Faster and cheaper transformation – Rita McGrath and Dr. Muneer Muhamed

Since digitalisation is the emerging trend for businesses everywhere, many of our global clients have been freaking out over digitally transforming legacy businesses. They then erroneously commit resources to anyone who can promise that digital is around the corner!

Here’s a smarter way to approach it…

The advent of technology has presented senior executives with an inflection point of enormous proportions. An inflection point is something that’s typically outside the boundaries of an organisation and exerts ‘10x change’ (10 times cheaper, faster or more valuable) on the business.

Successful entrepreneurs don’t commit huge investments to a colossal plan. Instead, they ask the question: ‘What will success look like for me?’ And then they work backwards to discover what would have to be true to achieve that success. They plan checkpoints using as few resources as possible to test assumptions.

By using our discovery driven digitalisation, many clients have ensured success – faster and cheaper.

Here are the disciplines you need for your digital drive.

Define what success looks like. Instead of throwing everything into an ‘upgrade or die’ mode, be very deliberate about how some digital efforts could be helpful.

Will it improve convenience for customers and eliminate frustrating workarounds? And does it have the potential to create an early win to reinforce the value of the digital effort?

Cove for example, which offers migraine relief medication, realised the fragmented way in which many patients suffer with what can be a debilitating illness was entirely unsatisfactory. The patients were a small part of any given doctor’s population and digging deep into one malady was not something that was incentivised.

Headache specialists are rare and patients don’t know who to ask for help since doctors themselves may not be well trained.

Through its app, Cove is able to provide specialised programmes for those suffering from migraine headaches. Migraine is the third most prevalent illness in the world.

Focus on the digital shift. You can start small similar to what German metals distributor Klöckner did by using digital technologies to get rid of faxed orders. How would you know that the digital effort is having an impact? A metric such as return on time invested (ROTI) will be a good first step.

Take the total revenue and divide it by the number of people employed to generate it. Compare the performance of Amazon (a native digital company) with Walmart (mostly legacy business and struggling with its digital transformation) in terms of their ROTIs. In 2018, Amazon’s ROTI of US$ 359,671 was 67 percent higher than Walmart’s 215,548 dollars.

But since then, things have changed drastically. Walmart’s relentless push to digital, which included the purchase of busi­nesses such as and Flipkart, and the recruitment of digital legend Marc Lore, improved its ROTI to US$ 226,056 in 2020 while Amazon’s dropped to 296,923 dollars. While it hasn’t caught up to Amazon as yet, the digital foray seems to be working well.

The competition must be defined broadly. Digital has made new partnerships between former allies a reality but also lowered the barriers to entry in ways few people foresaw. The advent of the ‘direct to consumer’ trend of the last few years makes it conceivable to have startups that can legitimately compete with long-established brands.

Digital is also compelling because of its ability to connect things and have information flowing through those connec­tions. Even manufacturers need to be constantly thinking about ecosystem implications.

Identify partners for your ecosystem and how you plan to attract them. Think also about the ‘gives and gets’ aspect of various partnerships and whether your ecosystem will be as competitive as others.

Cheap experiments are far more valuable than big ideas to gain practical insights, which can generate great value for businesses.

Since the onset of the COVD-19 pandemic, digital has certainly come into its own with working from home practices and accelerated investments. Lukewarm advocates were suddenly thrust into the role of becoming passionate promoters. And it shows no sign of slowing down.

One of the more interesting new developments is the advent of ‘low code’ or ‘no code’ applications, which are going to be an inflection point for traditional programming providers.

Offering lots of functionality at a fraction of the time and cost, such platforms promise to do for coding what ‘drag and drop’ editing did for website creation.

The other exciting thing is the potential for even physical products to be in perpetual beta phase. When you have to update the firmware in your car to keep it happy, you know that digital has crept into the physical world in a major way. As with any trans­formation, digital is only startling until it gets taken for granted and that moment is on the way.