1. Make customers your #1 priority across the organization
Amazon is rising to become the first TRILLION-dollar company! This is its vision statement:
“Our vision is to be earth’s most customer-centric company”
Digital Transformation is first and foremost about winning the hearts and minds of customers. And you need to keep them after you’ve inspired them.
2. Redefine your business to be about purpose
In the new digital transformed economy products and solutions are increasingly becoming commoditized at the core. What matters more and more is the purpose behind them. Customers have unlimited access to this information and your employees will love you or leave you based on your purpose.
A case of purpose driven transformation: Moneysupermarket redirected itself around saving the United Kingdom. £1billion. This impacted 500,000 households saving £200 each. The move to impacting the masses created company driven to help people save more money.
3. Change your strategy planning horizons to follow the cadence of the digital economy
The world is changing faster than ever and you need to adapt. What matters is agility and flexibility. Succeeding in the digital age directly correlates with faster feedback loops. The 5-year strategic plan is dead. It’s completely irrelevant to be exact.
You should focus on only 2 horizons:
- Your BIG transformative purpose, i.e. your long term vision. See above for an example.
- What you must accomplish in the next 6 months to take steps towards the vision.
Forget all other horizons. Don’t do your 5-year planning. Instead, Focus on these 2 horizons only.
4. Rethink and construct your business model for the digital age
As shown by the wave of industry disruption the rules of competition have changed.
Here are some examples of how companies can rethink their business model for the digital age:
- Move from resource control to resource orchestration. Don’t try to gain a competitive advantage by controlling scarce and/or valuable resources “With platforms, the assets that are hard to copy are the community and the resources its members own and contribute, be they rooms or cars or ideas and information. In other words, the network of producers and consumers is the chief asset.”
- Move from internal optimization to external interaction. Don’t attempt to create value by optimizing the entire chain of products and service activities. “Platforms create value by facilitating interactions between external producers and consumers. Because of this external orientation, they often shed even variable costs of production.”
- Move from a focus on customer value to a focus on ecosystem value. Don’t seek to maximize the lifetime value of individual customers of products and services. “[P]latforms seek to maximize the total value of an expanding ecosystem in a circular, iterative, feedback-driven process.”
- Adopt a digital mindset and integrate software development at the core: From Zalando interview: “By becoming a platform, technology received a lot more importance than it had for us in the past. We realized that to achieve our goal we don’t need just a couple of engineers – we need thousands of them. In order to make this happen we changed the working structures at Zalando Tech towards Radical Agility – a concept that is much more based on purpose, trust and autonomy. This doesn’t just make the way we work very efficient and effective – it also makes Zalando Tech a magnetic work place and will help us to become the number one technology company in Europe, where every tech talent wants to work for.”
5. Make technology a core competency to be leveraged for competitive advantage
IT is increasingly becoming a Line Of Business budget item vs belonging in the Chief Technology Office only. The reason: Technology unlocks the innovation super powers. As Marc Andreessen stated: “Software is eating the world.” and every company is becoming a software company. Whether you like it or not that is the expectation.
Note an important differentiator in terms of “technology”. Technology is not what it was 10 years ago. What runs the digital world is different than what was meant in the old economy. Technology is what enables new customer experiences. It is what connects people, things and businesses in ecosystems.