The Four Pillars of Digital Transformation

The Covid-19 pandemic has increased the pace of digital adoption in the corporate world. Without digital adoption, companies globally would not have been able to serve their customers in these times. IDC predicts that by 2023, 53% of all investments in information and communication technology will be towards digital transformation. This transformation affects each level of an organization and brings together data across areas to work together more effectively. By taking advantage of workflow automation and advanced processing, such as artificial intelligence (AI) and machine learning (ML), companies can connect the dots on the customer journey in a way that was not possible before. Our webinar on ‘Four Pillars Digital Model – Governance & Leadership, Process & Capabilities, people & Culture, and Technology & Innovation’ offered tremendous insights to attendees on the HOW, WHAT & WHY of Digital Transformation. Here is offering you astute thoughts of our expert panel who made this webinar a truly engaging affair…

Dr. Samir Yerpude, Deputy General Manager – Corporate IT, Tata Motors Ltd. - “To mitigate the risks, organizations need to develop on three core capabilities – Hyper-awareness and Connectedness, Informed Decision Making and Agile Execution. With these three core capabilities and customer experience driven digital transformation, organizations can expect to be successful.”

What does the word Transformation mean in Digital Transformation? What kind of transformational needs should leaders be aware of?

Transformation warrants for an act of changing something profoundly. The Digital Transformation is the integration of Digital Technology into all areas of a business, resulting in fundamental changes in how a business transacts with a customer and the value they deliver to their customers.

It is the leader’s responsibility to foster enthusiasm among the employees for the transformation opportunities that create value for the customer. The organizations which did not embrace the digital transformation are either acquired for or are on the verge of liquidation. The core elements to accomplish the digital transformation include People, Process and Technology. Leadership overarches all these elements bringing in the Strategy and Governance to orchestrate and deliver the transformation. Digital Transformation helps the organization in achieving the competitive edge in the market supporting its longevity.

What role does AI play in digital transformation? Where does that leave people & culture?

Artificial Intelligence fundamentally refers to the simulation of human intelligence in machines programmed to think and mimic human. It’s a niche area using Data Science, which necessarily means that it is driven by the data collated through different means. Data collated could be transactional or behavioral, that fundamentally is helpful to simulate human intelligence in machines. AI plays a major role in decision making and automation in the digital transformation to deliver customer experience and generate value. Relating AI to the people and culture needs to be looked at a bit differently. Traditionally humans were engaged in performing tasks which were mundane in nature. These tasks are now taken over by the technologies and the automations accomplished by deploying digital data. This has led humans to accomplish tasks which require skill and experience. The quality jobs are undertaken by humans improving their skills and elevating their satisfaction. Senior Leadership further nurtures the learning culture incorporating the customer centric DNA, eradicating the fear of technologies taking over human work.

How important is senior leadership buy-in (unconditional alignment) when you embark upon Digital Transformation journey?

That is a particularly important question. Companies are in a constant cycle of creating value, monetizing value, and defending value. While the cycle keeps repeating itself, the way a company goes about this cycle changes over time. Digital Transformation is unique. It is a top-down approach and does not depend upon parameters such as size of an organization, etc. Entrenched in the digital age, and businesses of all sorts are creating clever, effective, and disruptive ways of leveraging technology, senior leadership plays an important role in the Organization Operating Model. In contrast with the traditional silos, in the contemporary operating model, customer occupies the center stage, and resources, business processes and technologies aligned to deliver the customer experience and value. Senior leadership brings in the strategy and governance aspect to ensure the actions and measurement of performance. And finally, the sponsorship which is critical. A digital leader with his creativity and innovative mindset formulates the idea into reality.

Fail fast and move forward is the Mantra today, according to you which area / function should be prioritized for digitalization?

In the Information Technology domain, we call it POC i.e., Proof of Concept. Digital Transformation offers the much needed competitive edge. And companies will have to embrace Digital Technologies to generate value for their customers basis the digital data collated. The question that qualifies attention from the organization perspective is, how can we be competitive in the market? How do we build a customer centric ecosystem? In my mind, it is not about a single function but about how the organization is able to orchestrate different functions deploying digital technologies and bring a radical change in the customer experience to secure longevity for the organization. Every digital transformation is aligned with the customer. The focus of the organization needs to be on the Customer Centricity and the Experience Delivered, simultaneously creating value. Moreover, to mitigate the risks, organizations need to develop on three core capabilities – Hyper-awareness and Connectedness, Informed Decision Making and Agile Execution. With these three core capabilities and customer experience driven digital transformation, organizations can expect to be successful.

Future belongs to mix professionals (left-brained & right-brained and the new “Z” generation). How can we stop Technology from crossing the Ethical Lines in our Social / personal lives?

Digital Technologies have changed the way in which companies have ensured the value delivery to its customers. We need to dig a bit deeper to understand the mix of professionals and the difference between the Millennials and the Gen Z or the Alphas. Gen Z is pragmatic while the Millennials are idealistic. Gen Z is attracted to purchases that maximize the value of money, whereas Millennials are more interested in the entire customer experience of buying a product. Millennials expect customer experience and Gen Z expects organizations to do innovation and offer digital experience because of which organization, on other hand, have moved from Internet of Things to Internet of Behavior where they collect the digital dust of people’s lives from a variety of sources, and public or private and use this information to influence behavior. 

Organizations have an uphill task to ensure the requisite cybersecurity strategy in a connected ecosystem and connected society. Significant measures are announced in terms of the regulations and laws. These are practiced and implemented to take care of the data breaches, but in my mind, we as individuals have a larger role to play. Simple yet effective things that we should look for is Trust, Transparency and Experience during the digital interactions. The fact we all should bear in mind is that we are as much responsible for our own data as the organization.

Can you please elaborate on the four-pillar digital model?

The purpose of these four pillars is to keep the digital transformation program in balance. Since the digital transformation is driven by top management, the first pillar is Governance & Leadership. The top management needs to provide clear vision & strategy to be able to create the right digital roadmap for the company.

We expect the management to have high level of digital fluency. They also need to be the sponsors for the digital transformation program. The second pillar is People and Culture. You cannot drive any program if people are not attuned or engaged. It is especially important for organization leaders to engage the employees of the organization and align the culture to ensure a successful digital transformation journey. The leadership team should be open to transform the culture. Organizations should also be open to develop Digital Champions. They need to have the risk appetite to drive changes. They should be able to do Change Management. The third pillar is Capability & Processes. In this context, organizations need to enhance their capabilities & competencies and transform their customer & organization facing policies and processes. The fourth pillar is Technology & Innovation. Once you have figured out the exact requirements, you need to bring the desired Technological changes that are in tune with the organizational framework and deploy relevant technology platforms, programs, systems, and innovation practices. If these four pillars are balanced, the digital transformation program will move smoothly. 

A successful digital transformation journey requires a top-down approach. Digital agenda is led from the top by leaders with high digital fluency. They need to create a high-performing culture and engage employees at different levels by helping them understand the WIIFM (What is in it for Me). Organization leaders must secure the right talent to foster digital innovation and effectively support employees to execute on strategic aspirations. They also need to benchmark the digital culture, mindsets, and behaviors both internally and against digital leaders to prioritize the cultural interventions that support key digital objectives and customer needs. Having a holistic view of the organization’s current digital state and the capabilities needed to advance its digital agenda are crucial for a successful transformation. Digital is driving new expectations from IT organizations and making CxOs rethink how IT should operate. IT leaders are required to transform into Digital leaders and become more customer-centric in designing and launching new digital capabilities. They are also required to integrate capabilities and best practices across legacy and born-digital assets through simplified operations and delivery. 

A Digitally Transformed enterprise is connected, collaborative, and supported by real-time data & analytics. It is empowered by workforce with high digital capabilities and fluency. It is also supported by strategies, culture, policies, and processes that are agile, predictive and consistent.

Should digital transformation be people centered to drive maximum results for the organization?

The answer is a big YES. Companies need to assess the digital maturity of the organization. We need to connect people to the digital transformation program.

We need to create Digital Champions within the organization and get them engaged. If people are not engaged, no program will be successful. It is also important for leaders to enhance their digital fluency.

Where does an organization start in bringing innovation?

The leadership and especially the CEOs must take charge. There is no scope for lethargy. There was a recent survey conducted on the CEOs’ priority towards digital transformation. 90% of the CEOs mentioned that they believe that the digital economy will impact their industry. But guess what? Only 15% of those CEOs were executing a digital strategy within their organizations. The question to all the CEOs or all the SMEs is do you want to be a part of those 15% or do you want to be a part of the remaining companies, most of which are currently struggling. CEOs need to be a part of those 15% as soon as possible. That is where the digital fluency comes into play. One must work towards 4Ds – Discover the goals of the business based on where the value is shifting. This is especially important in the post-Covid era because the business goals are shifting each day. Once they discover the business goals, they should move towards the next D – Design. The leadership needs to bring in digital champions within the organizations to lead the transformation program. Unlike IT, digital is a business enabler. As an enabler, it must create a new revenue stream. Once the companies designed the transformation program, comes the third D – Deliver. Organization needs to deliver the change though an enabling ecosystem. At the same time, it is important to remember the fourth D – De-risking. If companies are not de-risking, they will struggle in the long run.

The leadership team needs to have the vision and also the fluency to understand or figure out the ‘low hanging fruits’ and work towards areas they need to address first. Companies cannot change everything at one go. Companies should embrace digital and then they can follow the 4D model. Most of the successful digital transformation programs across the globe have followed this 4D model.

What is the role of senior leadership?

Enterprise leaders who want to position their organizations for growth & success in this digital era should set the following goals:

• Use digital technologies to augment human capabilities & reinvent operating models.
• Transform relevant organization & business facing processes.
• Take the opportunity to redefine jobs and organization structure.
• Engage employees and make them partners in building the digital enterprise.

Your views on the expanse of digital transformation in the pre & post Covid era…

In the pre-Covid era, digital was extremely important. 5-6 years back when the digital transformation process started, it was being viewed as an optional initiative. I used to have a lot of interactions with business owners across the industry. One question I asked them was while being seated in the room, are you connected with your customer data? Are you connected with your business data? Are you connected with your employees? Do you know what your customers’ priorities are? A lot of them were shocked receiving the stream of questions as these concerns were never a part of their agenda at that point in time. My response to them would be that you have a mobile phone with you, do you have the data on your mobile phone because digital transformation or a digital enterprise is all about taking decisions based on business data and facts. Wherever you are, you need to connect with your key data. If you are unable to do so, you are not running a digital enterprise. In the pre-Covid era, it was not understood well. In short, in post Covid, we are moving in a connectionless & touchless hybrid world. The organizations need to embrace this change as quickly as possible to lead the next wave of growth.

During the Covid lockdown, a global organization’s HR team needed to access a database, and by that time they did not realize that they did not have connectivity to the server to fetch information. They had to visit office during the peak Covid wave to access the employee data. This example can now clearly ring the bell in the ears of the CEOs that digital today is not a choice but a MUST to be in the business. Business continuity process has completely transformed in the past one year. What Covid has done for all of us is that it has offered a level playing field for organizations. The ones who can take the leap fast will get the early mover advantage and often, they will succeed.

How can organizations assess digital maturity? How important it is before even embarking the journey?

The journey to enhance the digital maturity of an organization happens in phases and one can’t expect overnight changes in their organizations. Even though many organizations do not know what a digitally matured version of themselves will ultimately look like, it should not stop the process from beginning. Digital maturity is the process which defines how to respond appropriately to the emerging digital competitive environment. Digital maturity works on multiple performance indicators, including revenue growth, time to market, cost efficiency, product quality, and customer satisfaction. A recent study revealed that India’s digital maturity has increased from 33.5% in 2018 to 55.3 % in 2020, while globally the numbers rose from 23% to 39.2%, with the Asia Pacific & Japan (APJ) region having almost similar numbers. Digital transformation maturity can be assessed on various factors viz. Barriers, Strategy, Culture, Talent Development & Leadership skills.

Sandeep Raut, Digital Transformation, Analytics Big Data, Mobility & IoT Evangelist - “Bring customer experience at the center stage than technology.”

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From capability perspective, how would you evaluate the correct technology and the correct solution for the mundane tasks in supply chain verticals?

Technology is just an enabler. What you want to achieve is more important. There are three things to evaluate: first & foremost, whatever data you have, does this technology help you improve the quality, consistency, or completeness of available data? That is the biggest problem I have seen in digital transformation. Many a times, data is not available. Consolidating all that data together is a huge task. Second is the technology should increase visibility and transparency across the supply chain. If you automate the mundane task, it will ultimately improve the visibility. The third aspect is the ability to store data, and then can you predict trends or prepare better for the future? Upgrading digital platforms, collecting data, and then sharing with the stakeholders or the consumers is the gamechanger. If people do not have data to play around, that’s not going to take you anywhere. Going further, I would like to add that exploit digital twin concept in supply chain, so you can track all your assets & shipments and apply predictive analysis to reduce downtime.

What are your views on Blockchain in Manufacturing supply chain?

Blockchain is still at a nascent stage. Blockchain offers transparency and traceability. Traceability is the biggest factor in supply chain. Most people who would want to use Blockchain, they will have increased traceability of materials, which will eventually reduce the paperwork and improve visibility & compliance. The Blockchain enables entities to digitally transfer money and other assets directly, securely and near instantaneously. The Blockchain reduces the settlement window from few days to maybe a few hours. All the financial industry is based on managing that window. An international transfer could take as long as five days to settle, during which the counterparty can fail, or the exchange rate can change, or you can have a credit risk. Lots of people, working on managing that risk which is completely reduced, or even eliminated, and all those people and technologies that manage that risk are becoming irrelevant.

It is understood that close to 70% of digital transformation efforts may find failure. How do we ensure that we will be successful?

As we all know that many of these initiatives fail. Everyone must row in the same direction. If people are having cultural issues and everyone starts rowing in the different direction, the boat will not move at all. Culturally people should align, and the board of directors need to step in and ensure that everyone rows in the same direction. Many organizations get overwhelmed because they start with everything at one go such as BIG BANG approach. Digital Transformation is a series of initiatives that address the process of using digital technologies to radically change a business so it can respond faster & change how you grab opportunities with new business models and deliver value to customers. This must be driven by the CXOs top down to avoid any culture change challenges, and all the departments and all the employees should embrace it with a goal. It involves improving your customer experience, optimizing your operations & adopting new digital business models. One needs to go for Step-by-Step digital transformation strategy. Best thing is to start small. Start with one product, one machine and one factory at a time. Learn from the data collected and analyze the results generated. Once you are successful, then evangelize it. Market it to internal as well as external customers because they need to know what success is. Then you expand it to a wider base.

How can companies bring Human element in Digital Transformation?

It is easy to get wrapped by technology but without considering human element the transformation process will fail. CEOs are taking a digital-first approach to change the business. Digital transformation cannot thrive unless your organization has a culture that is willing and able to embrace it. Organization-wide adoption requires teams to change their attitude, automate the processes, shift their thinking, and reject the status quo. People are engaged by people. Productive and satisfied employees who like their work, go out of the way to satisfy customers. There are three important aspects to this:

• Know your customers – Customers are not just records but they are also humans, know their behavior
• Engage with employees – Elaborate on what is in it for me, people need to know what the change is and how it will benefit them.
• Focus on human collaboration, learning, and innovation for digital which yields better ideas, better results.

It requires all 4 pillars of the organization - Customers, Employees, Suppliers & Partners to collaborate and communicate with each other. Digitization is by no means dehumanization. It is 20% technology but 80% human touch. Without a strong involvement and without taking the human element into account on all levels, digital projects are going to fail. The best results will occur when technology and humans collaborate to create an entire ecosystem, which technology alone cannot achieve.

Would you be benefiting from legacy systems, or one needs to implement advanced technologies?

It is no brainer now that with fast moving digital age, change is the only constant. Full implementation of wide-ranging technologies will help a lot. Digital transformation is like going from caterpillar to butterfly. But if you do it wrong, then all you are getting is a faster caterpillar. Allow technologies to gape you from your source to destination. Do not just try to change or upgrade the technology, just for the sake of it. Think about the supply chain 4.0. companies need to be agile, flexible, and faster. Four organizational pillars – Customers, Employees, Partners, and Suppliers are then supported with this technology upgrade or organizational strategic operations and technologies.

Why Going Digital is more important now after the Pandemic?

2020 has been a year like no other in the past. With pandemic forcing us to live our lives more online, organizations have had to transform the delivery of digital services and experiences at an accelerated rate. As COVID force-closed companies and economies around the globe for months, businesses are considering mapping the customer journey more now than ever before. You can offer a customer a highly intuitive experience, but if you cannot deliver the required service to the customer’s satisfaction and expectation then you lose the customer. This is more important now, particularly when the people are so reliant on services being delivered digitally in every area like school/college education to retail. If these interactions do not go smoothly then the impact on our livelihood is more serious. With the digital age, the consumer has become a superman and this pandemic has Upped the customer expectations, which has created a new set of challenges for marketers and digital teams. The first is the need for faster delivery. Businesses need to update consumers immediately about the availability of products or services. Second is the quick online support. Customers expect to receive clear answers and solutions quickly. Digital leaders will need to keep an eye on such changing customer needs, be ready with staff members that can adapt and respond quickly and build digital platforms that are flexible and scalable to meet the demand for more engaging experiences and frictionless digital services. COVID pandemic has pressured many businesses to go digital.

Dinesh PA, Global Head of Engineering and Product – Director Supply Chain Technology, Kimberly-Clark - “In 5-10 years from now, every business will be a technology business. Unless you invest in technology, you will be like a dinosaur.”

How technology has been shaping the way we conduct and run our businesses as opposed to five years back?

Technology is transforming businesses in two ways: taking out mundane tasks that people perform in the business and automating them while also propelling growth & customer experience. In one of my previous organizations, we used to get lot of invoices from suppliers through fax & emails. Post receiving such invoices, we used to have heaps of papers to be scanned and manual processes. We used to have 10-12 people to assess these papers’ authenticity with the Purchase Order, authorizing payments to a channel. Now these tasks have been automated by way of Robotic Process Automation (RPA). The accuracy levels are 99% and above. This business process has today become totally technology driven. The question now arises is how many mundane tasks can be automated? Similar to this, there are many low hanging fruits, which are automated and it plateau’s out after a while. However, there is no limit on the growth and customer experience side as technology will help you to continuously innovate. 

Another example I would like to share with you is of Flipkart. This incident is about a couple of years back. With the intervention of technology and data insights, when Flipkart wanted to deliver goods to their end customer, in the core areas of Bengaluru for instance, people wanted their shipments between 10 am – 4 pm during weekdays. In the periphery of Bengaluru, they wanted shipments during weekends or during evening hours on the weekdays. This was because at periphery of Bangalore, which are IT areas, both the spouses were typically working and not available during daytime. To cater to customers’ specific requirements, Flipkart changed its supply chain model where the delivery agents would service the core areas in the morning and at the periphery areas during the weekends or evening hours of the weekdays as desired. This shift was only possible due to the right intervention of technology and without that, one would not be able to reposition workforce. 

There is an interesting example cited in HBR. A lot of people buy beer at Walmart, and they also buy diapers. Walmart technology team witnessed the strange correlation between the two. They may sound very confusing. Some time ago, Wal-Mart decided to combine the data from its loyalty card system with that from its point-of-sale systems. The former provided Wal-Mart with demographic data about its customers, the latter told it where, when and what those customers bought. Once combined, the data was mined extensively, and many correlations appeared. Some of these were obvious; people who buy gin are also likely to buy tonic. They often also buy lemons. However, one correlation stood out like a sore thumb because it was so unexpected. On Friday afternoons, young American males who buy diapers (nappies) also have a predisposition to buy beer. No one had predicted that result, so no one would ever have even asked the question in the first place. Hence, this is an excellent example of the difference between data mining and querying. After seeing the results of the data mining, Wal-Mart moved the beer next to the diapers and beer sales went up. The inference is that in 5-10 years from now, every business will be a technology business. Unless you invest in technology, you will be like a dinosaur.

Technology transformation faces obstacles. How do you manage the change?

Our customers are not traditional today. Let me give you an example… all of us prefer home delivery of food and want it fast. Speed and customer experience are the essence here. Service vs cost paradigm we always grapple with in supply chain domain. Unfortunately, due to legacy systems that we have in our organizations, rapid change is extremely difficult or rather impossible. During Covid if a company didn’t have a website or a deliver to home model, one had to rapidly innovate and figure out innovative channels to do business. If companies are waiting for legacy software companies to give you upgrades, it is going to come in 6 months or 1 year. By that time, your competitors would have taken the big leap and the market share. Cloud not just gives us infrastructure, it helps companies to do things fast. If you want to grow with changing times, adapt digital technologies, there are no two ways about it. Companies need to figure out the processes which need immediate attention when it comes to digital technologies, and which are Customer First in nature.

What would be your preference – is it platform vs product? What would be the right vision?

Let me explain this with an example… UBER is a platform connecting the drivers on one side to the consumers on the other side. Everything is seamless in one platform. In this also, there will be lot of products within Uber such as pricing for the consumers, payments for the drivers, their incentives, etc. Companies need to have a clear vision before starting off their digital transformation journey. It may not be 100% right. The idea is to assimilate all the functionalities so that it accelerates the entire delivery experience.

How would you like companies to embark on the digital transformation journey?

The most important criteria is that the board and senior executives of the company should see a desperate need for change and drive it from the top. The second is to hire real good digital talent in the organization who can make a sense of what needs to be done and really listen to them to drive change. Culturally it is not going to be easy for many organizations, which have always done things in certain ways and the leadership must be relentless to drive the message that this change is real and cannot be wished away.