The term "digital transformation" has become ubiquitous. Just about any provider's leaders and board of supervisors see the potential of digital transformation to produce new value and increase their competitive positioning. They're investing in building out capabilities to transform their company. Unfortunately, some companies build digital abilities but do not generate value that affects their competitive position. So, are businesses really making progress in these types of investments? Where are we in efforts to succeed in digital transformation?
Present Status Of Digital Transformation
For the last 18 months, the attention of digital transformation was understanding the capacities that firms necessary to develop or apply for their digital journeys. Additionally, consulting and advisory companies responded to this endeavor by creating frameworks along with the Target Operating Model (TOM) companies necessary for building those capacities. This resulted in a problem.
The problem is that the digital world is moving quickly and we do not have 10-20 years of experience to know what works and does not work. Disruptive technologies induce new operating models or new capacities, but firms could only hypothesize about what those capabilities must be. Frameworks are untested. Therefore, TOMs and frameworks are built in a vacuum. They do not reflect reality; they only reveal the best thinking at the time in regards to what a model or framework should be. This is part of the reason behind the abysmal amount of conversion failures.
That is where the digital transformation marketplace is currently -- companies will need to move the discussion from building/implementing capabilities to the way to gauge the value a business extracts from that effort. But they fight to do this. Here is the problem: Only a paucity of metrics exists to quantify progress in digital transformation and understand if businesses are receiving any juice out of the squeeze.
Businesses will need to be realistic at the abilities they're building. They desire a new framework to check at what works rather than what is theoretically meant to get the job done.
The Final Step Is Always The Hardest
In knowing where we are now with digital transformation, we now have two major examples of how industry transformation evolved before.
The first is the internet bubble. It was clear in the late 1990s that the internet was a very tumultuous technology and capability and it would reshape business and companies. There was a huge rush to construct websites and purchase technologies -- a lot of that, if not all it, was wasted. And every consultancy and study home expended enormous time and resources to build a framework for those capabilities necessary to be successful in the online age. Consultancies touted massive projections about how much market share would be captured or lost.
Subsequently, the burst came. Even though the internet was an extremely powerful and disruptive technology, the capabilities that firms hurried to execute were not well understood. So the frameworks and the effort to make the capabilities did not yield much value.
Here we sit almost 20 decades after. We understand much more clearly how to use the world wide web, and we have built on top of it. Amazon and other firms leveraged the internet to create a tremendous price. But most firms spent a great deal of cash on sites which were just elaborate brochures. In the last ten years, those sophisticated brochures matured and started enabling e-commerce to get a lot more value from them. But that is almost 20 years after we started the online journey. It is kind of shocking how long it took for those technologies to always take market share.
We're moving into exactly the exact same trap again now. We now have a raft of new, disruptive technologies ranging from Artificial Information (AI) to chat box into analytics into Robotics Process Automation (RPA), all of which jointly guarantee a massive breakthrough in performance. But we're going down precisely the same route as we did use the net -- we're building capacities against unproven maturity models and frameworks. If history repeats itself, which seems highly likely, a lot of this digital investment will be wasted.
Another example is that the spread computing revolution. The identical story performed there. It was obvious that distributed computing and PCs were far cheaper and a lot more powerful than mainframe computers. Companies hurried to make the most of this and invested huge leaps to equip their workers with PCs. Think about what we believed in the mid- to late 1980s about spreading computing along with the capabilities needed for that. There is a huge difference in contrast to what we know 30 decades later about ways to get the wanted productivity from PCs.
The path for the internet and PCS is a very natural route for how technologies evolve. It's unavoidable to start with the technology and vision, then think about capacities and then to evolve to hold organizations accountable to extract value. That final step is the toughest, and that's where we are now in digital transformation. We could shorten the time from the initial vision to consistent value capture compared to how long it took us to accomplish this with distributed computing and the web. We built capacities against unproven versions and then had to return and rework these.
In the case of digital, we went from three or even four years ago to understanding this technology will inevitably produce enormous market value and we will need to embrace them be left behind. Thus, we moved from eyesight to power building. Now companies will need to determine how to extract value; differently, they'll waste a good deal of investment. The only way to be successful is to create metrics which quantify progress toward bringing value. That's what should happen now.