Previous month:
January 2021

Exploring the Scope (and Opportunities) of Digital Transformation


Scope of Digital TransformationA digital transformation means far more than offering products and services digitally. That is undoubtedly the core of it, but as this article illustrates, it goes far beyond.

To start, let's review a simplified business model for a traditional bricks-and-mortar company. White Water Designs sells kayak, and small boat plans to home builders. If you want to build a 3-person canoe or small fishing boat, they will design it for you and provide the plans. The company was formed by two boat-building partners who honed their specialization (boat designs), hired a skilled workforce, and operate from an office in the marina.

Digital Transformation 1a

Going Online

Then, with the advent of the internet, they could also sell boat designs online.

Digital Transformation 2a

Now they sell both traditional, physical products along with online, digital products. Since their online presence is worldwide, they market to a much larger home-build boat enthusiast audience. They also have to compete against all the other online boat plan companies.

While the image above depicts the minimum viable digital transformation, it misses a lot of untapped potential. Unlike physical goods, digital products can easily be sold, rented, or consumed via a subscription model. So now there are some more potential revenue streams.

Digital Transformation 3a
Transforming Organizational Structures

As organizations embrace the space-shrinking nature of technology, White Water soon realized that not only can customers be remote, but employees can be too. Maybe someone moved away yet could still contribute; perhaps it took a pandemic and work-from-home orders to convince them.

The reality is that talent like customers are distributed, and online tools make remote contribution easier than ever. Young workers grew up digital and find online contribution and collaboration natural. That skilled onsite workforce can be augmented with remote team members.

These online workers do not have to be full-time. Part-time, project-based or single-item (gig work) are all made more accessible by job sites, apps and distributed work tools. This opens a larger talent pool and creates workforce options (and challenges) not possible in-person.

Digital Transformation 4a
Some organizations question if they need a physical office or workplace at all. Do White Water Designs need that expensive office in the marina, or would they do better diverting the rent towards online marketing?

The term "all-remote" describes organizations that deliberately avoid centralized offices. Two years ago, the list of largest all-remote companies were nearly all software companies. Now it contains credit card providers, pharmacies, insurance and medical suppliers. The world of work is changing.

Transforming Purpose

Once organizations start experimenting with shedding their physical offices and collaborating virtually, it is not a giant leap to wonder what other types of problems they can solve or new products they can offer. In the digital world, the cost to experiment is significantly reduced.

Maybe the skills required for designing stressed-skin kayaks are not that different from designing yurts, tents, and temporary buildings? Being web-based and having access to a diverse workforce allows for relatively easy-to-run small-scale experiments. Instead of opening an office in the yurt building district of town, spin up a new website, invite creators to a design-off competition, and test market people’s reactions.

Why not also partner with a materials supplier. Offer designs to showcase what can be built with their products in exchange for discounted materials or customer design referrals. Finding collaboration partners is also easier online. Invest in the promising experiments, pivot to new ideas when interest is low, or the competition too fierce. Soon the end-to-end business may look quite different than a traditional organization also selling goods online

Digital Transformation 5a
This fictitious review of White Water Designs was intended to highlight some of the potential impacts of digital transformations. It goes far beyond selling online, although that is a common starting point.

Structural Flexibility

Doing business online, directing remote teams, and experimenting with new products or partners is definitely enabled by technology, but digital transformation goes much further.  The real “transformation” occurs within the governance and engagement models.

Organizations that capture the true potential of digital, transform their structure, engagement and thinking. Today’s all-remote and digital-first leading organizations jettison top-down, hierarchical structures. The layers and reporting channels create bottlenecks to information flow and innovation.

The companies that can change quickly and capitalize on new trends or Ideas tend to be flatter in structure and favor “host leadership” that encourages whoever has a good idea to build momentum and go try it.

Companies such as Humana (health insurance), Amgen (biotech), Automattic (web tools) are not only all-remote, digital success stories – they also run a lot of employee-led experiments. They use empowered teams and challenge them to think differently to spark creativity and innovation.

This is the real challenge of digital transformation, and it is a cultural shift, not a technological one.  When we consider the skills required to enable and advance digital transformation, governance and culture are the most difficult. As always, the soft skills are the tough ones to master.

Technical Fluency

This can be good news for team leads, project managers, and change agents. The work required to take full advantage of digital transformation spans all departments, not just IT. In fact, the IT elements of digital transformation are becoming less specialized. Low-code and no-code environments, complete technology stacks as subscription-based services, and visual integration tools are broadening the set of people who can enable the switch to digital.

Digital fluency, the awareness and understanding of the tools and services available, along with their risks, limitations and when to engage specialists, is a valuable skill anyone can learn. Community developer platforms are seeing colossal investment and expansion. It is estimated that the no-code / low-code website builder platform WordPress  (provided by all-remote Automattic) powers 39% of all websites.

Organizations are using their specialized IT staff to grow-out and support business users as they undertake community development. The IT group provides integration help and oversees security and risk management, perhaps stepping in to do complex work. However, an increasing amount of digital enablement is business-led.

Digital Empowerment

Channeling all development through IT is akin to funneling all strategy and ideas down from senior management in a command-and-control structure. The benefits of empowered teams should have taught us that more people problem-solving and creating is better. Now, ironically, the same logic is being used against people in the IT department who try to suppress citizen-development over fears of unmaintainable rogue development and security flaws.

Just as successful employee-led organizations such as Wildling Shoes, Morning Star, Happy Ltd, and Centigo encourage their employees to self-manage and create new product ideas, they provide oversight and support. This is how the best IT departments work too. Empower your employees to solve digital problems and create new capabilities, but be there to provide oversight and support.

Giving up direct control takes a culture shift but can also be liberating and create new opportunities. Digital transformation goes far beyond online products and provides many exciting opportunities for project professionals. Most organizations will never become remote, co-operative innovation labs. However, enough have made the transition to model the way, if we wish to follow a few steps.