Digital Age, Digital Transformation, and Digital Business

Stephen DeAngelis

September 09, 2020

The Digital Age has spawned a variety of views about how technology will improve or destroy life as we know it. Klaus Schwab, founder and executive chairman of the World Economic Forum, has stated, “New technologies and approaches are merging the physical, digital, and biological worlds in ways that will fundamentally transform humankind. The extent to which that transformation is positive will depend on how we navigate the risks and opportunities that arise along the way.”[1] Businesses are certainly having to navigate digital transformation carefully as they seek ways to become more efficient and profitable while trying to avoid data leaks and privacy issues. The upside of digital transformation can be significant. Douglas Karr (@douglaskarr), co-founder of Highbridge, reports, “According to research from Capgemini Consulting, which surveyed hundreds of senior executives from large firms, companies that are mature in digital transformation are, on average, 26% more profitable than their competitors. They generate more revenue (9%) from their physical assets and employees and create more overall value.”[2]

You would think such results would motivate businesses to accelerate their efforts to digitize. Karr, however, insists there are good reasons to be cautious. “It’s not all good news,” he writes. “According to research from the Everest Group, nearly three-quarters (73%) of companies saw no business value at all from their digital transformation efforts. In fact, only 22% said they reached their desired business results.” What’s going on? Nicolas De Kouchkovsky, CMO at Acqueon, explains, “It has been a tale of two models. On one hand, digital startups have disrupted industries with their digital-first and, often, digital-only approaches. This digital strategy has worked by being laser-focused on small segments of larger markets. … On the other hand, incumbents, often in reaction to the threat of new entrants, have been adopting digital technologies to streamline their operations hindered by technology silos and organizational complexity.”[3]

The digital transformation imperative

Despite the fact that companies are struggling to find their way through digital transformation process, Mark van Rijmenam (@VansRijmenam), founder of Datafloq, insists, “Digital transformation is a prerequisite for most companies to maintain their competitive or leading position. Especially in these uncertain times, it has become apparent that digitization is indispensable for companies if they want to be and remain successful. The company must be agile and innovative and, moreover, always put the customer first (customer-centric). Digitization is a catalyst that can provide the company with a competitive advantage.”[4] Karr insists there are three keys to a successful digital transformation. They are:

Key 1. Internal Adoption: Karr insists no transformation will be successful if there is no internal “optimism for the implementation.” He explains executives and employees must understand “where there are gaps and opportunities.” He adds, “Rapid adoption internally will result in more effective use of technology and can unleash a culture of innovation and creativity within the organization.”

Key 2. External Experience: Karr writes, “The vast majority of companies have systems that are aligned with their internal command and control structure rather than focused on the actual customer experience. … Your systems should be invisible to the customer and provide them with a self-directed, unique experience that they cannot get anywhere else. Seamless customer experience is the goal of every digital transformation.” Lora Cecere (@lcecere), founder of Supply Chain Insights, has insisted for years that an outside-in approach to business is essential in today’s business environment. She writes, “This outside-in orientation needs a definition to make it actionable. Let’s start with the basics. The design needs to be from the customer’s customer to the supplier’s supplier.”[5]

Key 3. Agile and Iterative Deployment: According to Karr, “Digital transformation isn’t a project that begins and ends. Your business will change, your customers’ behaviors will change and the systems available to you will change. Because of this, you must prioritize your deployment strategy to include people, processes and platforms and be prepared that the only constant will be continued change. Professional development, employee turnover, competition, economic challenges, scalability — all of these must be incorporated into your digital transformation strategy. Your road map should be a working document that is constantly adjusted and modified, and it will never be complete.” It’s important to note that Karr stresses the importance of people, processes, and platforms (i.e., technology). People are often overlooked in transformation efforts. De Kouchkovsky explains, “Digitization in the past would have sought end-to-end automation with humans brought in only to handle exceptions and escalations. A more pragmatic approach is coming forth. It consists of applying digital technologies to simple process segments and leveraging people in a hybrid approach to bridge them all together and remove friction.”

Digital businesses are cognitive businesses

Former IBM CEO Ginni Rometty once stated, “If it’s digital, it will be cognitive. If you think that, you’re going to change the way you run a business.”[6] Cognitive technologies are finding a place at the heart of many digital transformation efforts. The reason is simple. Cognitive computing systems can deal with the complexities of modern business. According to the Cognitive Computing Consortium, “Cognitive computing makes a new class of problems computable. It addresses complex situations that are characterized by ambiguity and uncertainty; in other words, it handles human kinds of problems.”[7] Kamalika Some notes, “Digital revolution has introduced unprecedented possibilities, especially for business, with breakthroughs observed where artificial intelligence (AI) has been adopted changing the dynamic and progression of business operations.”[8] She suggests digital transformation efforts must successfully answer questions in eight business areas. Those areas are:

1. Business Priorities: “What are the current and future organizational priorities? What problems will AI solve? How can disruptive technologies help to deliver strategic goals? Which use cases can be identified to automate repetitive or mundane tasks?”

2. Data Pipelines: “Which strategy will address data issues? Is the right data available to achieve formulate a data strategy? How will this data be generated? Is it organization owned data or generated by 3rd parties? How [will the company] build data pipelines for seamless automation?”

3. Ethical Concerns: “How [will the company] secure data privacy? How [will it] address legal implications of using data for AI models? What consent is required from customers/users/employees? How [will the company] ensure the availability of bias-free data?”

4. Employee talent: “How [will the organization] address skill gaps? How [will the company] access AI skills and review in-house AI skill and capabilities? How [will the organization] hire new talent or train existing staff? [Will the organization hire] an external AI vendor or acquire a new business?”

5. Implementation: “How will the organization deliver its AI projects? How will testing be handled, manually or it will be automated? Who will be responsible for implementation? Which actions or projects will be required to be outsourced?”

6. Customer Engagement: “How [can staff productivity be augmented] with the support of Virtual Agents and Intelligent Automation tools? How [can the organization] deliver timely, conversational customer interactions? How [can the organization determine] customer intent? How [can the company] drive customers to improved digital experiences? How [can the company] scale customer consistency across all channels? How [can the company] increase digital adoption and deliver customized interactions?”

7. Change Management “Which employees and teams will be impacted by digital transformation? How will change management be effectively communicated? How should be the changing workflows managed? How will digital technologies change company culture? How [will the company] manage an organizational cultural change?”

8. Driving Revenue Growth: “How [can the company] maximize value per customer? How can the company] identify highly relevant products, offers and service offerings for prospective and current buyers? How [can the organization] assess higher levels of stakeholder engagement with AI? How [can the organization] increase ongoing productivity with machine learning-enabled attribution?”

Those are all important areas to focus on during digital transformation efforts involving cognitive technologies. Some concludes, “Employing AI is often touted as a pragmatic step especially for enterprises which are intertwined with legacy systems. The benefits of AI are huge ranging from boosting sales productivity, improving customer retention, account growth, and other critical business aspects.”

Footnotes
[1] Klaus Schwab, “Shaping the Fourth Industrial Revolution,” LiveMint, 12 January 2016.
[2] Douglas Karr, “Three Keys To Digital Transformation,” Forbes, 21 July 2020.
[3] Nicolas De Kouchkovsky, “Goodbye Digital Transformation, Hello Digital Business,” No Jitter, 16 June 2020.
[4] Mark van Rijmenam, “Why Digital Transformation Has Become a Prerequisite for Success,” Datafloq, 3 July 2020.
[5] Lora Cecere, “Building Outside-In Processes,” Supply Chain Shaman, 8 April 2016.
[6] Andrew Nusca, “IBM’s CEO Thinks Every Digital Business Will Become a Cognitive Computing Business,” Fortune, 1 June 2016.
[7] Staff, “Cognitive Computing Definition,” Cognitive Computing Consortium.
[8] Kamalika Some, “8 Questions that Answer an AI Strategy for Business Transformation,” Analytics Insight, 4 July 2020.