Achieving effective digital transformation through business centricity
It seems that all too often, I have read or listened to customer accounts of “digital transformations” that have disappointed or failed to live up to the hype that has accompanied them. This has been at odds with my perception that we stand at the cusp of making and benefiting from the most significant advances in safety and performance across a broad spectrum of asset-centric industries, as well as in how we do business, that have occurred in my lifetime. So, what’s happening? What’s causing the mismatch in both my expectations and in the minds of so many of those immersed in or emerging from so-called digital transformation initiatives? Are we just too optimistic in our expectations, or is there a flaw somehow in the way in which digital transformation initiatives get planned and executed? Can they be realigned? What can somebody in the early stages of awareness and planning learn from what has taken place to date?
Digital lipstick for the pig
Beneath this lies lots of questions and a myriad of deeply complex business, psychological, and human behavioral aspects. Rather than me dive into all of these and turn this into a philosophical dissertation, let me cut to the chase. There is a wonderfully expressive analogy that I came across a few years ago in the context of reviewing a software product that had some challenges in the market that I think may go a long way to expressing at least some key areas of concern. A proposal to address these challenges was put forward to me, in my product management capacity, and the others in the management team at that time. There was a somewhat muted response to the proposal, but my colleague perhaps summed up the general view on it the best. He asked, “Is this not just putting lipstick on the pig?”. It summed it up just perfectly. The proposal was adding what appeared to be a significant change. However, the changes were superficial, and once you distilled them down, there really weren’t any changes to the underlying product, just more of the same and the implication that the real issues hadn’t been recognized.
What are we transforming, and why?
Coming back to the concept of digital transformation, why do I think that putting “lipstick on the pig” is an appropriate analogy for some of the less successful initiatives? To get to my perspective, you must start from the business operator or end user’s perspective, whoever is the anticipated beneficiary. Fundamentally, can we define precisely how the transformation has changed their business for the better in a tangible manner?
Take my own industry focus as an example. For a pipeline operator, has it:
- Enabled making a step-change in safety levels
- Reduced unscheduled shutdowns
- Enabled increased throughput and meeting higher demand
- Improved security of supply for critical customers
If we are not delivering upon any of these or similar, business goals then we should be challenging exactly what we are transforming and why we are spending vast amounts of money in the process. Without achieving these gains, are we not also simply putting lipstick on the pig? The “pig” in this case being our old processes, procedures, and long-held views on best practice in managing pipelines.
Technology is an enabler for digital transformation
But what about technology? Where does cloud computing, the Internet of Things (IoT), edge computing, or artificial intelligence fit into this discussion; aren’t they the very essence of a digital transformation? Yes, but they are enablers, not the focal point. They are the enablers that should fuel our curiosity to not leave any stone unturned in bringing about step change to our industry and our business performance.
We should be open to critical review of our old ways and whether we now have a toolset that lets us do things we just couldn’t do previously or that we can now do in a much more efficient way. This has been the cycle that fueled all other industrial revolutions; we are now in the fourth of these, and this one is no different. For example, steam engines replaced sails to power ships because they reduced voyage times. They were more dependable and enabled vastly more cost-effective trade and trade in previously impracticable commodities. Similarly, the cotton gin boosted cotton goods production through efficiency and made (relative) mass production a reality, advancing the viability and value of the wider cotton industry. We now have the windfall of having a powerful set of digital technologies arising from various initiatives (including fundamental research and development) at our disposal to change our current industries and be the foundation of totally new industries.
For DNV GL as a solution provider, we must analyze how the technology may enable us to deliver more effective solutions, including the business model we provide. Should we be refreshing the traditional production line “pipeline” business model or taking advantage of the technology, enabling us to move to a platform-oriented business? Should we be moving to an open source approach, sharing the wealth but also gaining from the wider industry wealth of knowledge that brings net increase in value to customers through a best of breed solution on a seamless platform?
Industry expertise completes the pathway to digital transformation
I can’t help but feel that collectively, industry and solution providers have managed to disconnect the concepts of digital transformation and disruptive innovation. We need to ensure that we get back on track and maintain the digital thread from the foundational works such as:
- Winning Through Innovation by Tushman and O’Reilly
- The Innovator’s Dilemma and The Innovator’s DNA by Clayton Christensen
- The Platform Revolution by Parker, Alstyne, and Choudary
As well as the pragmatism of the product management practitioners and how to identify and assess opportunities expressed by:
- Inspired by Marty Cagan (perhaps the most on-point of all)
- The Lean Product Playbook by Dan Olsen
- Strategize by Roman Pichler
- Strategic Speed by Davis, Frenchette, and Boswell
Each of these are excellent works spanning almost 20 years of business thought leadership. However, they tell only a part of an evolving story. They also miss a key ingredient for success; they are written in a generalist perspective. That is where the likes of DNV GL must pick up the baton and inject their more than 150 years of expertise in the understanding and experience of the specific industry sectors they serve and utilize that to complete the pathway to the next generation of transformational services, products, and solutions.
Digital transformation initiatives should truly transform your business
Unfortunately, we are witnessing digital transformation initiatives across all industries being implemented in a blind faith that assumes, because it uses the latest technology and the business becomes digital, it will make things “better” in some way. Sorry to burst the bubble, but simply sprinkling Industry 4.0 technological pixie dust on what and how we do things today does not qualify as digital transformation, or at least not an effective one. One thing for certain is that it will have been a costly exercise for zero gain in business effectiveness.
So, how impactful is your digital transformation? Are you truly transforming your business through harnessing the power of digital technologies that enable more effective processes, introduce new ways of working, or perhaps facilitate new business models to be implemented that lead to enhanced business performance? Or, are you simply putting lipstick on the pig? Let me ask it another way. Are your old analog business processes still alive and well and simply getting on as before but from behind a fine digital veneer?
How impactful is your digital transformation?
To miss the opportunity of executing upon a well-considered digital transformation can have wide-ranging repercussions for your business. Depending upon your industry and line of business this may take a long time to manifest itself, but in some cases the impact may be seen more immediately. From my perspective, we should all be asking ourselves what our objective is for our business.
Fundamentally, do we have clear line of sight upon the underserved needs of the industry? In other words, can we identify where there is an impact that can be made that will bring clear added value to the customers that we serve as well as our investors and other stakeholders?
Once we adopt a business performance-centric mindset of viewing the opportunity given to us by the availability of the far-reaching technology and its rapidly maturing state, then we will be well-positioned to make industry-changing digitally enabled transformations.