Navigating the Digital Revolution - A Roadmap to Business transformation - Part Two

Like mentioned in the part one of the previous blog, Navigating the Digital Revolution - A Roadmap to Business transformation - Part One, we are going to be looking at the digital transformation process itself in this part. We will also see how do businesses formulate and implement their digital business transformation strategies.  

Faced with multiple digital transformation challenges, companies have recognized the need ot govern this complex endeavour bu formulating and executing a clear strategy to keep pace with the new digital reality. This is supported by various stakeholders within organizations - executives see the potential of emerging digital technologies, and yet there are unclear about how to achieve their transformation goals. Experts in the business world are all in agreement that the ability to digitally reinvent the business is not just about the technologies being adopted, but rather about a radical strategic and cultural change within the organization, and corporate employees equally believe in the central role that strategy plays for successfully adopting new technologies. 

Both levels, individual and organisational, are therefore advised to comprehend this strategic imperative behind any digital integration and transformation attempts. Despite the paramount importance of formulating a dedicated strategy that integrates all the prioritisation, coordination mechanisms and implementation steps of digital transformation, academia still fails to provide a coherent guideline that addresses a company-wide transformation strategy. We need strategic frameworks that are aimed at deliberately harnessing the unique capabilities of digital technology that are embedded into products to gain competitive advantage. This growing sense of urgency about the need to craft the successful strategies for the digital marketplace makes it apparent that the concept of a company-level digital transformation seems to hinge on a strategy perspective, which is needed in practice. Therefore, this blog continues to focus on the strategic perspective of a digital transformation and the following sections explore this in more detail. 

Positional Digital Transformation 

Analyzing the content of digital transformation allows us to position the digital transformation phenomenon and distinguish it from previous technology-enabled transformations. We, at Celeix Digital, propose two tenets 

— The degree of complexity in digital transformations exceeds that of previous IT-enabled transformation, as it takes a revolutionary approach to fundamentally change the dimensions mentioned above. 

— The range of potential impact and benefits arising form tdigital transformation are also higher and have a clear external impact crossing traditional organizational boundaries. 

We also argue that digital transformation only entails revolutionary levels of transformation as a result of its increased complexity and impact. This is apparent in the nature of the business dimensions that are being transformed and their interlinks. 

— The operations - with multiple impacts requiring a fundamental redesign; 

— The customer experience -with a wider impact crossing form’s boundaries;

— The business model - adding additinal layers of complexity and wide-spanning impacts. 

Distinctive features of digital transformation - how is digital transformation different to previous IT-enabled transformation? 

Following the positioning of digital transformation within IT-enabled transformations, we will attempt to demystify some novelties and the distinctive characteristics of digital transformation. We mainly argue the difference from a technological point of view and show its implications on products, firm’s value chains and the external environment before concluding with the necessary organisational restructuring. 

Technological Perspective 

Arguably, the nature of digital technologies is a fundamental key difference causing the dramatic shift within organizations and in the competitive landscape. Today, we are reaching an inflection point, where the effect of these digital technologies manifests with ‘full force’ and enables ‘unprecedented things’. They have computer hardware, software and networks at their core, and have benefited from the exponential improvements in it capacity, which can be best explained using Moore’s Law. 

Moore and Fellow write - the complexity for minimum components costs has increased at a rate of roughly a factor of two per year. Certainly over the short term this rate can be expected to continue, if not increase. They have revised this doubling of computing power from one year to two, and nowadays it is common to use a doubling period for general computing power of 18 months. Progress in the digital world depends on ‘how many electrons per second can be put. through a channel etched in an integrated circuit, or how fast beams of light can travel through fibre-optic cable. 

This digital progress may slow down with time, as many people have already predicted, and yet there are two reasons why it will not. First, we underestimate the engineers and scientists working in the computer industry, and second, only if we use the same technology will we run into limitations. In fact, Moore’s Law is different of the laws of physics, as it is a predication related to the work of people in the industry, who have shown consistent success in the past. Furthermore, we are not limited to one technology. A convergence of multiple technologies is happening today as the innovations build on and amplify one another in a fusion of multiple technologies across the physical, digital and biological realm. 

Our central argument in identifying the key difference of digital transformation is further grounded on multiple characteristics of digital technologies. They differ from earlier technologies in three characteristics - 

— Re-programmability - allowing separation of the functional logic form the physical embodiment that executes in addition to a wide array of functions. 

— Homogenisation of data - storing, transmitting, processing and displaying digital content such as audio, video, text or image using the same digital device. 

— Self-referential nature - the requirement of using digital technology, leading to a faster diffusion and positive network externalities. 

In addition, digital technologies have mobility an ubiquitous connectivity features, which provide immediate interaction and access to a wide range of data and of computing power; these features are also reflected in today’s products and enable a wider reach (of people), regardless of geographical location. The exponential availability of data as a result of the discussed features enables companies to analyse the insights and derive the right decisions in real time. In summary, these technologies do not merely automate basic processes, satisfy information needs or affect the business strategy, as was the role of IT in previous eras; they also have the capacity to reformulate the entire business strategy as a result of their unprecedented capabilities ensuring efficiency, scalability, reliability and predictability of core operations, while simultaneously facilitating rapid development and the implementation of rapid innovations in response to, or even anticipation of, customers’ needs. 

In the next and final blog of this series, we will look at different perspectives product and value chain bring to defining the business transformation strategies. We will also understand how the external environment affects a digital transformation process along with influencing the internal organization structures concluding with the objective of this roadmap leading the digital revolution.