Is this a digital upgrade or a digital transformation?
A digital transformation occurs when you use digital technology to change the way you operate.
If you discover that you are actually embarking on an upgrade instead of a transformation, ask yourself if that will be sufficient to maintain competitiveness when business models based on digital networks create market valuations four times higher than the rest.
Are you really bought in, and is your team?
A situation that we have seen over and over again is a leadership team trying to lead a digital transformation that they aren’t particularly passionate about.
Are you prepared to share value creation with your customers?
The latest technology-enabled business model, network orchestration, is premised on the fact that companies can allow customers and other networks to share in the process of value creation. Uber relies on a network of drivers; Airbnb relies on a network of property owners; Ebay relies on a network of sellers.
Have you put walls around your digital team?
A digital upgrade requires a well-defined team with a narrow scope. A digital transformation requires a team with a cross-functional mandate and strong support.
Do you know how to measure the value you intend to create?
Are you ready to make the tough calls about your team?
There is an old saying: “It is easier to change the people than to change the people.” Said another way, sometimes a new vision requires new people to create it.
Will you be ready to spin off your digital business?
Sometimes the upstart inside the organization becomes bigger and more valuable than the parent that gave birth to it—or risks not attracting the right talent or suffering turf wars between digital and legacy. (A great resource on this is The Second Curve by Ian Morrison.) Often, separation is required to enable both the parent and child to continue growth.
Transforming an organization is difficult, and the research proves it. But it is still worth doing. Forrester’s assessment is that by 2020 every business will become either predator or prey. As a leader, you likely already know the basics of managing change, but a digital transformation goes deeper, and thus makes different demands on you, your team, and your organization. In return, however, you have the opportunity to invest in the most profitable and valuable business models the market has seen.