Believers, Non-Believers and Digital Transformation

Digital transformation is a revenue growth engine according to fifty futurists we surveyed.  Many companies are already experiencing significant benefits and gaining competitive advantages.  The futurists predicted the top five impacts of digital transformation on businesses by the year 2020 will be:

  1. Speed to market
  2. Competitive positioning
  3. Revenue growth
  4. Productivity
  5. New distribution channels 

Given the importance of these top-five on revenue growth and the future success of a business, who would not want to digitally transform their enterprise?  Non-believers that’s who.  Non-believers, aka laggards, in our study of 2,000 executives don’t believe in significant digital transformation now, or in the future.  They don't demonstrate a sense of urgency or a recognition of the massive changes happening around them today.  They seem blind to the fact companies are witnessing an increase in revenue already from their digital transformation investments.

Digital transformation-believers aka digital leaders, however, are investing significantly more now, and receiving positive ROIs on their investments already.  As a result, they plan to invest greater amounts in the future, and predict higher ROIs in the future relative to non-believers.

Based on our survey data, believers and non-believers are seeing alternative realities.  Non-believers, if they don't quickly become converts, are going to face increasing challenges staying competitive and relevant against digitally transformed competitors. 

When we asked mid-level managers to list the top 10 mistakes companies are making regarding digital transformation today, they listed the following in order of rank:

  1. Moving too slowly
  2. Lack of clear digital strategy
  3. Company has the wrong leadership for digital transformation
  4. Investing too little in new technology
  5. Not focusing enough on cyber-security
  6. Culture that discourages innovation
  7. Lack organizational structures to drive digital transformation
  8. Ignoring fresh thinking from external sources
  9. Not educating the entire organization on digital transformation
  10. Neglecting to hire the right digital talent

This list describes the actions or non-actions we are seeing from non-believing companies.  

Let’s pull all our findings together and review once again:

  • Futurists see digital transformation as a revenue growth engine
  • Believers are already reporting positive ROIs, and as a result, plan even higher levels of investment and revenues in the future.
  • Non-believers are investing little today, seeing little ROI, and are planning relatively little investment in digital transformation in the future.
  • Mid-level managers report the biggest challenges are moving too slowly, a lack of a clear strategy, wrong leadership and too little investment in new technologies.
  • The revenue gap between what believers and non-believers predict in the future as a result of digital transformation is significant across all industries.  

Survey participants believe the bulk of the revenue gains will be achieved by the year 2020, with incremental gains continuing thereafter.  That is only 3.5 years from now. Yikes! That reflects a view that more revenue is available now for fast movers.  It also suggests a realization that a lot of work needs done quickly.  Non-believers, because of inaction and/or a lack of investment, seem likely to miss out on these early revenue gains and will suffer competitively.

Businesses must invest the time and effort now to understand the impact of digital transformation on their industry, market and company.  Once there is situational awareness achieved and a clear vision articulated, a digital transformation doctrine needs to be developed and socialized so strategies can be developed to achieve the vision set forth in the doctrine.

What technologies should believers invest in over the next 3.5 years to achieve digital transformation?  In the opinions of over 2,000 survey participants the largest business impacts will come from the following technologies:

  1. Big data/business analytics
  2. Cyber-security
  3. Cloud
  4. Collaboration technologies
  5. Mobile technologies
  6. IoT/sensors
  7. Artificial intelligence
  8. Digital currency
  9. Sharing economy
  10. Social Media 

When asked for year 2025 predictions, survey participates anticipate a similar list, but with even higher business impacts from each.

It is interesting that core systems like ERPs, CRMs, HCMs and SCMs were not identified as driving high business impact.  I am wondering if companies still view digital transformation as "add-on" technology?  In my view, a business' ability to convert from "human-time" to "digital-time" and operate at a real-time operational tempo requires digital transformation across the entire ILS (information logistics system).  The ILS is the master or umbrella system that manages and processes data across the entire organization to optimize business performance and customer interactions.  This ILS system includes all the core systems that today, often involve legacy systems incapable of supporting the new world of digital-time.  It is my analysis that many companies will ultimately be required to replace legacy core systems in order to accomplish true digital transformation.

If you find yourself sitting in IT and business meetings every week listening to how existing legacy IT systems will not permit new business processes, new business services, new business models and new innovations required to compete and win, then you should recognize those are red flags and things can get ugly, quickly.

When the New Year’s ball drops at midnight and year 2020 comes around, will you be found among the believers?  Stay tuned for my new report on digital transformation technologies and strategies.

  1. Forces Driving the Digital Transformation Era
  2. Digital Transformation Requires Agility and Energy Measurement
  3. A Doctrine for Digital Transformation is Required
  4. The Advantages of Advantage in Digital Transformation
  5. Digital Transformation and Its Role in Mobility and Competition
  6. Digital Transformation - A Revolution in Precision Through IoT, Analytics and Mobility
  7. Competing in Digital Transformation and Mobility
  8. Ambiguity and Digital Transformation
  9. Digital Transformation and Mobility - Macro-Forces and Timing
  10. Mobile and IoT Technologies are Inside the Curve of Human Time

Forces Driving the Digital Transformation Era

The words “digital transformation” appear everywhere today. I use them in discussions daily.  They describe the era we live in - an era where the rules of business, strategies and the pace of business have changed.  In this era the manner in which we operate our businesses, and interact with our customers, suppliers, employees, partners and even physical objects have changed.  This new era is different. We feel urgency for more information, deeper insights, faster operational tempos and business agility.  We recognize a need for change, but to what?

I propose that it is important to understand how we got to the era of digital transformation. What are the contributing factors?  For that purpose, let’s begin by considering how we moved over the past decade from environments full of disconnected unknowns, to the world of connected knowns, and how we evolved from mass markets of faceless customers to precise markets ofHow did we get here? I posit that rapid advances in six areas have converged to create the era of digital transformation:

  1. Hardware
  2. Software
  3. Networks (cables, wireless and social)
  4. Commercial and consumer comprehension
  5. Democratization of technology at scale (low costs & mass adoption)
  6. Moving beyond human time to digital time 

The evolutionary path to digital transformation followed a timeline that included the invention and development of the following[1]:

  1. Computers & Moore’s Law
  2. Memory and data storage
  3. Mass adoption of PCs and laptops
  4. Local Networks
  5. ERPs
  6. The internet
  7. Mobile networks and mobile phones
  8. GPS
  9. Mass global adoption of wireless devices (laptops, mobile phones, tablets, smartphones, wearables, sensors)
  10. Proliferation of websites and online activity
  11. Rapid adoption and expansion of online and mobile databases and search
  12. Rapid adoption and expansion of online marketplaces and reviews
  13. Rapid adoption of online and now mobile payments
  14. The transformation from physical to digital (think retail stores to e-commerce, and now m-commerce)
  15. Move from paper documents to digits
  16. Rapid expansion of embedded computers
  17. Rapid adoption and proliferation of mobile apps and the mobile web
  18. Online gaming
  19. Rapid transformation from traditional marketing to digital and mobile marketing
  20. Rapid addition of smartphone enabled sensors
  21. Rapid evolution and adoption of online social networks, social media sites and content sharing
  22. Online classified sites (e.g. Craig’s List)
  23. Rapid emergence of the sharing economy (e.g. Airbnb, Uber, etc.)
  24. Rapid adoption of online education services
  25. Rapid adoption and expansion of online entertainment movies, TV programs and streaming music
  26. Wearables
  27. Cloud computing
  28. Rapid emergence of cloud based platforms for everything
  29. Internet of Things
  30. Industrial Internet (telematics, smart grids)
  31. Proliferation of analytics and reporting
  32. Mobile wallets
  33. Development of advanced algorithms
  34. Artificial intelligence and machine learning
  35. Augmented reality
  36. Robotic process automation

All of these innovations and advances, and our adoption of them, changed us.  We are different consumers.  We are different employers and employees.  Our expectations increased.  We became impatient and mobile.  We became global.  We demand immediate, accurate and real-time responses.  We want personalized and contextually relevant experiences.  We want digital experiences that are beautiful, simple and elegant.  We want instant access to all products, services, news, information and friends’ status.  We want to share our lives instantly and globally.  We want to find things, buy things, move money and complete transactions from anywhere at anytime. 

All of these innovations and our resulting behavioral changes – changed commercial marketplaces and brought us to the tipping point.  Definition of tipping point: the point at which a series of small changes or incidents becomes significant enough to cause a larger, more drastic change.  That drastic change today is – digital transformation.

  1. Digital Transformation Requires Agility and Energy Measurement
  2. A Doctrine for Digital Transformation is Required
  3. The Advantages of Advantage in Digital Transformation
  4. Digital Transformation and Its Role in Mobility and Competition
  5. Digital Transformation - A Revolution in Precision Through IoT, Analytics and Mobility
  6. Competing in Digital Transformation and Mobility
  7. Ambiguity and Digital Transformation
  8. Digital Transformation and Mobility - Macro-Forces and Timing
  9. Mobile and IoT Technologies are Inside the Curve of Human Time


[1] Not a definitive list


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This May Be the Second Machine Age - But it's Still a Barbara Streisand World

As a minor representative of the Earth bound, life based form, commonly known as a “human being,” I think a lot – perhaps too much! – about what us humans will end up being in world full of very clever machines. One doesn’t have to be too far to the lunatic fringe of the “we’re all doomed” camp to be somewhat concerned that when Watson, or Alexa, or Siri, or Amy, or M, or Atlas, or Baxter or their grandchildren can pack a box quicker than me, create a sales forecast quicker and better than me, drive a car quicker and better and more safely than me, and write a novel more creatively rich than me (as well as more quickly, better, and safer; safer? – well, it’s unlikely that a “novelbotist” will be a drunk or a serial philanderer or a junkie!), we – that’s you and me mate – face a bit of an uphill battle to remain not surplus to requirements.

Given all of this, and given that my beat is sniffing out postcards sent from the unevenly distributed future, I’m always heartened when I come across something that we humans can interpret as a ray of hope! “Hey kids, we’re not moving to the bunker in Boise yet! I’ve got an idea ...”

The latest source of my irrational optimism? This; the “unstore” ... You back? Great! The “unstore” is a recognition that bricks are increasingly losing the battle against clicks and that competing against Amazon is leaving more and more brick based players wandering deliriously in circles in the rainforest.

Not letting a good (exponentially accelerating) crisis go to waste, the “unretailers” are re-conceptualizing the role of physical space in the process of selling. When somebody can buy something – anything – from the 5.5 inches of Gorilla Glass they’re holding in their hand, what do we do with our 15,000 square feet on The Avenue of the Americas or our 45,000 square feet at the Turfland Mall, in Lexington, Kentucky?

Well, the answer that’s blowing in the wind seems to be to perform what we might think of as corporate jujitsu! Take your opponents strength and use that against them, and use your weakness to your own advantage.

In the current retail mano a mano, the “clicks’” strength - price, speed, efficiency, not having to put pants on – is seemingly all. But newly togged in white pajamas and a belt colored black the “bricks” are fighting back.

At the heart of this new phase of the battle is the simple recognition that though this may be the Second Machine age this is still a Barbara Streisand world. We human beings like other human beings. Though we all may have our “Satreian” moments – “hell is other people” (mine come particularly in the TSA line!) – we all basically want to be in “human hands”. We all want a human experience.

So the question now becomes what makes a great human experience and how does a great human experience in a world of Dash (hopefully not a world of Daesh) reassert itself.

The unstore is showing that the answer to this is the human touch; we want to touch things and we want to be touched. We want to pick the merchandise up, we want to try things on, we want to ask “how does it work?”, and “why did it do that?” We want to sit on it, listen to it, read it, argue about it with our wives. We want to see experts use it. We want to see cool people rock it. We want to waste an afternoon dreaming about it. We want to go back week after week and think, “one day”. We want the blue shirts to listen to us, to laugh at our quips, to keep chatting longer than seems normal. We want to sit in a comfy chair with a latte and be pleasantly surprised that nobody seems to mind that we’ve been there all day – with only one latte. We want to watch videos and see demos and get help and be advised. We want to take the merchandise back and get it fixed or upgraded or exchanged or customized or refreshed or accessorized. We want to hang ... with other people ... with other people that need people.

Then we want to go home, and on the way in the car, buy the thing we’ve been checking out online and have it shipped to us overnight!!!

In short the unstore is place to check things out without checking them out.

The unstore builds on a number of trends that have been developing for some time;

  • Music concerts used to be loss leaders to sell records; now streaming is a loss leader to get people to come to concerts.
  • The speaking circuit for stand up corporate (often not very) stand-up comedians – er, I mean, presenters - used to be a loss leader to sell books; now books are a loss leader to get stand up gigs (at the high Clintonesque end, often going at $100K, 200K a pop).
  • Museums used to advertise their collections and mention in passing they had nice dining facilities; now they’re “ace cafes with quite nice museums attached”
  • Bookstores introduced coffee bars to encourage customers to linger longer; now cool cafes have books on sale to go with your skinny flat white.

In this new Omni channel, hybrid mash up, of bricks and clicks, being human is an advantage again. As long as your humans can be human and you can put the experience in customer experience.

Of course, the first computers were humans but it’s all too common an experience today that we go into a big box store and the humans seem like robots. And the experience is hardly an experience at all. (Those of you paying attention at the back will recall that I’ve written at length about this before In the land that popularized and perfected the art of customer service the evenly distributed present seems full of the exact opposite at the moment – customer disservice

The unstore reintroduces the idea of the “enthusiast” – John Cusack in High Fidelity, the Click and Clack garage in Cambridge, the undiscovered writers working the tills at the Strand bookstore in NYC - people who love their subject and love sharing that love with other people.

The people working at the Samsung store, or Bonobos, or Warby Parker, or Tory Burch, or in the aforementioned blue shirts, are people who are “into it”; who are “loving it” (not many of those at the home of the place of “loving it” I’d hazard a guess) and who are central to the “experience” that people are flocking to experience. They’re sharing their enthusiasm and excitement and pride on being “in the gang”. They’re not “selling” in a traditional self. In fact, they’re the human based version of the online “always be recommending” algorithm.

Every organization that operates in physical “space” is facing some version of this same “bricks v clicks”/”bods v bots” dilemma. And unsurprisingly there have been some amusing/ugly (depending on your perspective) steps along the way trying to deal with it. The café in a bank mélange is my particular favorite! The skinny flat white instantly turns into a cup of coffee with milk next to an ATM!

This misstep is actually quite instructive though; the bank has sort of got the memo but the memo got scrambled as it went through the business as usual machine (commonly referred to the capital expenditure approval budget meeting).

Rather than the existing branch being reconfigured so there’s a forth rate café sitting where the tellers, and the desks, and the safe used to be, the space could be reconfigured so there’s a nice lounge, and kitchen, and meeting rooms, and phone booths, and video displays, and TVs, and office equipment, all sitting there available for people to use when they come in to talk to the bank’s humans – their experts, their advisors, their counsellors, their coaches, their shoulders to cry on, their enthusiasts. The branch could be re-conceptualized as a place where people can come and have a human experience, centered around a very human need, i.e. the need for financial security and financial health. Dealing with people who are enthusiastic with helping you deal with your human needs.

Writ large, bank branches could become co-working spaces a la WeWork; centers of new growth in local communities. They could be places where the Chambers of Commerce meet; where VC’s hang to tap into the new ideas. Where Maker Fairs are held; where the successful send the elevator back down.

Oh, and, discretely, in the corner, there could be a small ATM. Just in case an old-timer wanders in for some cash.

A bank branch could be a “unbranch”; in a world where the most popular branch is the one people are holding in the palm of their human hands and where Betterment are only a tap away.

If you’re still wondering what a bank branch re-energized could look like, this might give you a better idea

Given that Silicon Valley isn’t coming to financial services is already here these issues are now longer merely theoretical ones for banks sitting on huge swathes of underutilized and depreciating assets but in fact existential questions that need practical answers. Today.

I started off this piece by suggesting that “unstores” were signs of hope for humanity! I’ll end it by suggesting that the “un” movement is a sign of hope for bankers too! Ouch! Cheap shot! But I couldn’t resist! Don’t take it personally fellas!

The “un” movement repositions people at the core of the “experience” - in whatever area; banking, retailing, teaching, etc, etc – that people want. People want to bank online, buy online, research online, entertain themselves online. Do everything online. But people want to be with people. People they like. People that impress them. People that they learn from. People that – if you want to get “corporatey” about it – “add value”. This might explain why Amazon themselves are opening stores and why Macy’s is undergoing reconstructive surgery

In the future people probably won’t add much value adding things, or moving things, or doing things. But people will still be able to add lots of value in inefficient, creative, cool, stupid, funny, odd, exciting, unpredictable ways; “how does it feel on?”, “this is how you get it to do this”; “hmmm, that’s a great question – this is how I’d do it”; “nah, I think the v7.2 is way cooler than the v7.1”. Ways that are hard to quantify, and measure, and optimize on a spreadsheet, but are really the future of every body’s work. Be you a banker or an AI agent natural language coder.

Finally (yes, finally, I hear you sigh), this notion of re-assessing the value of wildly inefficient humans in a machine age is riffed on here by Wired magazine founder Kevin Kelly and I think the Sage of Pacifica is onto something; what I call the “Tokyo Hotel Model” - Japanese hotels seem oddly overstaffed in comparison with hotels in London or New York etc – is central to re-conceptualizing the role people play in the future of work.

People want great prices. But people want great people based experiences too. The “un” model perhaps unlocks a previously seemingly unlockable conundrum. Don’t automate humans away. Hire them to be human. Not second rate robots.