Is your digital transformation successful? Odds are, it’s hard to tell. Find out the secrets to success from our Q&A with expert, Charles Araujo.
Boosted productivity. Enhanced insights. Heightened agility. Digital transformation is business transformation.
But digital transformation can often be seen primarily as a technological shift within a business. However, that’s not what digital transformation is about. Why? Because technology alone simply isn’t enough.
To successfully achieve digital transformation, you need to transform your technology and your process; your strategy and your culture. As founder of The Institute for Digital Transformation, Charles Araujo, told us, “Digital transformation is fundamentally about re-envisioning business models.”
Talk about a tall order. So, what’s the best way to go about completely changing your business? We sat down with Charles to find out. Read our full conversation below.
A Q&A With Charles Araujo, the Founder of The Institute for Digital Transformation
Q: Businesses are faced with the option to disrupt or be disrupted. How do they embrace the former?
You're either the disruptor or the disrupted.
The advent of technology is driving fundamental transformation across every single market sector. So, even if you are a disruptor, you still have to be on guard for the next disruptive technology or forces. If you're a well-entrenched brand or organization, you need to be very, very focused on what those disruptive trends are so that you can see them coming and respond or react to them.
“Disruptive technology” is also a bit of a misnomer. If you think about the oft-talked about, disruptive companies (i.e. Uber, Airbnb), you’ll find a really disruptive business model that’s enabled by technology. The technology itself wasn’t the great breakthrough. It was the application of technology to re-envision a business process that drove transformation.
Disruption is about the intersection of technology and the re-envisioning of business models. And so, to answer the last part of the question, the risk of not adopting this kind of disruptive mindset is that you're going to get run over. And in one way, shape, or form this market is going to move beyond you.
Customers across all sectors and modalities are demanding a change in how organizations operate. And the only way you're going to be able to respond to that is through the adoption of disruptive business models and, of course, the underlying technologies.
"Disruption is about the intersection of technology and the re-envisioning of business models.” - @charlesaraujo
Q: A PwC study found that 75% of digital transformations fail to generate a return on investment. Why do you think that is?
The missing link is that they're missing the point.
There is this kind of the prevailing erroneous view that digital transformation is a project and that it should be evaluated like any other project, investment, or technology. But digital transformation isn’t any one of those things, right?
Digital transformation is fundamentally about this re-envisioning of business models, transforming business operations, the employee experience, and even the nature of work itself. And it's all because the power has shifted from the organization to the customer. In this digital era, the customer is in charge, and it’s the customer experience that drives value.
For example, Walmart built arguably the most efficient, robust, crazy supply chain the world had ever seen in the industrial age. And they dominated the market when the supply chain was what drove value. They were unstoppable. But in this digital era, it is now the experience that drives value.
Amazon didn't disrupt Walmart because they had a better supply chain. They disrupted because they delivered a better customer experience. Their customer experience gave consumers the power to look at literally anything in the world we might want, understand what our peers thought of it, find answers to common questions about the product, and get it delivered to our door in a couple of business days. This was all stuff you couldn’t do in a Walmart.
If you think about the example of Amazon, it's a complete change in mindset, in culture, in the operating model. It was not a project. If you try to measure digital transformation the same way as a project, you’re going to fail every time. And that’s why you get stats like “75% of digital transformations fail.”
“If you try to measure #digitaltransformation the same way as a project, you’re going to fail every time.” - @charlesaraujo
Q: What do organizations need to know in their pursuit of digital transformation success?
First, you need to understand that this is not a technology project. This is about re-envisioning and transforming your business model and everything that comes from that. But how do you actually do that?
It’s bigger than a breadbox to attempt to completely transform your organization, top to bottom. In many cases, you’re transforming business processes that have existed for 100 years. That is a scary proposition, just from a pragmatic standpoint. It takes a massive amount of political capital, so organizations err on the side of caution.
Second, you need to focus on creating a culture of risk taking, of innovation, of failing fast, of being willing to challenge the status quo. You have to be willing to throw everything on the table. The greatest challenge organizations face, especially legacy organizations that have been around for a while, is inertia.
For example, Kodak famously invented the digital camera and had it for decades. They didn't understand that the digital camera was going to completely transform their business and therefore didn't allow it to be a leader. And so that's really the challenge I think that organizations face: it's a cultural challenge first and foremost, and then it's about freeing people to embrace it.
Lastly, and most importantly, try and create a company of visionaries. That sounds grand and big, but it doesn't have to be. It's the idea of having everyone in the organization looking forward, looking out at the horizon, saying, “what's coming and how rapidly is it changing?” and, “how can we adapt the business to the disruptive threat and become the disruptor?”
There’s an entire generation of workers in most large enterprises that have been trained to do the exact opposite. They’ve been told to put their heads down, do the work, do exactly what they’re told, and don't do anything else. That is the recipe for ensuring that you will never transform your organization.
“You need to focus on creating a culture of risk taking, of innovation, of failing fast, of being willing to challenge the status quo.” - @charlesaraujo on #digitaltransformation success.
Be the Disruptor, Not the Disrupted
If Charles made one thing clear, it’s that digital transformation isn’t really “digital” at all. It’s about transforming your way of thinking and your way of doing business. For your transformation to be successful, you need to create a company culture that is willing and eager to change.
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