The Top 5 Myths of Digital Transformation

Myth 1: Digital Transformation is Led and Owned by The Chief Digital Officer

Now, this might be heresy to CDOs and ex-CDOs like me, but the CDO does not own digital transformation. Neither does the CIO, or COO, or CMO. Digital Transformation, I have realised is actually nothing but business transformation. However, any business transformation today would, by default use digital tools and technologies, and call it Digital Transformation.  Therefore, the leader needs to be the owner of the business – the CEO, the business owner or the Board. The CEO must have a clear vision of what she wants her business to become at the end of the transformation and be able to articulate the same. One of the best examples of this is probably General Motors Co. (GM), whose vision says: “Over the past 100 years, GM has been a leader in the global automotive industry. And the next 100 years will be no different.” GM’s CEO Mary Barra and her management follow this to the letter, and GM is transforming like no other: the $500 million infusion in Lyft to enter the fleet platform space, their electric vehicle programme, and the GM OnStar digital experience are steps taken to reinvent and transform the company.

Myth 2: Digital Transformation is Not Linked to Business Metrics

There was a time companies fell over each other to create their own dotcoms; it was the fashionable thing to do. Until suddenly one day it was not. It is surprising how many CEOs want to go digital, because everyone is doing it, or because it has great ‘PR value’ or because their kids, or the analysts, want them to! Needless to say, these are absolutely the wrong reasons to go digital. The digital transformation exercise must impact real metrics—revenue, profit, cost, customer engagement, retention or repeat buying—and therefore impact business in a positive manner. And, we should know what metrics we trying to change, and by how much, right up front; or else, the whole exercise is not worth doing.

Myth 3: Digital Transformation is Only About Digital, Not IT

The digital front-end (website, app, store, etc.) and the back-end (like customer relationship management (CRM), enterprise resources planning (ERP) and billing systems) need to sync with each other. There is no point building a killer engagement app for smartphones, without it being integrated seamlessly with the Big Iron at the back. This is the ‘uncool’ part of the equation, the most common point of failure of your digital story. It is also where most of the hard work has to happen. While digital is not necessarily IT, IT is the backbone of all digital execution.

Myth 4: Digital Transformation and Digitization are the Same Things

This is probably the greatest myth that needs busting. Both Digitization and Digital Transformation are super important, but they are different things. Digitization is about taking, say, a process, and making it better, faster, cheaper using digital tools and technologies. So, digitization is about efficiencies and saving costs. It is inside-out. It is an operational necessity: about operational excellence, predictability, making data accessible and reliable. It is a key input for scale and efficiency. However, it will not make a business a digital one. For that, you need to digitally transform a business. Digital Transformation is a customer-centric value proposition. It is how digital technologies and information can enhance an organization’s existing assets and capabilities to create new customer value. Digital offerings are the specific solutions that deliver on a company’s digital value proposition. The key benefits of digital transformation are growth in revenues and margins, undying customer loyalty, and the ability to attract top talent (and thus continue to grow). It is about business models, customer experience, and people, culture, talent; and key deliverable is customer value.

An example I use in the Indian context is Meru, the taxicab service. Digitizing Meru will make it run faster, cheaper, more efficiently. However, digitally transforming Meru will be converting it to (a business model like) Uber or Ola – a totally different customer value proposition.

Myth 5: Digital Transformation is Quick!

Digital transformation is going to be a long, trying passage. There will be stomach-churning ups and downs, and severe doubts and disruptions along the way. The primary quality needed of a CEO to traverse this path is not mercurial brilliance, or a driving ruthlessness or even faultless execution, but sheer, limitless patience. As the world-renowned artist, Michelangelo remarked: “Genius is eternal patience”.

One of the companies that had ‘eternal patience’ and was richly rewarded for it was Burberry. Burberry went through an unprecedented digital transformation, a first in the luxury industry, where it became ‘and end to end digital company’ and made itself far more attractive to younger buyers in the U.S., Europe, and China. They did many things right and a few wrong, but the key here was that it took nine years! And, more importantly, the CEO and the Chief Creative Officer, Angela Arhendt and Christopher Bailey, stuck together in the company for all the nine.

Digital transformation is already going on all around you. If you’re not yet preparing your business for what will be at least a major disruption if not a complete alteration of the way you operate today, it’s time to start ramping up now. But before you jump on the digital transformation bandwagon, be able to distinguish fact from fiction so you make wise choices. Dispelling these five myths will help.