Bloomberg’s Carol Massar: “So what the heck is digital transformation?”

Categories: Digital transformation |

So what is digital transformation

A couple of weeks ago, I was interviewed on Bloomberg Radio by Carol Massar and I loved when she asked, what the heck is digital transformation? As she put it “I feel like we’ve been going digital for a long time, what exactly do you mean by that?”

During the interview I, perhaps unfortunately, slipped back into tech terminology, in explaining that organizations used to be characterized by a separation between their front-end and back-end processes, which results in disconnected, slow moving organizations. So even if a company invests in their technology, such as developing a new mobile application, by failing to modernize their organization and in particular their processes, they continue to struggle to keep up with with more agile, more “digital” competition.

On reflection, I don’t think this was the best answer I could have given. But it serves as a useful reminder that those of use in the tech industry talk all day in industry jargon, and that those people not coming from a tech background, can struggle to understand why what what is happening now is so different that in the past. Why is today’s digital transformation different from, for example, what happened with the emergence of the iPhone and the creation of a new ecosystem of mobile applications and devices?

I believe a better way to explain digital transformation, is that creating a digital organization goes much beyond greater investment in technology. It’s the difference between building a new shop window, and building a new shop. Simply creating a new website or updating your mobile app is the equivalent of hiring the local builders to create an attractive storefront – while it’s a good start, it won’t help you become a more nimble business, or create new forms of value for your customers.

It’s actually new processes, enabled by new technologies, which mean executives can create the foundations of a digital company – rather than the technology itself. Organizations that have realized and achieved this, are characterized as having an intimate and close relationship with their customers, and are able to respond to changing customer desires rapidly and effectively. These are organizations that have re-thought their business strategy, and all aspects of their business, to take into consideration the fact that their customers are engaging with them and their brands via new digital (particularly mobile) channels.

Unfortunately many companies continue to struggle with this shift – there remains all too often a gulf between an organization’s technology capabilities, their ability to respond to customers, and the expectations of those customers.

But what does this look like? I think a great example of digital transformation comes from the work we have done with one of the largest banks in Latin America. Large banks are at the forefront of the discussion on digital transformation, because they typically have large, complicated legacy IT systems which are difficult and expensive to modernize. But they’re also faced with new and vibrant FinTech competitors which are changing people’s expectations of financial service providers.

In this particular case, the Belatrix team worked side-by-side the employees of the bank in a long-term transformation initiative – addressing not just the bank’s technology, but also their culture, their digital vision, and making sure they had the right people and the right skills. Part of the transformation involved implementing Agile development, first in its dedicated innovation center, and then scaling it to the whole organization. Agile development, which to be honest has been around for many years now, represents an ideal methodology to drive an organization’s digital transformation. With the help of Agile, new processes, and a new organizational structure, the bank has been able to get products from the idea stage to being live on the market, in just 14 weeks. Customers have rapidly adopted these new products. This is a great example of a digital transformation fundamentally changing how an organization operates, goes to market, and engages with its stakeholders and customers – and most importantly, creating new forms of value.

You can listen to my full interview with Bloomberg Radio here (the actual interview starts at the 2:48 minute mark)

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