In the construction business, professionals know a great building begins with a strong foundation. That basic concept holds true in most aspects of life including business. At a time when many experts insist legacy organizations must transform into digital enterprises, leaders need to understand that building a strong digital enterprise requires a strong digital foundation. The time to lay that foundation and start building is now. In the first part of this article, I want to discuss why organizations should transform into digital enterprises. In Part 2 of the article, I will discuss some of the fundamental principles experts suggest will help any business transform successfully into a digital enterprise.

Randy Bean (@RandyBeanNVP), Founder and CEO of NewVantage Partners, and Ash Gupta, former American Express executive and Chairman of the Board for Corridor Platforms, insist time is running out for legacy organizations to transform. They write, “Legacy companies need to become more data driven — fast.”[1] Being data-driven, however, is just one element of a good digital foundation. Paul Leinwand (@PaulLeinwand), global managing director for capabilities-driven strategy and growth at Strategy&, and Mahadeva Matt Mani (@MMahadev), lead for the transformation platform for PwC and Strategy&, correctly argue, “Digitizing isn’t the same as digital transformation.”[2] As discussed below, to build the right foundation, you need to know what kind of digital enterprise you are trying to build.

The Digital Transformation Imperative

Bean and Gupta note, “The ability to deploy data as a competitive business asset is what has distinguished a set of well-established, data-rich companies who have reigned as market leaders over the course of the past several decades. However, business conditions evolve, and today, these companies face a new set of challenges that threaten their hard-won leadership positions. … Data and technology are driving business change. As data volumes and computing power increase, and as new AI, machine learning, and big data capabilities rise, established leaders need to adapt and grow.” If this is true for companies that are already data-driven, the imperative for enterprises organized around Industrial Age principles is even more urgent. Business consultant Rishad Tobaccowala (@rishad), writes, “A river of change is carrying everybody and every company into the future; significant forces are sculpting the frontiers of tomorrow.”[3]

As companies continue on what Nagendra Bandaru (@nagbandaru), President and Managing Partner at iCORE Business Line, calls “the journey out of despair triggered by the Covid-19 pandemic,” he believes it is an excellent opportunity to transform.[4] He insists it is time “to abandon incrementalism and to embrace digital uncompromisingly.” Bean and Gupta add, “Our view is that to retain their leadership positions, traditionally data-rich companies must adapt their data and analytics processes to incorporate the latest techniques, or risk falling behind those companies that embrace Big Data, AI, and machine learning.” Business leaders also need to think long-term. Digital transformation is a continuous process.

Business writer Esther Shein (@EstherShein) reports that a study by Forrester and global software consultancy ThoughtWorks, entitled “Secrets of Successful Digital Transformation,” concluded, “Modernization efforts are not one-and-done initiatives. Sustaining digital transformation success requires a continuous commitment to change management, the study found. ‘Success in modernization efforts doesn’t necessarily lead to an organization that can thrive long term. A company can execute a single modernization initiative, but true digital transformation requires a dedication to a continuous process of ongoing change.'”[5]

Envisioning Your Digital Enterprise

There is a reason most buildings begin with architectural renderings. Blueprints help you envision the final product. The conversation Alice had with the Cheshire Cat in Lewis Carroll’s Alice in Wonderland describes the journey organizations might take if they have no idea what kind of digital enterprise they want to become. Alice begins the conversation:

“Would you tell me, please, which way I ought to go from here?”
“That depends a good deal on where you want to get to,” said the Cat.
“I don’t much care where —” said Alice.
“Then it doesn’t matter which way you go,” said the Cat.
“— so long as I get SOMEWHERE,” Alice added as an explanation.
“Oh, you’re sure to do that,” said the Cat, “if you only walk long enough.”

Organizations won’t succeed in their digital transformation if they just want to go “somewhere.” Leinwand and Mani assert, “Companies need to step back and fundamentally reconceive how they create value. They need to reimagine their place in the world, rethink how they create value through ecosystems, and transform their organizations to enable new models of value creation. The bottom line is companies need to shape their own future, recognizing that the world has fundamentally shifted, and that they must find their purpose in it.” You need to see it to be it. Updating old processes to incorporate digital technology is not a vision. It’s what Tricia Wang (@triciawang), a self-described Tech Ethnographer & Sociologist, calls “digitization at its worst.”[6] She explains, “A lot of companies treat digital as if they are ‘doing digital’ — this is ‘digitization’ at its worst — as if it’s some checklist of things to do. It’s very transactional, and people are so busy doing digital they don’t even know WHY they are doing it in the first place! Whereas [some companies] embrace ‘being digital’ — this is ‘digital transformation’ at its best — it’s a total paradigm shift in the culture and operations — it’s not just about buying the latest digital tool, but about creating a new system, new cadence, new mindset.” Leinwand and Mani bluntly state, “If you can’t answer the questions ‘Why are we here?’ or ‘What unique value do we add for our customers?’ then you are likely at best just staying in the game.”

Concluding Thoughts

Tobaccowala insists, “Today, every company is a tech company.” To underscore his assertion, he points out that, a decade ago, a person would have done better investing in Domino’s pizza than in Apple, Facebook or Google. Why? Because they transformed their pizza business into a digital enterprise. He explains, “The company leveraged technology to reimagine and transform every single aspect of its business — from how one could order the pizza, monitor its journey to customers, let customers decide where to receive it (at the football field as you tailgate?) and how it was delivered to them. They reimagined stores and understood how delivery services could become parasites eating into their margin. Domino’s controls every aspect of the customer relationship and delivery. Domino’s understood technology was its business and could redefine its future.” Many experts argue that every business is tech business and the sooner they understand that the better off they will be. As noted at the beginning of this article, in the conclusion of this article, I will discuss some of the fundamental principles experts suggest will help any business transform successfully into a digital enterprise.

Footnotes
[1] Randy Bean and Ash Gupta, “Legacy Companies Need to Become More Data Driven — Fast,” Harvard Business Review, 15 June 2021.
[2] Paul Leinwand and Mahadeva Matt Mani, “Digitizing Isn’t the Same as Digital Transformation,” Harvard Business Review, 26 march 2021.
[3] Rishad Tobaccowala, “The ‘Third Connected Age’ of Tech Is Here—Is Your Company Prepared?” Adweek, 28 June 2021.
[4] Nagendra Bandaru, “Four Pillars Of Business Transformation To Bring The Future Closer,” Forbes, 28 June 2021.
[5] Esther Shein, “What are the ingredients of digital transformation success?” TechRepublic, 25 May 2021.
[6] Trevor Miles, “Let’s be clear: Digitization is not the same as Digital Transformation,” Kinaxis Blog, 8 December 2017.