Podcast transcription

Introduction

For all of you who are embarked on a digital transformation journey, how do you know you are on the right track? Are your digital investments upping your enterprise’s overall digital maturity? How can we assess an organization’s digital maturity?

Hello everyone to another episode of DigiBizCentral podcast on organizational excellence. I am your host Wasim R. In today’s episode, we will attempt to answer these questions. But first, a note about this specific podcast.

The DigiBizCentral podcast on organizational excellence is focused on covering various aspects of today’s digital business particularly on business strategies as well as management methods and practices that drive organizational excellence. We encourage you to subscribe to this podcast to ensure that you are always getting notified on future episodes as they are published. Also, please take a moment to rate us on iTunes or whatever channel you get this delivered on. We highly appreciate your feedback.

In today’s episode, I will introduce a digital maturity framework, which organizations can use to assess their digital transformation maturity more holistically. The underlying idea behind this framework is that as an organization continues its digital transformation journey, it must pay attention to certain elements to ensure that they are addressed in their digital projects and initiatives. Defining a digital transformation roadmap with specific milestones and outcomes along the way can ease the transition and increase the chances of success. Before we get started, please note that I will cover this topic in two parts or episodes. As this is part 1, look for part 2 to be published immediately after this one.

So, let’s get started with Part 1 of this topic.

The world in general and organizations specifically have been going through a digital transformation for a number of years now. Digital transformation does not refer to one or two programs that an organization embarks upon at some point in time. Rather, over the years, most organizations have taken on various digital initiatives triggered by their business imperatives and since then have continued their journey, which continues until today and would for some time to come. Depending on when each organization started, they are at different stages of that journey.

But all this then raises the question that how does an organization know where is it in that journey of transformation and where’s it heading? Specifically, how can an organization know that it’s progressing and maturing as it goes through that journey? For example, does an organization that migrates its business applications to the cloud can be regarded as digitally mature? What about the one that actively uses social media to interact with its customers or the one that has established a blockchain system to manage its transactions?

The answer to that question is that unless those steps have helped your organization become more customer centric or improve on your operational excellence then the answer is no. The market doesn’t reward organizations for moving to the cloud, for example, unless those steps have helped your organization to come closer to your customers and made your organization more agile and nimble to respond to market needs.

The move to digital, therefore, must be more holistic in nature. In this fast paced economy, it’s important to ensure that rather than merely taking on a few digital products and services, an organization becomes digitally mature so it’s firing on all engines for it to be more effective. Band-aid digital solutions in this economy simply don’t work. We saw how GE, despite its numerous digital innovations, suffered serious setbacks due to not paying attention to its bloated internal operations and dropped out of the Dow Jones Industrial Average index after being on it for more than a 100 years. We saw a similar fate of ToysRus, who despite launching major digital initiatives a few yeast ago was recently driven out of business. And there are other numerous examples of organizations, which were driven out of business due to their pursuing one off digital solutions rather than paying attention to all the necessary dimensions to keep them competitive.

As for the digital transformation maturity framework, it has five dimensions and they are:

• Innovation


• Market alignment


• Customer centricity


• Operational Excellence


• Organizational Culture

It’s important to understand that achieving digital maturity related to these five elements that I just mentioned is not just about launching a project or two. For example, an organization can’t just become innovative by launching one innovation center. Rather maturity along these dimensions and getting these ingrained within the fabric of the enterprise requires establishing systems, methods, and practices that can traverse the entire organization along with retooling and reskilling of the organization’s workforce.

Let’s now cover the five dimensions of this maturity framework in more detail. In this episode, I will present the first three elements and we will continue with the remaining two elements in the next episode.

Innovation

The first dimension necessary to achieve digital transformation maturity is that of innovation. In this fast paced economy where organizations in all industries are facing threats of disruption, no one disagrees on the need to constantly innovate to stay ahead in the competitive game. Innovation today is not about finding random opportunities to innovate a few products and services but instead it’s about changing an organization’s culture to bring innovation at all levels of the organization consistently. To do that, first, it’s important for every organization to define what it means to innovate. Innovation can be defined in multiple ways depending on various perspectives. Within the context of enterprises, we can say that it’s an overall process that identifies and creates new opportunities for the organization. These opportunities may be in the form of creating new products or services, streamlining of operations, making processes leaner, reduction of costs, and so on.

The goal of innovation in organizations is usually to take emerging technologies and prevalent industry trends, and then applying that knowledge in the context of the organization’s current state and develop new products, services, solutions, and even business models and frameworks. The goal usually is to make it easier for customers to engage with the organization, creating new products and services that are more aligned to the market, fixing issues related to operational excellence and so on.

To do so at a larger scale and to make it impactful enough, organizations must have innovative processes and practices at all levels of the organization. From small things such as including the right button on the right spot on a web page to pursuing innovative strategies and creating the most innovative products and services, a culture of innovation must be cultivated at all levels to enable an organization to stay competitive in this marketplace and economy.

And to do all this, i.e. to inculcate innovation throughout the organization, an organization should take formal steps and look at inculcating innovation as an overall process as well as a set of practices that must be introduced organization-wide. Having a formal method or framework can help guide the right processes, structure, and cultural practices across the organization and can help drive innovation at all levels of the organization resulting in new products and services, process improvements, injecting agility in all corners of an organization, etc.

When defining the overall framework or process of innovation, organizations must define it in the context of the various innovation programs that they already have such as R&D labs, CoEs, etc. The process should be defined clearly for all in the organization to see and follow. The better it’s defined, the more the process is likely to yield useful results for the organization.

To ensure that innovation gets its fair share of attention through digital transformation, many organizations can use a maturity model to guide their maturation in this dimension. For example, they may simply start out with a few innovation projects but then may push the concepts across the organization through awareness sessions, launching formal processes, creating new compensation programs to encourage innovation, and so on. This journey of inculcating innovation in the organization’s culture should be tracked and followed up to ensure its successful adoption.

To cite specific examples of innovative practices and steps that organizations can take, we see organizations establish companywide innovation centers, where staff can work on new opportunities and validate their commercial viability. We see for example Samsung establish a strategy and innovation center where it works on new products and services. Amazon has a Cloud Innovation Center where it experiments with new cloud products and serv