whilst minimising cost.

#3 – Plan digital products for your markets

I am often taken aback when realising that businesses do not see the context of their new digital products and services in its entirety. You must not forget that the old triangle of products – markets – customers still holds true. Digital does not change that. However, what digital changes, is the nature of these three categories. Products are possibly becoming less “physical”. Markets show different dynamics, but are still hugely relevant. Customers will be more fickle and technology savvy. In the end of the day, you still have to go through all these categories and evaluate the best course of action for your specific business.

Winning Markets and Products Identification

Firstly, you will need to understand what properties a wining product in the digital age has to have. These properties most likely represent features that serve a customer’s goals, requirements, desires and wishes better than any competitors’ product does. The competitor analysis must be part of your market research. In some cases you may even want to reengineer what your competitors have done. What customer needs do the their products serve? Where do they have flaws? What can be improved? Where can you gain an advantage by doing a better job? Equally, you will need to put in context your targeted customer audience with the markets you address and the digital products you intend launching. For example, it does not make sense to develop an electric door knob that can be digitally managed over the internet when the market you want or can address are blue-collar electricians that barely can handle their own smartphones. However, looking at the wider picture, “digital” has somewhat moved the goal post here. For one, we have an almost ubiquitous basic (wireless) connectivity. The moving of features into software has become the norm. We have experienced location flexibility as far as operation, updates and maintenance goes. And, often hugely reduced price points and better ease-of-use contribute to this picture.

Disrupting and unfair Business Models

So, you have planned your product. You are certain that your customer will be served perfectly in your identified markets. Job done? Far from it. You still have to figure out what business model you want to operate and how to protect your new moat. However, what you may see happening before you know it is disruption. In plain English, disruption is a situation in which a competitor will serve the same or similar customer needs with a different solution. Your entire planning has just gone up in smoke. The competitor will steal your customers because they find the competitor’s product or service better suited. This might be because it is more convenient to use the competitor’s product or service. Or because it has a better price point, Or it offers additional perks that draw customers away from you. In some cases, your competitor may even employ unfair business practices. For example, unfair practices are subsidising one line of business by profits made elsewhere. Or utilising somebody else’s assets, thereby avoiding costly investments and emerging at a better cost base. Point in case here are Uber, the ride-hailing service and AirBnB, the private room rental company. Their unfair advantage comes to play as for them there is no need to spend money buying cars or real estate, Their business model is simply that of a broker that offers superior services to your existing customers.

Rapid Business Plan Drafting

When you have finalised your first round of deliberations over your (new digital) product and service, there comes a time when you have to talk funding. Traditionally, that has always be done through the presentation of a business plan to your Management and Finance folks. But compiling a business plan will take time. You need to be clear about the assumptions, run sensitivity analyses, start your financials number crunching machine, find market data to back up your plan etc. Unfortunately, this process slows you down big time. You also should always remember that one of the prime goals of a digital business transformation is to become faster in your product deployment process. Full-fledged business plans are not a good idea here.

Quick and dirty?

What we recommend instead is a short version business plan. Something that can be put together in a day or two. Backed by the findings you have gathered thus far. For the revenue side you will need an educated guess. Possibly by using some proxies and past examples. Though, honestly, in many cases predicting revenues is like gazing into a crystal ball. For cost side you need to liaise with your team of developers. Cost can usually be predicted somewhat more accurately if your business has experience from similar products and services. Alternatively, you can always ask for a second opinion from, for example, a partner. Once you have agreed on a business plan with your Management you want to ensure appropriate budget is allocated on a revolving basis. Forget the grandiose 5-year plans. Update the plan when new information emerges. You can also find some examples in our Digital Transformation Strategies ➥ cookbook.

Supply Partnerships and Platforms

A careful consideration and selection of your supply partnerships and platforms for your digital world is essential. What do we mean with this? Firstly, you have to remember that a successful digital transformation only yields commercially beneficial results where you optimize your operation in parallel. This has to go hand-in-hand with the increase in agility and innovation that you are looking for when digitalising your products and services. Secondly, to enable your accelerated innovation and product launches you will require infrastructure that is rapidly responsive. Otherwise you will not be in a position to streamline your digital product and service life cycles.

True partnership vs supplier relationship

Therefore, one of the main areas to get clarity about is (supply) partnerships as a quick way towards complementing what your business might be missing. The partnership may take the shape of a more traditional set-up. However, and this is something we increasingly experience, you may want to look for a partnership where your future partner has skin in the game. Maybe because your partner can bring in parts that are vital to an overall success of your digital products and services. Or maybe because your wares can be more appropriately pushed into the market by your partner. Often closely related to partnerships, you will need to think about platforms. Many of today’s business still maintain a zoo of technologies and platforms that have grown over time. And this regularly holds back rapid progress. Look for platform solutions that somewhat unify your entire delivery chain from product inception to deployment and decommissioning. Likewise, look for somewhat unified platforms across your other functions. A “good” platform exhibits a range of properties that will become beneficial for your business. It support incremental deployments of new product variants. The test and validation phase will be shortened. Price competitiveness and ongoing decrease of unit cost can be achieved. It scales easily. Your employees will be able to learn quickly and reskill.

Channels and Digital Marketing

An area that is very overlooked by many organisations is that of channels and digital marketing activities. It is simply seen as frontend to the sales process that is run by a bunch of marketeers. However, in the age of social media you will find an ever-increasing diversification of touch points with customers. Where can find your customers? Where are they hanging out? We cannot stress the importance of a solid channel and marketing approach enough. These are the points where you often make the first impression. And the second. And the third. Also, your digital channel and marketing strategies contribute a great deal to shaping your business model. Be aware of this. Incorporate considerations of marketing into your digital product planning and validation process.

#4 – Experiment with digital ease

I started my professional career at a major German mobile network and phone gear manufacturer. Back then there was a strong belief that product management should sit in a central function. A product manager was seen as the go-to-person for everything relate to product design, market and user needs. Needless to say that this now sounds like “old time thinking”. Budgets were by and large fixed a long time in advance. Designs, although validated with key customers, took 2 or more years to materialise. And, rarely there was the ability to test product ideas through prototypes. In the new digital world, a wide proliferation of new experimentation environments have fundamentally changed that old approach. We recommend your business develops a culture where you experiment on new digital products and services with ease, and a low cost point. How do you go about this? Read on.

Infusing Innovation

Firstly, you will need to generate ideas for your digital products and services. Be creative. Think out of the box. Ask yourself: what would a competitor from outside your industry tackle to make a mark in your industry? There are so many sources of ideas that point the way towards enhancing your existing portfolio or come up with something unique. You may want to use the results of your trend spotting to inform your future digital products. Do patent research with a view of getting inspired by what is out there. Run customer focus groups. Look over the fence of your industry and identify features or solutions that can help you improve. The key here is to be as creative and open-minded as possible. Do not shut down an idea or innovation simply because it does not seem a good fit. The way that we found innovation infusion works best is where you establish, keep and nurture a big portfolio of ideas. Accessible for those that do the actual product planning and design. And, presented without pre-qualification.

Prototyping, Fast Fails, CX/UX Designs

Once you are at a stage where you have committed budget to bring live a new digital product or service, prototype it. For potential customers, there is nothing better than a tangible prototype. Something they can touch and feel. Something that sparks further ideas and inspiration for improvements. Now, there is some qualification we have to make here. Obviously, you cannot easily prototype products that are big and bulky. Products that consist of a lot of potential expensive physical components. Also, products that are too small. Like a new micro-sensor. Or a “submarine” that is inserted into a blood vessel. However, what you can do in these cases are product animations. You can also walk potential customers and users through software prototypes that give them an impression of functionality and usage.

Practical steps only within a sound environment

There are numerous prototyping environments available to business that innovate. Chose a reasonably unified one that also allows non-technical staff to experiment with it. Something that eases the pain of transfer from prototyping stage to actual production. If your digital products and services have a high degree of physical components with it, consider 3D printing facilities. Focus on the user interface (UX) and how it looks and feels to your customer (CX). Or even better, what feelings your new products are likely to generate for your customers. But, most importantly, make sure you build your prototypes in a “fast fail” approach. If something does not work: stop there, fix the problem, move on to the next idea and feature. Make them better. Rinse and repeat until you find your winner. And always remember: your prototypes and products will need to improve over time anyway. So, do not look for the 100% perfect solution.

Coopetition & Codesign

A technique we have successfully applied is that of coopetition and codesign. Not only are these techniques fun to work with, but they also provide you valuable insights. Coopetition is when you basically invite a competitor (or a company that could potentially attack you from a different industry) to design and develop a joint digital product and service. Coopetition is  a valuable tool when you realise that your competitor may have something that you may need. Or where the market is too big and too risky to go it alone. For example, several players in the German automotive industry just went down that route when teaming up for a new mobility venture. On the other hand, codesign is often used in the context of working together with customers or developers, such as hackatrons. In codesign you will take a conscious decision to invite your customer or developer partners to jointly develop product ideas, design prototypes and potentially even develop products up to a stage of commercial viability.

Minimal Viable Product Launches

You may have heard the term “minimal viable product” before. When we help businesses with their product management and life cycle aspects, we often sense a lot of question marks in our audience. The truth is, there is no such thing as a tight definition of MVP. In actual fact, sometime people even refer to MVP as a “minimal viable prototype”. First and foremost, MVPs are a matter of applying common sense. MVPs are products you want to come up with so that you can give (and sell) them to your early customers without failing the red cheek test. Yes, that’s the test were you are not getting too embarrassed.

The balance between speed and perfection

Many, more traditional businesses, still strive for perfection. They feel that their reputation is on the line if they fail to deliver a product that fulfils 100% of their customer needs, is unbreakable and will live unaltered for the next 5 years. In the digital age, with MVPs there is an alternative approach. Now, we are not claiming that the old approach of a high quality product and service is not valid anymore. But you have to understand that your competitors may not have read that script. There are simply different ways to think about digital product launches and incremental improvements. Of course, you may need to change your communication strategy, realign your brand image and deliver on the promise of rapid and frequent product updates. However, MVP techniques will allow you to introduce  less costly (and less feature rich) digital products and services. You can iterate more frequently by reacting to customer feedback and requirements. The horizon of planning shortens, which in turn gives you a better visibility of required changes and cost.

Commercialisation Preparation

There comes a time when you have decided to go all out for a full-scale commercial launch of your digital products and services. If you followed an MVP route you will have gone through a reasonable learning curve already. In this case, commercialisation preparation becomes merely a release of the latest digital product and service version. The drawback here is that you rarely can go for a “big bang” such as Apple regularly does with their latest iPhones. However, you will be in a good position to crank up your channel comms and marketing machinery to generate traction with your target customers. The commercialisation would look more like a Facebook or Spotify model. For example, Facebook issues an average of 12 new product releases every day. That is 1 new product release every 2 hours. When they launch something bigger they first test it on some select users. They get user feedback, fix problems that pop up, stabilise the product and then switch the button to open the new release to everybody.

#5 – Devise your digital strategy

The last step in preparation of your digital business transformation relates to devising your strategy. This is not to be underestimated. Defining a sound strategy takes time. You will need to understand numerous factors that will drive a sustainable strategy. Unfortunately, quite often we find businesses jumping to strategy definition before they have worked through the basics. They may not know their starting point and the gaps they have to fill. Other businesses may lack sufficient data. Also, you should be very sceptical about coaches, consultants or business schools that promise to draw up a strategy in the blink of an eye. Experts that portray themselves as able to give you a digital transformation strategy a couple of days into a project. Or even worse, at the tail end of a 3 day course. This does not work. You will need to go through at least a skeleton version of the steps #1 to #4 to come up with a proper digital strategy. Your point of departure. The customers and markets you serve in the context of “digital”. A first view of your initial digital products and services you want to launch. We also recommend you go through a product development experimentation phase. This will give you invaluable insights into how your internal processes will need to change. You will get a much better appreciation of the hurdles to be cleared.

The Strategy Pillars

When you are set and done with your preparations it will be time to assemble your digital strategy. This is actually the point when you iterate back to the layered diagram that we showed you at the beginning of this post. For each of the areas your strategy will develop a concise course of action. To start with, each of the areas will need to outline the WHY for the digital change. The WHYs are basically your objectives, and provide a great source of input for your communication. Equally important is the WHAT. This is a high-level aggregation of activities that you think are necessary to move your business towards “digital”. The third level is the HOW. Now, here your strategy setting becomes a little bit more tangible. Ideally, you will break down the HOW into smaller chunks of task areas or tasks. Structure these tasks in a way that they can easily relate to functions, task teams or departments in your business. But, resist the temptation to think the other way round i.e. thinking of departments and then defining their tasks. The reason is that your organization will likely need to change anyway. You do not want to stick to an organizational structure that is inadequate.

Slicing the elephant: one step at a time

In summary, remember the areas for digital strategy definition include:

What usually works best is to go through these areas step by step. Run an educated brainstorming for these areas. “Educated” because you should consider the findings from previous steps. Then, collate, narrow down and prioritise the items in your now evolving digital strategy. Don’t forget to cross-check for integrity and consistency. Also, do not skip any of the areas. There are coaches who will tell you that digital transformation is only a people or organization. And, that the rest will sort out itself. This is plainly wrong. Your business may need realignment on numerous different fronts.

Programme Plan and Roadmap

Once you have populated the WHYs and the WHATs it is time to put the more flesh on the bones of your digital strategy. The HOW is best done with participation of your own subject matter experts. Do you have an HR guru, somebody in your tech team that is savvy in digital, an operations, a sales, a marketing expert? Pull them in. Make them part of the transformation team at Day 1. The aim here is twofold. You will get implicit buy-in from (key) staff across your business. And, you will develop a more realistic digital strategy. Let your teams develop the programme plan and roadmap of your digital transformation strategy. Also, they will need to develop a tentative costing. In reality, what you will find is that you may need a series of iterations because you will bump into previously unidentified road blocks. Or, the digital transformation you envisaged in the first place turns out to be too costly, However, when you devise your digital strategy keep in mind one very fundamental issue: your strategy is a living object. You are NOT trying to embody a 5 years plan here. It will change. Which is why we recommend running digital transformation strategy definition frequently, and with a fiercely result-orientated mindset.

Funding and Governance

After you have developed and agreed on your digital transformation strategy it will be time to talk funding and governance in more detail. This is important to get straight early on because both issues tend to greatly jeopardise the success of transformation programme. Your Finance may need to enable far more flexible funding arrangements than you are used to from your traditional business. That is because task teams in a digital business context demand more flexibility. They may also not be able to commit on results such as milestones or content. The change that a digital transformation most likely will introduce is that you trade budgeting certainty for flexibility, agility and faster, though possibly iterative, delivery. The Governance aspect is equally important. As digitally transformed businesses run on extremely flat hierarchies Governance will need to adapt, moving towards peer-to-peer arrangements. One of the comparisons that you will always hear in this context is that between a big tanker (your traditional business) and a flotilla of small boats. Start thinking of your business like being the flotilla. Instead of having one captain on the big tanker, you can now draw on hundreds of  experienced skippers. Of course, sometimes there will be chaos. But, you are more likely to win the (digital) battle.

Digital Organization Structure

Digitally transformed businesses have also rejigged their organizations big time. In some cases of bigger business you will only find 3 hierarchical layers: management, team leaders, task team members. Whilst we do not want to comment on the fact that the entire layer of middle managers might be made redundant, this set up is ground breaking. Why? Because it relegates much of the responsibilities to the task teams. The staff that does the work. Employees that are specialists in their respective fields. If you cannot cope with such an arrangement, you should ask yourself more seriously why you would want to undergo a digital transformation. However, where your ambition to morph into a digital leader still stands, you will need to start planning for a transition of your organizational structures.

Digital Strategy Communication

A big mistake that we often see businesses doing is a lack of communication. Internal as well as external partners, staff, employees and stakeholders will need to be kept abreast with your plans. This is another part of your successful digital transformation. Many of your counterparts may not even understand what you are trying to achieve. They need steer, education and, last but not least, reassurance. For example, put yourself in the shoes of your employees. They might be wary of the changes to come. Fear for their jobs. Be unwilling or unable to reskill. Quite rightly, they will demand to understand the reasons, objectives, plans, ramifications etc. for the impending change towards “digital”. After all, fail to take your partners with you, and your digital transformation will fail. Want to know how to implement a digital transformation?

Keep on reading in our Digital Transformation in 10 Practical Steps – Part 2 ➥ post.