Evolution 4.0: Digital transformation by the people, for the people

There is much about the Fourth Industrial Revolution that is unprecedented; we are, in many ways, at a frontier in human history. But this industrial revolution has one thing in common with every revolution that has preceded it: people are the principal agents of change. Why is this important? When we speak about transformative innovation, we recognise that technology is an enabling tool, not a driving force for change.

Digital transformation is frequently mistaken for digitisation or digitalisation. Indeed, the terms, often used interchangeably, are misunderstood. The three concepts, while certainly intersecting – and, at times, co-reliant – are distinct.

Digitisation is the simple process of converting information from analogue to digital. If these days you prefer an Amazon Kindle to “real” books, you have digitised your reading habits. As transformative as it may feel to keep an entire library’s worth of titles on your tablet, this is not digital transformation. Similarly, if you have saved your business money by going paperless, you have digitised, rather than digitally transformed. That is true irrespective of how astronomical the cost savings might have been.

Digitisation is the foundation of digitalisation which is, in effect, a systemic restructuring of all business processes. If you are using technology to drive revenues, efficiencies, transparencies, resource allocation and risk mitigation, you have successfully digitalised.

And then, there is digital transformation.

Digital transformation is driven by people and driven for people. Yes, it requires the holistic implementation of digital technologies, but moreover, it forces organisations to adopt new cultures. It is a team sport. At all steps of the hierarchy, from C-Suite down to interns, skills profiles will shift, and job specs will be rewritten. Training and recruitment priorities will be realigned. The vital need for talent does not change, but the nature of the talents sought undoubtedly does. In all these ways and more, digital transformation is driven by people. The ultimate aim is to create an organisation that is fully responsive to customer demands, an organisation that is driven for people.

Data, of course, is a fundamental accelerant of transformation. Digital maturity and data maturity are positively correlated. Data provides insights about your customer base; it can sketch patterns of behaviour at the macro level and simultaneously paint intricate individual portraits. But, without the talent to interpret it, it reveals little.

Those companies at the forefront of data innovation are routinely using a multitude of datasets to generate customer insights. On top of what we might call traditional or structured data – primarily internal data assets – they are overlaying real-time insights from literally thousands of additional sources. This amounts to terabytes, and even petabytes, of unstructured data. Unless you are incredibly scrupulous about data privacy, you are contributing to this Big Data. Through the simple act of owning a smartphone, each of us ensures that the map of our consumer preferences is constantly redrawn and refined. The possibilities of billions of people connected by mobile devices with unprecedented processing power and access to knowledge are unlimited.

Amazon has amply demonstrated that those companies best able to use customer data to understand their base will capture the market. Back in 2005, Amazon Prime subscribers ranked two-day delivery as the service’s top perk. Rather than rest on their laurels, Amazon upgraded the Prime offer to one-day delivery and made two days the standard delivery time for non-subscribers. In doing so, they not only improved the customer experience, they raised the bar for e-commerce across the board. What was then a premium service has become a minimum expectation. For many online shoppers, the prospect of a longer than two-day wait is a deterrent strong enough to tank the sale.

Much was understandably made of the fact that last month, Jeff Bezos added US$13 billion to his net worth in a single day. Bezos’s gift, the gift with which he has built his fortune, is his ability to read customer demand rather than simply create it. Amazon lists 14 leadership principles on its website; these, it says, are what makes the company “peculiar.” First among them is customer obsession. To quote directly: “Leaders start with the customer and work backwards.”

Somewhere in the multiverse, the company has different principles. Sure, it is interested in customers, but not obsessed. As such, it stubbornly remains an online retailer of books, while another, savvier firm shipped 3.5 billion packages containing 12 million product ranges last year. In that parallel universe, Amazon has never truly pursued digital transformation. And in that parallel universe, Jeff Bezos has never enjoyed a US$13 billion day.

While not every firm can be an Amazon, nor every leader a Bezos, the principles underpinning successful digital transformation are scalable and transferable. Start with the customer and move backward: in the modern business ecosystem, that is the only way to go forward.

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