Digital Transformation: A Model to Master Digital Disruption

By Jo Caudron and Dado Van Peteghem

PREPARE YOUR BUSINESS FOR A DIGITAL FUTURE!
For companies and organisations across all sectors, digital and online activities are no longer just a gimmick. Digital is now changing the essence of an organisation. In order to keep up in a landscape with unprecedented challenges, organisations must integrate digital into their business strategy. Standing idle is no longer an option.
Over the last few years, Jo Caudron and Dado Van Peteghem helped dozens of organisations across various sectors to prepare themselves for the digital revolution. They made use of their own Digital Transformation Methodology, which gives organisations a framework and actionable plan to deal with their digital transformation.
This book is a guide for anticipating the change and convert- ing digital threats into business opportunities. It helps you understand the impact of digital disruption and offers a model to shape your own future.

• Language: English
• Publisher: BookBaby
• Release date: Jan 8, 2014
• ISBN: 9781543923261

Book preview

https://www.facebook.com/digitaltransformationbook

INTRODUCTION

Since early 2013, we have been helping companies understand how digital has a potentially disruptive impact on their future. We advise CEO’s from news media, radio and TV, banks, HR, automotive, retailers and many other industries on digital transformation. When we pioneered Digital Transformation in Europe, many organizations didn’t believe in digital disruption, we had to convince them. A few years later and everyone is talking about it, and more importantly, more organizations are taking steps to make it happen.

Before writing this book, we debated for a while whether we should publicly share our vision, knowledge and approach, after all, it is our core business as consultants. So why give our expertise away in this book? Well, because keeping knowledge and insights away from a broader audience is an example of how people did business in the past. Sharing information and being open, transparent and collaborative are drivers of transformation that are shaping the business of the future. A future we believe in.

THE BOOK IS A STORY OF HOPE AND OPPORTUNITY

Of course digital is disruptive. But this book is not just a listing of everything that is being disrupted by the impact of digital. We firmly believe that many industries still have the time to transform themselves for the future. Digital is creating massive opportunities to develop new products, services and businesses. Understanding how digital is transforming our world and businesses might be intimidating at first, but once you start thinking about how things can be done differently you might just become more optimistic than ever before.

YES, ALSO ON PAPER.

Why are we writing a book on paper about a digital story? Well, although we are all die-hard digital guys, we still think that a book on paper is the best medium for the story we want to deliver. Digital is not always without question the best answer to what you are doing. You need to take into consideration the reality of today’s market. And today the reality is that most people still prefer reading paper books :-)

IT’S PARTLY CROWDFUNDED

Digital has dramatically lowered startup business costs allowing more and more business to enter a market. Nowadays it is even possible to get buy-in from your customers before the product or service is ready. Crowdfunding platforms like Kickstarter and Indiegogo have proved how good ideas can rake in the necessary funding by backers worldwide. As crowdfunding believers, we’ve invited our networks to support us by pre-ordering the book. Their faith in us was a huge motivation to write this book. We would like to thank all the people that supported us before we had one letter on paper; we greatly appreciate your trust in our message.

IT CONTAINS A METHODOLOGY

Digital Transformation Modeling has different dimensions.

You start from a strategic framework for businesses to identify and define the right opportunities while thinking about digital transformation. Starting from 7 metaphors and over 40 drivers of transformation, our model allows businesses to create different scenario plans to better understand the future.

Next we focus on the organizational model that introduces new ideas on how your company can organize itself to reflect the willingness to transform into the new structures, roles and ownerships that you will need to translate that future vision into a reality.

All of this should prepare you for an on-going operational reality of digital transformation.

OUR STORY IS NOT BASED ON ACADEMIC RESEARCH

The Digital Transformation model we have introduced is not scientifically tested or researched. It is something we have put together based on what we have learned during hundreds of projects with clients across different sectors. The overall response from our consulting clients was that this light-weight and pragmatic no-nonsense methodology was exactly what they needed to get them started working with what the future would mean to their business. We sincerely hope that it can inspire you to transform your business for the digital age.

NO, IT IS NOT ABOUT THE MEDIA INDUSTRY

It is not our aim to write a book on how digital is transforming the media. We have already written about this topic in great detail in a previous publication released in 2011. Still many media companies are currently deeply involved in digital transformation. Newspapers, magazines, TV-stations and other media-types are going through the digital transformation as we speak. The outcome of their transformation process is still unclear but we are hopeful about the future. The interesting thing about the media is that it illustrates the way for other industries. It is very tangible as we are all media-users ourselves and as such probably also active participants in their digital disruption. This makes it all very tangible and the reason why we use references to how media cope with different aspects of digital transformation.

THIS IS NOT JUST A MARKETING BOOK

For the past few years digital has been pretty disruptive for traditional marketing. The arrival of new types of digital media has forced marketers to think about interactive ways of communication and dialogue with customers. There have been many studies, books and conferences about this evolution. This is not another book in that series. Digital transformation is not just about transforming your marketing approach, it’s about turning your business around to deal with the challenges and new opportunities that digital is bringing to the market. We’re entering a new phase where all internal stakeholders are involved. Digital transformation is a journey for the entire company.

THIS IS NOT JUST AN IT BOOK

In 2015, we began to see IT companies use the term Digital Transformation for implementing cloud services and other IT infrastructure for clients. While this is an important aspect of transformation, it doesn’t cover the full picture. Simply using more digital services and communicating with your clients over social media won’t help you survive the wave of digital-first challengers with new business models, products and services built from the ground up.

It’s not just about IT or marketing, it’s about business transformation, involving the entire organization.

This book is a reworked edition for 2018, with new, up-to-date examples, based on our experiences in the many Digital Transformation workshops we’ve given since the first and second editions of our book. We want to thank our clients for giving us the opportunity to apply our methodology and our readers from over 55 countries for their feedback.

HOW DIGITAL FINALLY BECAME IMPORTANT

1. SMILE, YOU’RE IN A CRISIS

The world is still in a deep crisis, considered by many as one of the most dramatic economic moments in recent history. Europe, the US and even emerging BRICS countries have suffered severe blows, impacting governments, businesses and individuals.

It is not the purpose of this book to explain the reasons and mechanics behind this specific situation. Nor is it the intention to make everyone depressed and pessimistic about the future. Although our book deals with the great challenges that lay ahead for many of us, our aim is to provide insights and context. This makes it important to understand why the current crisis is so different compared to what the world has previously seen in our economy over the last century.

As many crises before, this great depression that began at the end of 2007 started as many other financial crises have started with the shortage of liquidity. As a result, the worldwide banking system nearly collapsed.

Governments all over the world had to step in and bail out some of the largest banks. It was apparently the only way to prevent a global collapse of the economy and possibly of society as we know it. The impact of these and many other political decisions will probably continue to resonate for years to come.

This great depression revealed the underlying banking crisis that triggered the current situation, one crisis setting the other in motion. The true nature of the banking crisis was of course not just the shortage of liquidity nor the following distrust between banks and the rest of society. The real nature of the problem was rather ethical and philosophical: the risk we were all taking by having a handful of people manage a hyper-complex technical financial construct as the backbone of an even more complex world and economy. With this crisis it was clear that the system has simply become too complex for anyone to understand and manage. We are all doing the best we can but we are no longer smart enough to deal with all the consequences of change in the world and economies as we know it today.

While we are writing this book some first signs might indicate the end of this economic crisis. We might even become optimistic if it weren’t for many economists all over the world that do not believe this crisis will ever pass. They are talking about system-crises, a possible chain of small and big crises following one another. At least there is a consensus that this crisis did not behave like previous ones, making it almost impossible to predict the next steps. The economists believe that if we define the end of the crisis as going back to normal, that will never happen again. Ever.

There is no more normal in the economy of tomorrow. The days of a few years in recession followed by a relatively long stable period of growth are over. We have to accept that everything is currently changing and that one wave of change is quickly followed by another. One important insight is that change is no longer a one-off thing: the media changed so now we are done for a while, is probably not how it will be. The media (and with it many other industries) will continue to be in a permanent state of flux. The biggest mistake is to believe that transformation will happen once. Transformation has become a permanent condition. Something that works today might suddenly not tomorrow. This forces us to consider change as a permanent factor. This makes it difficult to design 7-year plans. This makes long-term investments that force you to follow a certain road without the ability to change course along the way very dangerous. Organizations and their leaders that do realize this challenge are the captains of tomorrow. They will lead the pack.

This is where the story turns positive again. The better you understand the change that is upon us, the more agile you and your company become which enables you to be prepared to respond and deal with these changes. If there is one thing we should learn from this crisis, it is that we need a different mindset; one that allows us to deal with rapid change in permanently uncertain times. Those who master this will win. This change in mindset will be necessary as the impact of the financial crisis is far from the only challenge we need to deal with.

In the long term, we are facing the consequences of climate change that will have a huge impact on policymaking, economy and our personal lives. The investments for dealing with floods, droughts and possible migration of millions of people might represent billions of euros and make up a substantial part of the gross domestic product of most countries.

At the same time, we see the shift in focus from the traditional (mainly western) superpowers to new emerging economies like Asia, South-America and Africa, which are slowly taking over part of our dominance. This will not only have an impact on economy but possibly also on our self-esteem as nations.

Let us end with the nearest and probably largest challenge we face in the short term: digital transformation. As we approach the end of the great depression many companies will be unable to go back to normal. Even though consumer trust and spending will rise, many traditional industries will not be restored to their initial position. They are losing ground due to the constantly changing rules in each of their markets. The main driver behind this is digital disruption. Many industries face the biggest challenge in their existence: weakened by the economic crisis and constrained by their legacy business, it will be difficult for them to adapt to and embrace the new rules dictated by digital change. The temporary economic crisis will be replaced by a long term structural crisis that is impacting the very essence of their being.

In this book we will discuss industries that have already faced and barely survived this evolution. We will also touch on others that are currently in stormy weather or might be in the near future.

Should we be depressed? That depends on where you stand and how you deal with digital innovation. This book is about showing you the drivers of digital transformation and how they might impact your business. This book will help you understand what the future of your industry might be and the role you may play in it. Of course you will need to be able to adapt some of the basic rules you have been working with for a long time and embrace the power of digital change.

Digital in itself is not a destructive power. It is a power that emancipates people, companies and movements. A power that creates new opportunities and ways to do things that were previously unthinkable. If we use this digital power in a positive way, it will create enormous future value. Not just in revenue and profit, but it might also prove to create solutions to the major worldwide challenges we are facing.

One last word of advice: if your business is not performing as it should, do not automatically blame it on the economic crisis. You should also consider the possibility of being subject to a structural crisis: the disruption and transformation of your industry.

2. A SHORT HISTORY OF GOING DIGITAL

This book deals with digital transformation and how it shapes your future for better or worse. In order to understand this future, we must first look at the past.

I (Jo) was born about 45 years ago, in 1968, in a time when there was no such thing as digital. My first recollections of media, communication or entertainment date back four decades and are based on pure analogue models. A simple world where radio, TV, newspaper, telephone, photography, business, shopping and all other things, had nothing in common. They all existed on their own islands, without links between any of them. This was an easy to understand physical world, with physical boundaries, strict opening hours and a TV-programming schedule that was holy for everyone.

About 30 years ago my world became digital. I got my first computer at the age of 12 (a Sinclair ZX81) and I was hooked on it from day one. In the years that followed more and more digital technology entered my and other people’s lives: CD-players, gaming consoles, digital cameras, navigation systems, handheld computers and so on. In barely 30 years’ time everything has become digital. Today the world is a digital place in which analogue merely exists because it’s vintage (like vinyl) or because it is still transforming to digital (like newspapers). Digital has become the backbone of change, introducing the first wave of emancipation. Digital technology allowed us to easily create things that were previously reserved for a select group of people: writing and lay-outing a book suddenly became possible for everyone. Making music or editing movies was also no longer the exclusive privilege of a select few and became mainstream.

In the mid-nineties the Internet became the next big thing. All our digital machines (mainly computers in those days) started connecting with each other. Putting them into a network created so much additional value. This was the sign for the next emancipation wave: the restrictions of the physical world suddenly mattered less. Through the Internet we could start doing business with people all over the world, 24/7. Physical boundaries disappeared and the world became a global village.

About a decade ago, people discovered that their computers and the Internet could be used to not just connect to servers anywhere in world, but also to people. Social media was born and was about to accelerate change even more. Facebook, LinkedIn, Twitter, YouTube and the other large networks facilitated the third wave of emancipation. It allowed everyone to play an important role in the distribution of headlines and opinions. In a way we are now all gatekeepers for at least part of what is happening in the world.

Around 2007, the last acceleration happened with the new mobile ecosystems. Although the early efforts to bring Internet to mobile phones date from the late nineties, we had to wait for Apple (with the iPhone) and Google (with Android) to actually make it happen. We simply cannot overestimate the impact smartphones and tablets have on the behavior of people and how this is speeding up digital transformation.

Mobile started the fourth wave of emancipation. Access to information, communication and interaction has been available everywhere at all times ever since. This wave is creating new habits and expectations focused around the here and now, instant gratification and more impulse based decisions. Another effect of the mobile ecosystem is that more and more people that previously had no access to the Internet or social media, are now jumping on the digital bandwagon. Expect to see many more billions of users join the digital space, resulting in a more multi-cultural, complex and vibrant environment.

The last key driver of change that mobile brings to the table is its ability to bridge the physical and the virtual world. Through mobile devices, we have started to use the world around us to trigger digital information and services. The physical world has become our navigation interface, often without us even realizing it.

Nobody knows what the next wave or accelerator will be, although we could easily theorize about the potential of smart TV’s in the living room, wearable computing (like Google Glass or smart watches) and the Internet of Things. One thing is certain: we haven’t seen the end yet.

3. THE SPEED OF CHANGE

Change and evolution are nothing new. Humanity is subject to permanent change: every cell, every person, everything around us, every part of the universe is changing and evolving. This has been the case since the big bang and it will go on forever. So why is digital change so scary? Why is it so difficult to manage?

The explanation is probably that humans can only deal with a certain amount of change within a general framework, This gives us the overall impression that it remains relatively stable. People change, companies change, industries change, political systems change, but until now, this change always happened at a speed that was mostly slow enough to adapt.

Digital is increasing and speeding up the amount of change we have to deal with. The explanation for this can be found in the four waves of emancipation that we introduced in the previous chapter.

The analogue world was characterized by physical boundaries which, by definition, made it difficult to introduce change. A retail company that wanted to compete with another player in