Published by Columbia Business School Publishing
A Book review by Abhijit Bhaduri – Chief Learning Officer – WIPRO Group
In the early days of electricity, the “start-ups of that era worked with companies to evangelize the use of electricity to transform the way factories were run. The digital-born companies are at the same spot. They have to make it easy for the analog businesses to transform the way they have always worked. The Digital Transformation Playbook simplifies the steps needed to go through this transformation. The author David Rogers (@David_Rogers) teaches digital strategy and marketing to executives at Columbia Business School.
The Digital Transformation Playbook talks of the five domains which need to be transformed if the organizations have to succeed in the digital world – how the businesses view customers, their competition, how they leverage data, innovate and create value for customers. 1) customers are part of a network, 2) competition comes from platforms more than products, 3) data is a strategic asset, 4) innovation is driven by small experiments and scaling, 5) value is dynamic and adaptable. That makes these 5 areas very different from what they have been traditionally. This shift is hard for leaders in the analog world to fathom.
- Customers: Customers in the analog world had to be sold to. In the digital world the businesses need to have the customers involved and actively engaged in the influencing others. The organization has to continuously change its processes and policies to respond to the evolving needs of the customers.
- Competition: Competition does not have come from the traditional peers in the industry. GM and Ford have no choice but to acknowledge Google and Apple as companies they are competing with besides competing with Tesla. GM has invested in Lyft as part of an alliance that involves autonomous efforts with the ride-hailing service while the Chinese ride hailing company Didi Kuaidi is raising money from Apple to battle Uber.
- Data: Every business and every function within the organization has to learn to make sense of the massive amount of data being generated with every transaction of the customer, the suppliers and the employees. Cloud storage is making it easy to access the data anytime, anywhere. Turning the data to insights is an important part of the organization’s competitive strategy.
- Innovation: In the analog world, innovation was expensive. Only the successful product had to be shown to the world. Today every product is in perpetual beta. Every app will need to be updated every other week. Nothing is finalized and completed before putting it on display. digital technologies enable continuous testing and experimentation, processes that were inconceivable in the past. Prototypes can be built for pennies and ideas tested quickly with user communities. Constant learning and the rapid iteration of products, before and after their launch date, are becoming the norm.
- Value: Once a company becomes successful, it rapidly settles into complacency. The value created for the customer keeps eroding and some other provider can quickly step in to plug the gap. They have to create a value proposition and a “value-network” that creates a barrier to imitation by the incumbent.
All this means just one thing. It is really not about technology. It is about strategy, leadership and a new way of thinking. Businesses will have no choice but to adapt. They will need to identify new customers, partners, channels of distribution, new alliances (maybe even with competitors), rethink their cost structures and approaches to brand. The organization’s portfolio of skills has to be unique – think of Apple’s superiority of design or the way Google continuously uses data to create new products or services or the way Amazon is rethinking the way it fulfills customer demand. Once you look at it like that their drone service suddenly makes sense.
The book is full of the obvious case studies of Apple and Google and Netflix. But then the value of the book lies in the way David Rogers deconstructs the elements that have created a strategic advantage to companies such as Warby Parker. That enables Warby Parker to disrupt the incumbent Luxxotica (sells branded eyeglasses from RayBan, Prada, Armani, Vogue etc). Warby Parker sell eyeglasses at one third the price of Luxxotica and delivers several options to your home. When the customer buys a pair of eyeglasses Warby Parker donates a pair to VisionSpring – a non profit. That leaves the consumer feeling good. It is this combination of elements that makes it hard for the incumbent to compete.
The examples and case studies are terrific. Two kinds of readers will enjoy the book – the incumbents and the disruptors. It is not about technology. The digital transformation is about leadership and thinking differently. That is so right. Yet, the book does not spend enough time outlining how leaders must build such an organizational culture.
Maybe that is why you have to wait for my upcoming book The Digital Tsunami (due in the next few weeks) to know how to build such a mindset.
If you know all this, you should get the book to see what tricks you are missing. If you don’t know all this, you have to be like me – read The Digital Transformation Playbook. I loved it.