Gather Insights and Information

As a starting point, a review of existing research and information will provide an overview of the current business landscape. As an external expert brought in to support and guide organizations in their transformation process, I typically start by reviewing existing internal strategies, documents, research, or analysis that may have already been developed. For example, business strategy and objectives, vision and mission, market research, customer personas and journey maps, customer or employee satisfaction studies, business functions overview, product portfolio, financials and sales overview, ongoing or planned initiatives or projects, among others. Alternatively, if this process is being tackled by internal organizational teams, it is still a valuable exercise to review this information, and gain a refreshed view of the focus and priorities of the organization.

In addition, you should gather insights and perspectives from key stakeholders to gain a deeper understanding of the business ecosystem. Based on my experience in such engagements, it is important to keep in mind that the interview and information-gathering process across business functions and markets will need to be flexible. Several methods of information collection could be applied to accommodate this, including one-on-one meetings with key stakeholders, focus group meetings with teams or small groups where interview questions and data requirements are clearly predefined, as well as indirect formats such as surveys or questionnaires. The format and approach will vary depending on the size of the organization, geographic distribution of teams, as well as the availability of key stakeholders.

In order to gather the input required, it is critical to review existing information, as well as conducting diagnostic meetings with key people to gain a deep understanding of the business ecosystem. These sessions, conducted with selected key stakeholders or in groups, are aimed at gathering insight, experiences, and validation for the day-to-day business operations and culture in the organization. In conducting group sessions, bear in mind that bias may affect the outcome. For example, in an attempt to maintain consensus, participants may agree with each other's opinions instead of providing frank responses, often leading to exaggerated responses and results that do not accurately reflect the actual current environment. Conversely, individual stakeholder sessions may contain personal perspectives or biases that do not reflect the experiences of all employees. As such, information gathered must be viewed in combination with structured content, such as processes, analysis, and reports, as well as observational research collected of the daily business.

Digital business transformation also aims to improve the value that the organization offers to customers. As such, it is critical to gain insights from customers, for example, customer surveys or, where possible, interviews with sample groups that describe the strengths and weaknesses of customer interactions and offerings. Conduct focus group sessions with external stakeholders from the business ecosystem, such as suppliers, service providers, partners and collaborators; this also brings value by identifying specific gaps, priorities, and opportunities.

In gathering insights and information, I would caution against falling into the “analysis paralysis” trap. Oftentimes, transformation teams struggle to move past the deep dive research and analysis stage. Stay practical and focus on gathering critical information that would guide the next phases and optimize the time required for the diagnostic exercise to deep dive into selected topic areas, as and when required.

Conduct a Business Health Check

The Situational Analysis phase offers an opportunity to conduct a diagnostic “health check” of the internal and external business environment. Just as you would do annual physical checkups with your healthcare provider to get an overview of your health and necessary preventative care, organizations can also benefit from a health check. I developed the Digital Transformation Health Check^© to guide organizations in assessing the well-being of their business ecosystem.

The Digital Transformation Health Check^© takes a structured approach to analyzing the internal and external elements of the current business environment. The holistic methodology also allows the identification of digital gaps and potential opportunities along the entire value chain that contributes to creating an implementation plan. The health check does not lock into any specific technology or solution, but requires an honest assessment of the organization, including its strengths, shortcomings, pain points, and gap areas. It is most effective when conducted as an audit or review by an objective external stakeholder or internal cross-functional team set up with this specific mandate. In my experience, this can be a particularly trying or emotional process that brings to the surface areas for improvement or issues in the existing business environment. This can trigger fears of losing control, position, or authority, as well as blame among teams that may have been bubbling under the surface of the hustle and bustle of daily business operations. However, it is a critical starting point to ensure sustainable success in the digital business transformation approach.

The health check consists of four dimensions offering a full review of the business ecosystem—The Outside-In and Inside-Out health checks that assess the organization and its operations, and the Top-Down and Bottom-Up health checks that assess the leadership teams and employees for digital transformation readiness (see Figure 6.3).

The four dimensions of the Digital Transformation Health Check^© are described in more detail as follows:

• Outside-In Health Check    Before embarking on a digital business transformation journey, organizations need to first understand the elements that are disrupting their business. A good place to start is to understand uncertainties in the business environment by conducting an external scan of rising trends impacting the company, business, and related ecosystem. These trends are prioritized according to the potential impact and time frame of occurrence, and high priority trends explored as a part of the digital visioning process.

  

  There is often an assumption that technology is the key driving force of disruption. As a result, there is a high focus on investing in new technology solution implementations. However, there are several disruptive factors that impact the business ecosystem, which need to be assessed and prioritized. For example, evolving consumer behavior or a shifting competitive landscape could also be top drivers for disruption. Traditional approaches, such as creating new mobile apps or launching social media channels to communicate with customers, are insufficient and only manage to scratch the surface of digital transformation. Additionally, there are a myriad of new technology developments emerging on almost a daily basis. Leadership teams are constantly flooded with news of amazing technological breakthroughs, including artificial intelligence and machine learning, augmented and virtual reality, autonomous vehicles, 3D printing, wearables, blockchain, and many more (Chapter 8 provides an overview of these top disruptive technologies). Understanding and assessing the impacts of all these technologies could prove to be an impossible task, particularly considering the exponential rate of development.

  The Outside-In Health Check focuses on identifying external elements that have a disruptive impact on the industry, as well as business. These groups of disruptors are then assessed against multiple scenarios to determine which are most likely to occur. By developing multiple scenarios that explore different perspectives and outcomes for disruptors, companies will be able to set the stage for an adaptive digital transformation strategy. An effective tool that I have often used for the Outside-In Health Check is the Trend Scan, described in the next sections.

• Inside-Out Health Check    An Inside-Out Health Check is at times the most difficult to conduct as it requires a brutally honest view of the company's internal operations. This includes reviewing existing business activities or functions, process landscape, technology architecture, operating model, value chain and partnerships, as well as business assets. An assessment of the internal operations may bring to light hard truths about pain points and deficiencies that leadership teams may not be ready to address or may feel defensive about. However, this is a necessary step in transforming the organization, as well as in navigating disruptions. For example, a complex internal process landscape could create a barrier against establishing innovation management within the organization.

  Reviewing and analyzing key pain points during the Inside-Out Health Check will help prioritize changes that are immediately required, and result in some initial quick wins for the organization. Effective tools that I have often used to conduct the Inside-Out Health Check are “Painstorming” and Gap Analysis. Painstorming is the process of uncovering pain points to create bigger and better ideas (Kaplan 2021), and unlike brainstorm sessions that jump to ideating solutions, the painstorming process reveals the fundamental drivers of new opportunities within employee or customer pain points. The ultimate goal is to get internal teams to think about who they serve, what their needs are, and how to solve the “pains” through meaningful innovation.

• Top-Down Health Check    True digital business transformation strategy involves organization-wide transformation that could cover any area of the business, including customer interactions, employee engagement, product digitization, process improvements, new technology implementation, or even business model innovation. As such, it is imperative that transformation is driven, supported, and encouraged top-down by leadership teams.

  A major barrier to digital transformation success is the lack of digital maturity or capabilities in the leadership team. This means that the senior management teams are unable to direct digital transformation initiatives, lack the entrepreneurial mindset to drive innovation, or are simply unsure who should own it. The Top-Down Health Check is a mindset and capability assessment that determines the digital maturity of the management team and plays an important role in identifying skillsets that are required to jumpstart the digital transformation journey. An effective tool that I often use to support the Top-Down Health Check is the Digital Maturity & Readiness assessment, as it identifies misaligned perspectives in leadership and management teams, and key gaps in understanding to focus on. Chapter 5 covers the maturity assessment in detail.

• Bottom-Up Health Check    Most companies tend to focus on external-facing elements of digital business transformation, for example, customer interaction or product sales. However, internal-facing elements are also a critical success factor of the transformation journey. This relates to the way the company develops products and services, employees work together or interact with customers, as well as their readiness for transformation and skillsets that are available in the organization.

  Digital business transformation is a change journey that impacts the organization culture, that is, the company's core values and how it operates. As such, it is important to help employees understand the reasons for transformation, its impact, and the role they play to ensure its success. The Bottom-Up Health Check helps determine the organization's readiness for digital transformation, including assessing employees’ digital appetite, capabilities, organizational culture, and skills gaps. The health check also identifies gaps and improvement opportunities to drive change, for example, highlighting potential candidates who could take on the role of change agents to drive transformation.

Analyze Disruptors and Change Drivers

As part of the health check, it is critical for organizations to set up a foresight process to gather the information that might inform the future of the business and industry. This information is usually gathered and presented in the form of trends of the future.

Organizations often establish an innovation team to conduct research on trends and market developments. Oftentimes, this information is gathered in a slick PowerPoint presentation that is disseminated across the organization as a “nice to have” research paper, read with interest by some and ignored by many. The major problems lie in relatability and urgency—how does this research relate to daily business, and how quickly will this trend disrupt the business, if at all? Organizations that have established robust trend analysis capabilities stand out as innovation rockstars across industries.

A Trend Scan is a tool that identifies a robust list of potential developing trends, change drivers, and disruptors that would impact the business environment over time. The Trend Scan assesses various categories of disruptors such as market and consumer behavior, emerging technologies and breakthrough solutions, competitive landscape, new business models, and political or regulatory changes. These trends and disruptors are prioritized based on the potential impact and risks to the organization and overall industry.

In the current dynamic business landscape, companies need to quickly assess and distinguish fads from trends that will have a lasting impact. Making sense of these emerging and ongoing changes helps transformation teams get an accurate picture of what is going on in the environment and what is coming up on the horizon. As part of the foresight process, trend research is conducted to identify developments and changes in the business, industry, and global market in general. There are several well-known business strategy frameworks that could be applied to support the research, including STEEP-V (Social, Technological, Economic, Ecological, Political, and Values); PESTLE (Political, Economic, Social, Technological, Legal, and Environmental), or STEEPLE (Social, Technological, Economic, Ecological, Political, Legal, and Ethical).

By setting up a structured approach to continuous information and insights collection, transformation teams will ensure that they do not miss any significant developments. Based on this research, you should create a trend map that illustrates the various topic areas and impact priorities (see Figure 6.4). In addition, several research organizations have published Trend Scans that could accelerate the foresight process, for example Gartner Trends Impact Radar and Board of Innovation Future Scan.

The table in Figure 6.5 illustrates an example of the trend categories, research sources, as well as prioritization and timeline considerations. As illustrated, an effective Trend Scan consists of a range of trends and disruptors from fringe to mature, estimating the time by which said trend will cause an impact on the business ecosystem.

In order to conduct the Trend Scan, a combination of primary and secondary research works well. Here are some suggested sources:

• national and global news;
• industry-specific news;
• business models ideas—e.g., Board of Innovation, Strategyzer, www.businessmodelideas.com;

  

  Trend Category	Trend Topic	Description	Source (links, documents)	Impact on Company XX	Timeline Consideration (years)	Priority	Recommendations / Actions / Next Steps
  Technology	Mobile Internet	By 2025, nearly 80 percent of all Internet connections could be through mobile devices, and a majority of new Internet users could be using mobile devices as their primary or sole means of connecting to the Internet.	McKinsey report - Disruptive technologies	2018 - 58% of population use internet, 69.7% have access from home, 82% individuals use mobile (1.9m subscribers) (ICT statistics, 2018)We can anticipate huge risk to business, if alternative channels aren't developed because competition has stepped up on using it, futher these channels allow us to engage consumer suitably, which is critical for staying close to customer, obtain access to data etc.	3	Critical	Develop new channels across the businessa) POS/Virtual POS/Proximity POSb) Online (web)c) Mobile d) Hybrid
  Technology	Augmented, Virtual and Mixed Reality	The augmented reality and virtual reality revolution has reached a tipping point. Driven by a historic transformation in the way we interact with technology and data, market leaders are shifting their focus from proofs of concept and niche offerings to strategies anchored in innovative use cases and prototypes designed for industrialization. They are laying the groundwork for broader deployment by tackling issues such as integration experiences with the core, cloud deployment, connectivity, cognitive, analytics, and access. Some have even begun developing new design patterns and nurturing non-traditional skillsets, heralding a new era of engagement. These early adopters recognize a shift in the AR/VR winds: The time to embrace digital reality is now.	McKinsey report - Disruptive technologies	Stand out from competitors offeringsUtilize for onboarding, real time marketing, engagementDigital solutions and applications developed have a unique opportunity to incorporate AR / VR capabilities to create higher customer engagement and interactions.	3	High	Consider adopting technology that enables you to connect with customer in new ways but in a more closers, contextual, personalized way. Always, aim to deliver a wow moment.
  Technology	Decline of Facebook (Social Media)	Criticisms over social media channels having too much control over what information the world has access to, as well as progressive sentiments of populism and political propaganda easily promoted through these channels result in its decline, and eventual demise.	https://www.businessinsider.com/sacha-baron-cohen-criticizes-silicon-six-billionaires-adl-speech-video-2019-11?r=US&IR=T	Existing competitors and potentially future are all present or making their presence in social media, this will only mean more competitive landscape to grab attention of end consumer. One way to stay clear from the mad rush is enabling a unique channel.	5	Medium	Digital solutions and offerings would integrate / align closely with social media channels for customer reach, adoption and engagement. The most popular social media channel in Mauritius currently is Facebook. In-addition/Instead of utilizing social media, consider an in-app proprietary channel (e.g., similar to WeChat, WhatsApp) The advantage of in-app type channel would also help in differentiation.
  Economy / Market	Circular economy	Circular economy models could add up to $1 trillion to the global economy by 2025. Global countries / industries make significant steps towards a greener economy, investing in renewable energy, clean waste management technologies and in public transport infrastructure.	https://www.un-page.org/files/public/mauritius_green_economy_assessment.pdf	Consumers look for sustainable solutions and greener living. Increase of sustainable investment trends	5	Medium	Consider applying these models in non-core areas of business to achieve easier cost effective solutions, an example would be to connect/collect customer information, add value such as extended services, collect requirements at their convenience instead having them to your POS, this can be extended to other areas.
  Society & culture	High fertile & growing population	A pyramid with a wide base and narrow top suggests high fertility and a growing population, whereas a pyramid with a narrow base suggests an ageing population with low fertility rates.	https://www.worldometers.info/demographics/mauritius-demographics/	Consumers will be quick adopters of new technology and aspire to improve quality of life, budget conscious, goal oriented etc.	3	Critical	Given that 15-50 age group is growing, be aware this age group/demographics has wide training/enablement needs, ensure you engage them appropriately. Enable the various age group to achieve their goals, enable them embrace change, it will lead to brand loyalty and brand recognition.

• podcasts—e.g., Future Squared, 10x Talk, Outside In, HBR Ideacast;
• websites, blogs, and newsletters—e.g., Futureloop, Next Nature Network, DigitalTrends.com, www.nowandnext.com, Imperial Tech Foresight;
• Social media, online forums, art and design, and other popular media.

These sources could also feed the Disruptive Visioning phase in sparking ideas and envisioning potential future scenarios that may develop.

Assess Maturity and Readiness

It is vital to assess the readiness level of both an organization and its workforce to transition into digitized workflows that are enabled by new technologies introduced during the digital business transformation. Rushing into change or transformation without sufficiently preparing the business and stakeholders is one of the most common reasons digital transformation initiatives fail.

Assessing the organization's current status in terms of digital capabilities is required before setting goals, creating roadmaps, or implementing any digital transformation initiatives. While the exact approaches are never the same, most available digital readiness self-assessment tools are making use of questionnaires and interviews that are built upon specific sets of criteria and indicators.

The Digital Maturity & Readiness assessment (described in Chapter 5) is a rapid online assessment tool that offers a quick way to determine the perceptions, understanding, and attitudes towards digital capabilities in the organization. In combination with the insights from qualitative information collection (e.g., interviews and focus group sessions), the quantitative output from the assessment offers a clearer picture of the current situation in the organization.

Step into the Future Together

The future is unpredictable. However, with the right level of information and insights, a little imagination, and an instinct for connecting the dots, it is possible to make a close “guesstimate” of what the future might look like in your business ecosystem. In the 1970 book, Future Shock, author Alvin Toffler painted a picture of what future societies will look like. Many of these “prophecies” were spot on and have become a reality today, such as concepts that closely describe the free-flowing information via personal computers and the Internet, and the sharing economy. As Toffler explained, futurists do not address predictions, but are simply open to the question of what may be possible in the future. Similarly, organizations addressing the future of business must be open to the possibilities of the future, outside of current limitations of the business landscape.

Business leaders today face not only a myriad of possibilities for the future, triggered by rapidly developing technology, but also a high level of uncertainty due to global shifts such as the coronavirus pandemic. So how should leadership teams build digital business transformation strategies for the organization if there is little certainty about the future, particularly a future that is rapidly changing? In reality, every decision made in an organization is a choice developed under a degree of uncertainty. At the end, a strategic plan is developed based on possible outcomes and best case predictions about where the future is going to go.

Scenario planning, commonly used for corporate strategy development, is an effective tool to identify plausible future scenarios and make better strategic choices under uncertainty. Traditionally, the scenario planning process involves crafting a set of different “realities”—descriptions of what might happen in the future of the business. These “realities” or future scenarios are used to address long-term challenges of uncertainty and complexity in defining the vision for the company, as they help to explore different alternative paths in the future. The timeline for the future scenarios typically considers five to 10 years. However, some companies may consider a shorter time frame of up to three years due to extenuating factors (such as industry-wide disruption already taking place and rapid adoption of breakthrough technologies, among others). I have found that the most effective and engaging approach to this step is to involve leadership teams and key stakeholders in a workshop session, where the future scenarios are described in detail across various categories, as illustrated in Figure 6.7.

The key trends and disruptors identified in the Situational Analysis phase, that have been prioritized based on impact and time frame of their occurrence, are used as key inputs to define these future scenarios. To begin the process, the big shifts in the trends, as well as the effect on the organization and industry, are described and discussed to ensure a common understanding of each. A subset of trends and disruptors is selected (those that have the most impact on the business) for deeper exploration. I have found “What if” discussions effective at this stage, where participants are asked to consider the outcome in the market or global business landscape if a specific trend were to become a reality. The “What if” scenarios are described in detail and relevance to the business defined by the group.

For example, “What If” additive manufacturing were to be commonly adopted in the fashion industry to design and produce 3D printed garments, ranging from clothes to accessories, jewelry and even shoes? With computer-aided design (CAD) software, designers will not spend as much time physically drawing and editing illustrations of prototypes during their ideation stage. They also will not need to assemble physical prototypes by hand in order to visualize their designs. The fashion industry supply chain would be transformed, enabling mass production of hyper-personalized garments closer to the consumer's touchpoints at low or near-zero costs (i.e., localized 3D printing centers). Additive manufacturing produces zero wastage and is more sustainable and environmentally friendly. This would allow brands and manufacturers to meet, and even exceed, corporate social responsibility and sustainability objectives. Organizations across multiple industries would be significantly impacted by this scenario, including textile and garment manufacturing, logistics, distribution and storage, as well as fashion retailers and resales.

The scenarios are assessed based on the implications for the business, and shortlisted to identify the most likely to occur with the highest business impact. The shortlisted scenarios are expressed in terms of how the organization will add value in the market and for consumers (value creation), business models that may develop (value capture), as well as how the organization could leverage existing capabilities to offer this (value delivery). The Disruptive Visioning process of creating future scenarios helps reveal the myriad of ways the business and industry could change over time, allowing companies to better map out the steps to take for digital business transformation. The trends and disruptors, as well as future scenarios, should be periodically evaluated and updated to ensure new developments are being taken into consideration.

The next step is to develop a future vision or goal that the organization should strive to achieve, in alignment with the corporate strategic goals and the selected future scenarios identified. Several tools could be applied to develop the future vision or goal, however I like to utilize the Why/How/What approach to develop a massive transformative purpose (Ismail 2014) as described in Chapter 4. The ultimate objective is to define a vision that is ambitious enough to create competitive advantage in a digitally enabled future that is rapidly developing and uncertain, while still concrete enough to translate into pragmatic action. The Why/How/What approach meets this requirement by helping to turn the audacious vision into specific actions on how the company will address and deliver on opportunities created in the market.

Reimagine the Value Proposition

With a clear vision or goal developed, it is time to reimagine or redefine the value that the company promises to deliver to customers and the overall market. In advising leadership teams, I often emphasize that technology is not a “silver bullet” solution for an organization. A clear value proposition should drive any digital business transformation effort. Reimagining the value proposition within the context of the vision and future scenario allows the transformation team to think through reintroducing the brand to the consumer, including what the company stands for, how it will operate, and why it deserves their business.

A great value proposition may highlight what makes your company different from competitors in the new business landscape. However, it should prioritize how customers define the company's value. When developing a vision for the future of the business, you need a practical tool to help execute things faster and better. A great tool to utilize for this process is the Value Proposition Canvas, developed by Strategizer, a commonly used and fairly simple tool that quickly offers the clarity required to start turning a vision into practical action. The Value Proposition Canvas is often used by marketing experts, product owners, and value creators to help ensure that a product or service is positioned around what the customer values and needs. However, in the context of the Disruptive Visioning phase, it is used to explore the elements of the organization that contribute to a strong value proposition for the future.

In exploring the sections of the Value Proposition Canvas, focus on the perspectives of the future consumer groups. For example, define high-level consumer segments and imagine how your organization could play a role in increasing pleasure or reducing consumers’ pain points in this future scenario. Also, explore the emotional drivers (wants), rational motivators (needs), and any undesired outcomes (fears). Keep in mind that even in a digitally immersive environment, consumer actions, interactions, and purchases can still be motivated by emotions.

The development of a value proposition is a vital part of a company's business strategy, as it provides a method to influence the decision-making of customers. While technology may lie at the heart of digital business transformation, it is critical to recognize that a relevant value proposition—and true digital business transformations—should be driven by what consumers want. Some of the most successful digital natives, such as Google, Amazon, and Apple, have created significant value by leveraging on the shifts brought about by their customers’ requirements.

A great value proposition may highlight what makes you different from competitors, but it should always focus on how customers define your value. When developing a vision for the future of the business, you need a practical tool to help execute things faster and better. A value proposition sits at the pivot point of an entire business model. Mapping the business model of a new product or service is one of the most important parts of building an overall business strategy.

Redesign the Business Model

During this step, all the elements defined during the Disruptive Visioning phase are brought together to redesign the business model for the future. This involves conscious changes in how the company will create and deliver value to customers, while simultaneously capturing value for itself by transforming the underlying operating model. At the value proposition level, these transformative changes address target segments, product or service offerings, channels and touchpoints, as well as revenue models. Operating-level transformations focus on how to gain competitive advantage and drive profitability by addressing where to play along the value chain, cost models to gain attractive returns, and changes in the organizational structure and capabilities that will be required to achieve this.

The process of redesigning the business model raises common concerns for many business leaders, particularly in companies that are still performing well or excelling financially. This is the roadblock that I have frequently faced while advising companies in their transformation efforts. While often willing to initiate changes in customer engagement, channels, products and services, as well as the technology landscape, leadership teams resist deeper changes to the core business and revenue model. The old adage “if it ain't broke, don't fix it” comes to mind. However, organizations in the current global business landscape are only considered stable and successful when viewed through the traditional business lenses. Most dominant business models that exist today have stayed true to their original form established decades before, or experienced minimal iterations of change, and are ill-equipped to take organizations into the next decade of business in the digital ecosystem.

The global business landscape of today is a hybrid environment where technology solutions have triggered and reinforced new levels of engagement, scale, growth, and profitability. Technology implementation within existing business models will fall short of the true potential that can be achieved. Pouring new technologies into existing business models does not simply translate into customer acquisition or new revenue. Additionally, technology solutions, products and services, as well as channels and engagement strategies are easily replicated by industry peers, providing little competitive advantage in the long run. Sustainable competitive advantage comes from building innovative business models that are able to leverage and commercialize these solution implementations.

The coronavirus pandemic has also fundamentally changed the pace of business globally. According to a global survey by McKinsey (May 2021), many respondents recognized that their companies’ business models are quickly becoming obsolete. Only 11% of survey respondents believe that their current business models will remain economically viable through to 2023, while approximately 64% indicated that companies need to build new digitally enabled models to thrive in the years to come. The survey also demonstrated that the pandemic has created new vulnerabilities and opportunities, resulting from customers, employees, and value-chain partners increasing their use of technology, lowering the barriers to digital disruption. This has paved the way for more rapid, technology-driven changes, and highlighted the need to transform existing profit structures, products, and operations.

Peter Drucker, described as the founder of modern management practices, defined innovation as changes that create a new dimension of performance in the business. Rapidly developing technologies drive innovations that create opportunities for these new dimensions like we have never seen before. To leverage these innovations, organizations will need to make informed, deliberate decisions to abandon outdated or traditional activities and implement new initiatives that target the future business landscape. This process of redesigning the business model will at times involve choosing the “right things to do” because it makes sense, and at other times making conscious decisions or tough choices on what the next phase of the business will be, and how it will grow and develop.

To illustrate this point, let's consider the example of IBM. Although today it is known as a successful multinational technology corporation, IBM was on the verge of bankruptcy in the early 1990s. The company is over a hundred years old, and has had to implement transformation several times to keep up with the dynamic and disruptive global business environment. At that time, IBM made several difficult decisions as part of the process of redesigning its business model. The company not only repositioned its activities to leverage the skills and capabilities within the organization, but also refocused the value to the market and the customer by specializing upstream in the design and maintenance of software. In the early 2000s, when tablets and smartphones entered the market, IBM adapted its business model once more to deliver on customer expectations and stay at the forefront of technology.

For IBM, redesigning the business model meant implementing changes across several core dimensions, including redefining its value proposition in the market, new partnership requirements, different resources and capabilities, as well as redefining the revenue and cost structures. While it may seem like radical change, the company recognized that while the old business model could serve well up to a point, it is critical for survival, growth, and long-term success that the business model is consciously reviewed and updated on a regular and structured basis. This approach may provide tweaks to the elements of the business model or even full-scale business model innovation.

One of the most accessible frameworks to use in this process is the Business Model Canvas, developed by Alexander Osterwalder (2012). The canvas visualizes the elements that describe a company's value proposition, infrastructure, customers, and finances. The international popularity and simplicity of the framework makes it an ideal tool to map the existing business, redesign the business model, as well as visualize proposed transformations to key stakeholders, management teams, and board members.

Set the Vision

The final step in Disruptive Visioning is to define and communicate the vision for transformation. As a strategist, I fall back on application of a strategy map to develop a solid base for discussion and execution of the digital business transformation strategy. The main purpose of the strategy map is to provide a visual blueprint or description for the organization to drive discussion and execution (see Figure 6.8). The strategy map aligns to the corporate strategy and should provide a cause-and-effect connection with a clear logic that goes from top to bottom. The elements in the lower section explain how the organization plans to achieve the vision in the higher section.

• WHY do we need to transform?    This is the Guiding Star for the digital business transformation strategy, taking key imperatives from the overall corporate mission and defining strategic themes to focus on as a priority.
• WHAT do we need to transform?    Specific themes or pillars are identified to help organize top-level choices for the organization, providing a clear starting point for prioritization, continuous monitoring of progress, and success measures. The Balance Scorecard offers a great tool to identify and define strategic themes for transformation.
• HOW can we transform?    This takes the strategy into a clear area of execution, where high-level initiatives describe how the vision and strategic themes will be executed, and links to specific performance metrics that can be continuously monitored.

The strategy map, once defined, can be reviewed, refined, and validated with various key stakeholders in the organization, as well as the broader business ecosystem. This map is a living concept, and should be revisited often as the organization progresses along the transformation journey to ensure alignment, strategic fit, and continued relevance.

Disruptive Visioning is a great starting point to generate a commitment to the organization's vision and transformation strategy. Leadership teams should communicate the vision in a way that matters to people and provide clear signals on the overall direction that will be taken. This early employee engagement and communication of the direction, as well as a clear indication of how the organization culture may change, instills commitment. The digital business transformation strategy must address both the initiatives and the people simultaneously, in order to realize the disruptive vision.

Storytelling is a highly effective strategy for communicating the vision for change. It helps the listener understand, and when stories help connect employees with the present state and the future vision, storytelling invokes the emotional attachment needed to engender employee engagement. In his book Executive Presence, New York Times bestselling author Harrison Monarth highlights how good stories help to develop trust, solicit feedback, and serve to reinforce the vision. In my conversation with Monarth, he points out that a good vision story should be told in five minutes or less, focusing on simplicity, clarity, and engaging attention. Authenticity in leadership is built in an environment of trust and transparency, in which leaders demonstrate accountability and responsibility. This encourages people to discuss their concerns and issues, enables the leadership team to address fears and take action to show that the organization values its people and the contributions they make toward achieving the vision.

Monarth agrees that no change initiative ever runs smoothly. However, authenticity of leadership, where leaders are honest when things go wrong, follow through on their promises, and act consistently in line with organization values and beliefs, builds the trust necessary to overcome hurdles through periods of change. It is not enough to communicate vision verbally, leaders and managers must model the behavior that they expect to see in their people. Without this consistency between words and action, credible leadership and the change project will dissipate rapidly, and resistance will grow. To communicate a vision for change effectively, business leaders must do so in a way that connects with a wide range of people with different preferred communication styles. Additionally, make the vision memorable by employing metaphors to explain organizational culture and guiding people to the discovery of the vision using visual aids to map a path from the current state to the future vision.

Analyze the Gaps As-Is –> To-Be

The gap analysis aims to identify the specific actions that are required in the organization to turn the vision into reality. It identifies the gap between the status quo (As-Is) and the desired end vision (To-Be), to pinpoint specific areas for improvements required to achieve the digital business transformation strategic goals for the organization. By defining and analyzing these gaps, leadership teams will be able to create an action plan to move the organization forward and fill in the performance gaps.

Describing both the current (As-Is) and the desired future (To-Be) state in detail creates a visualization of the digital business transformation that is required—everything an organization needs to do in order to get from the current situation to the target situation. This description of the desired changes or actions is critical in providing focus and direction, as well as control on effort, investments, and the quality of change required.

The first step is to accurately outline and define the organizational goals or targets, all of which need to be specific, measurable, attainable, realistic, and timely. Based on the strategic goals identified in the Disruptive Visioning phase, analyze the current state and gaps that exist between the two areas. For example, consider an organization that aims to increase the revenue growth of digital channels by 25% a year, but currently it has been growing by only 8% a year. That puts the current state at 8% growth (As-Is) and target state at 25% growth (To-Be). To achieve the target state, consider actions that need to be taken within a reasonable time frame and potential scale. Typically, a gap analysis is conducted within the context of a business strategic plan; the targets may be three to five years out, which is ideal. In the current digital business ecosystem, technology solutions are able to significantly accelerate the time frames to achieve a certain scale of solution implementation.

To bridge the gaps in current and desired states, first identify why the gaps exist. Do this by asking questions—and questioning the answers to those questions—until the root causes of the gap become clear. An effective tool for this is the “5 Whys Technique”—a simple problem-solving method that highlights when a problem occurs and drills down to its root cause by asking “Why?” five times. When a counter-measure becomes apparent, follow it through to prevent the issue from recurring. If required, consider also using more in-depth problem-solving techniques like Cause and Effect Analysis, Root Cause Analysis, or even Failure Mode and Effects Analysis (FMEA).

In addition to the gap analysis, potential areas for improvement and initiatives are also derived from the following areas covered in previous phases of the Digital Business Transformation Strategy^© framework:

• Digital Maturity & Readiness Assessment    Identifying the largest gap areas in the assessment results based on target states across the maturity dimensions.
• Trend Scan    Identifying specific trends and breakthrough technologies that could be addressed to gain competitive advantage. For example, growth in consumer adoption of voice technology may indicate application of an AI-based virtual assistant on the website to increase customer engagement.
• Research and initiatives    Ideas generated within the organization based on research or existing issues faced in daily business may already suggest effective solutions to bridge gaps.

Another great tool to utilize at this point is the ExO Canvas (Palao, Lapierre, and Ismail 2019), part of the Exponential Transformation sprint process. The ExO model comprises of 11 components or attributes, which are building blocks that allow organizations to achieve exponential growth, scale, and impact. The attributes leverage existing and emerging technologies that enable an organization to access and manage abundance in the form of available resources, potential clients, or useful information. In practice, these set industry leaders and digitally enabled organizations apart from the rest.

Each attribute offers the opportunity to shift from a traditional mindset of managing the business within traditional limitations to one of abundance or unlimited potential in growth and scale. There are five externally focused ExO attributes that allow the organization to access global abundance, and five internally focused attributes that enable organizations to manage abundance and drive culture, enabling them to grow exponentially. The ExO attributes and related examples as described in the Exponential Transformation book are provided in the table below. In order to ensure the organization will become exponential by tapping into and managing alternative ways of doing business, the ExO canvas drives a new mindset on how to leverage each of the SCALE and IDEAS attributes (see Figure 6.10). The solutions should always be considered in alignment with the vision defined in the Disruptive Visioning phase and the areas for improvement identified in current state and desired state gap analysis.

The outcome at this stage is a list of initiatives and action items aimed at bridging the gap between the current state and vision set for the organization. These initiatives may still be high-level descriptions or ideas, but should not be left ambiguous. Formulate the initiatives and actions based on what each will address or the gap it will fill, how it will fill this gap, when a possible outcome could be achieved, as well as what elements of the organization may need to change to achieve this outcome. Only with the appropriate level of description will the leadership team, as well as other relevant key stakeholders, be able to prioritize the initiatives in a reliable manner.

Develop Target Operating Model

The organization's target operating model (TOM) is a blueprint of the core business capabilities of a company. While the business model defines the value proposition (value creation for customers and product offerings to the market), the operating model details the elements of the physical implementation and execution of the business model for value delivery.

A TOM is a blueprint of how the company should operate or run at a future point in time based on the new vision and strategy developed. In the context of digital business transformation, it is essential to reassess the existing operating model and identify changes or transformations that will be required to deliver the vision and strategic objectives defined in the Disruptive Visioning phase. Organizations should develop a TOM when there is a substantive transformation in how the company intends to function in the future—product/service portfolio, customer segments, price points, channels, and the value proposition. Considering that digital business transformation requires organization-wide change over a span of time, most incumbent organizations will need to reassess their current operating model and develop a TOM to deliver the digital vision.

The initial stages of the digital business transformation journey can have a profound impact on the ultimate outcome that is achieved. It is in the stage of Strategic Roadmapping that the big decisions are made and the end state for the organization is determined. The quality of the outcome is in direct relation to how clearly you understand where you are trying to go. As such, developing the TOM can help empower the digital vision and translate it to reality.

The TOM methodology that is typically applied addresses a comprehensive scope that includes six “layers”—Customer/Market Demand Generation, Channels, Products & Services, Process, People/Organization, and Technology & Infrastructure (see Figure 6.11). Addressing the target operating model across these six layers ensures that an integrated and highly functional solution is defined and developed.

My time at Deloitte Consulting offered numerous opportunities to sharpen my skills in operating model design and implementation. The methodology typically used involves deconstructing the organization into its constituent parts (i.e., layers) and analyzing the impact of the proposed transformation or change. This analysis can then be clearly mapped and visualized to gain a full understanding of how the value delivery model of the organization will need to change in order to successfully deliver the digital business transformation strategy.

Layering of the proposed changes in this way may require effort, but it offers distinct advantages:

• The gaps between current operating model and proposed target state operating model are clearly understood.
• The transformation or changes can be visually communicated in a clear and concise way to achieve stakeholder and sponsor buy-in and support.
• The leadership will have a real opportunity to optimize all change opportunities, specifically in terms of the scope or consistency across the business.
• The business can effectively communicate this new model to all relevant members of the organization.

The TOM exercise will result in additional areas of improvement and initiatives being identified. These should be included in the list of initiatives already identified in the previous phase.

Prioritize Initiatives & Develop Roadmap

Most organizations operate with limitations of investment, resources, and time, and it is crucial to allocate these to the right portfolio of initiatives that bring the best outcome for the company. There are multiple methods for organizations to prioritize initiative and action items. The key to prioritization is to utilize a model that works best for the specific organization and capabilities. Based on my experience, an effective approach to prioritization focuses on aligning initiatives with the company's strategic priorities and filters across two axes: value and complexity. Value is assessed in terms of the initiative's value to both the organization and its customers, while complexity is assessed in terms of the level of complexity to develop and execute the initiative in the context of the existing business environment.

Prioritize the areas of improvement and initiatives across these two primary dimensions—value vs. complexity—by addressing several critical questions:

Value

• How valuable is this initiative for the company and its related business?
• What value does this initiative bring to customers?
• Does the value only relate to existing business, or future opportunities as well?

Complexity

• How feasible is this initiative to operationalize within our company?
• How complicated is this to build?

It may be tempting to delve into detailed analysis and assessments to determine the value and complexity of these initiatives. For example, detailed calculations on the potential value of the initiatives in terms of financial returns, or complexity in terms of detailed cost assessments to build. However, the prioritization stage serves only to shortlist and identify where to focus, after which detailed business cases will be developed (see Figure 6.12).

The areas of improvement and initiatives may be grouped into four categories based on the prioritization matrix:

• Quick wins    These are the low hanging fruit—initiatives that are not difficult to execute and have high value for the company and/or customers. These initiatives may be tackled right away for more immediate or shorter-term benefits.
• Essential    These initiatives are assessed as high value for the company and/or customers, but require significant amounts of effort, cost, and capabilities to complete. However, these initiatives are deemed critical to the company's overall success and future competitive advantage. A selection of the essential initiatives should be started right away, along with a mixture of quick wins for balance.
• Park it    Overall, these initiatives are not difficult to execute but bring low value for the company and/or customers. As such, these initiatives will be pushed to the backburner and may be addressed if certain conditions change, resulting in a reprioritization.
• Shelve it    These initiatives are difficult to execute and offer low value to the company and/or customers. These should be shelved, or cut completely, until they make more sense for the company to focus on.

In order to successfully achieve the digital business transformation vision, group the areas of improvement and initiatives into workstreams (see the example in Figure 6.13). Categorize the initiatives and action items according to the Digital Transformation Building Blocks^© (described in Chapter 5) to create a link to measurable strategic objectives and outcomes. By identifying multiple workstreams, you will be able to distribute resources across the initiatives, as well as prioritize programs and projects within each workstream.

The Strategic Roadmap is prepared for the prioritized projects against the implementation timeline. The prioritized projects are grouped into workstreams or sub-categories for execution (see Figure 6.14). A high-level plan is drafted including estimated start and end dates, responsible teams, and key milestones.

I would advise organizations to start their digital business transformation journey with quick wins—projects that are less complex, easy to deploy, but still valuable and financially viable. This provides a strong footing to gain return on investments early, as well as buy-in and support from key stakeholders to the overall transformation journey that will span a longer time frame. Plan the transformation journey in phases, ensuring that results are seen periodically through measurable actions that increment over time.

Develop Business Case & Investment Plan

In advising a large financial services company, I worked closely with the CEO and executive team to develop a digital business transformation strategy investment plan that spanned over three years. We had prepared the investment plan for board review, describing in detail the rationale for the transformation journey, priorities, and focus areas. The board challenged the proposal to evaluate if the plan was too costly, aggressive enough for the shifting market, and had the right focused priorities. Often, boards and top leadership teams accept or reject transformation plans and investments based on the volume that is delivered in terms of business returns. To support this process and guide decisions in the right direction, a robust business case and investment plan need to be developed to recommend the best way to act in order to create business value.

Taking the time and effort to create a solid business case will ensure that key stakeholders are not only well informed, but also buy in to the transformation journey and support potential continued investment throughout the journey. A well-documented business case will include the rationale for transformation, key priorities, as well as recommendations that align with the strategic priorities of the organization and promote confidence for the journey ahead. The depth of analysis carried out in the previous three phases—Situational Analysis, Disruptive Visioning, and Strategic Roadmapping—provides sufficient details that justify the proposed direction, size, and complexity of the investment decisions.

The true value of investing in digital business transformation is to generate long-term revenue growth, and the business case must demonstrate value through the eyes of the customer in order to maximize the impact of these investments. In addition, traditional return on investment (ROI) calculations may work for technology implementations, but are less effective for shifts in the core business model.

The business case and investment plan should be developed in a phased approach, with small amounts of the total budget allocated on delivering preliminary proofs of concept or pilot implementations. This approach provides a low barrier for budget approvals and gives the transformation team opportunities for exploration and testing hypotheses, a necessary step with utilizing emerging technology solutions. When applying the phased approach, it is critical to move into full-scale implementation and avoid getting stuck in the test environment.

The business case should also describe clear governance structures that provide key stakeholders and board members with trackable checkpoints and milestones. For the transformation team, this spells the difference between success and failure, as management of issues, conflicts, priorities, and decision points can be carried out quickly and in a structured way. Along with governance structures, provide details on scope, roles and responsibilities, cross-team involvements, risks, and hidden costs that may arise from the transformation journey. Also, ensure that the price of “doing nothing” is clearly stated to indicate what may be lost in the coming months or years if the organization continues along the current course.

Develop Solutions & Implement

Successful digital business transformation is not simply a matter of strictly implementing plans. The development and implementation of solutions may vary, depending on the type of initiative and impact it has for the organization. For example, optimization of a functional area through robotics process automation (RPA) requires review and redesign of the process landscape to identify bottlenecks, gaps, and improvement areas. Once this is done, RPA solutions may be deployed to streamline workflows and automate repetitive tasks with the aim to increase productivity and efficiency. This project will require specialized skills to quickly understand where RPA could be applied and effectively implement automation across the business landscape.

Conversely, implementing a new digital customer channel or touchpoint will require more focus on the evaluation of customer behaviors, journey, and needs, as well as building experiences that are interactive and engaging. There are a range of technology solutions to be explored that can offer digitized experiences, ranging from social media and mobile apps to augmented reality. Capabilities, readiness, and technology compatibility are several areas that will need to be assessed in the selection of technology solutions. The approach to developing and implementing these initiatives can vary and requires leadership strategic guidance, cross-functional teams to coordinate their efforts, as well as solution providers that are able to deliver the intended outcome.

Exploration may require a different approach. A few years ago, I supported a client in the financial services industry who was keen to explore blockchain as a solution the trade commodity unit. As a traditional and highly regulated business, my first step was to establish a cross-functional team tasked to build capabilities and experience on the technology, and develop a feasibility study on blockchain application. Over a span of six months, the team developed the required knowledge and training that created a solid foundation for the next phase—development of a pilot solution for application within a limited scope of the business. During this time, the team provided frequent and consistent progress reports to the digital transformation steering committee, a cross-functional governance structure established to guide decisions, monitor and track progress, as well as resolve issues and conflicts that were escalated. Clear objectives and success measures were defined for the pilot implementation, in order to assess the feasibility and viability of blockchain application for the business. This approach offered the legal team time to explore the regulatory frameworks around blockchain application, which was developing at a national and industry level in parallel. At the end of the pilot phase, the results proved valuable, not only for the organization's leadership team in assessing whether to continue scaling the solution, but also used as an essential input to regulators and industry experts.

Scale & Transform

A mistake that I have frequently observed in many organizations is to stay at the small-scale pilot implementation. The true benefits and sustainable returns of initiatives are often only visible once it is scaled across the entire business.

The main purpose of proofs of concept or pilot projects is to identify and test new solutions to particular problems, as well as the feasibility and application within the organization's unique environment. Pilot implementations typically include a narrow scope of technical, process, or business function. While this is a logical approach, based on many years of advisory and implementation experience, I can attest that successful pilot projects do not always lead to successful scaled implementations. Although pilot projects try to simulate the actual business scenarios, often teams and stakeholders involved have already bought into the potential benefits of the solution. Large-scale implementations will face a wider range of resistance and real-world challenges that have not been addressed in the pilot. As part of scaling the solution, you need to create the conditions that allow people and teams to adapt the solution to their unique circumstances and make it their own (Ashkenas and Matta 2021).

Additionally, it is worth considering that implementing meaningful large-scale change almost always calls for the creation of new organizational structures or for major changes to existing ones. Even when this is not the case, there is an enhanced need for sharing information and resources and for more concerted coordination, particularly during the transition period.

Based on extensive experience in implementing digital business transformation strategies, I have detailed several key learnings and best practices for sustainable success in Chapter 7.