The first mistake organizations make is assuming that Digital Transformation, innovation, and disruption are the same thing. More importantly, organizations forget to include consumer experience when planning innovation. Because of this confusion, organizations are finding that their progress with Digital Transformation or DX initiatives has been too slow. A recent IDC report has predicted that by the end of this year, nearly half of organizations will have scaled their DX team. The reason for this scale is that innovation progress has been too slow relative to competitive response.
To be clear, Digital Transformation is about new business models intended to deliver new consumer experiences, and the most successful companies know this. Innovation is about solving consumers’ unmet need or struggle (through those experiences), and disruption is how you strategically position innovation (and especially technology) to enter new or alter existing markets. With this foundation in mind we can begin to plan Digital Transformation. First, we need to identify consumer experiences which relate to how your products or services are acquired and how they are used. These experiences should solve the struggle a consumer is having. By knowing what the struggle is, we can know who our true competitors are. In some cases, there are no competitors, which is an example of new market disruption. In other cases, we see who our competitors are and make plans to deliver the experiences better. Usually, companies are organized in traditional silos with marketing, development, etc. when delivering innovation. A new approach to organizing for success is to create a cross functional team (from legacy departments) for each experience identified and then track the successful consumption of each experience by your consumers through that team.
When experiences are defined and known, then emerging technologies can be evaluated for application to those experiences (not the other way around). Many products fail because they start with technology or start with product feature differentiation, when in fact you don’t need to compete on features, you simply need to solve the consumer’s struggle for progress better. World renowned Harvard Business School Professor Clayton M. Christensen has rightly pointed out that consumers are not committed to technologies, they are committed to solutions which deliver their need for progress. Feature differentiation or technology differentiation alone can become an example of sub-optimal innovation investment.
Technology is critical, but technology supports your consumer experiences. Those experiences in turn open new business models. Those business models allow you to fully “realize” Digital Transformation.
Therefore, technology drives transformation.