Digital transformation has become a buzzword among Thai corporations, reflecting the rising risk of being disrupted by the tectonic shifts that digital technology is creating. New players and startups, combined with ever-changing consumer behaviour, pose a great risk to established corporations. Technology, customers and the competitive landscape are changing more rapidly than the ability of businesses to adjust and adapt.
Digital transformation may seem to be the silver bullet that can solve all of your business problems at once. However, based on my experience working with corporations on digital transformation, it is way harder than you think. I compare it to training for and competing in a triathlon. Most of the time the process is not well defined in terms of vision, expected outcome, strategy and resources. Here are some of the problems with digital transformation programmes and how to overcome them:
The vision is either too big or too small. Some transformation programmes are defined too broadly and don't take into account the limited resources and capability of the organisation. You can't turn your organisation into Google or Apple overnight.
In contrast, some other organisations treat digital transformation like a PR programme. I liken it to putting beautiful toppings on melting ice-cream. The CEO or the board come up with lofty-sounding ideas but nothing cascades through the ranks to yield tangible results.
A great corporate transformation programme starts with a clearly defined and practical vision based on a deep, thorough analysis of technological progress, the ecosystem and customer insights. These will give you clear answers as to why you need to change, and how to prioritise areas that are critical for your corporation to thrive.
Lack of long-term commitment from management. Your leaders need to accept that you will fail at some points and will need to adapt rapidly. Digital transformation involves a lot of experimentation and risk-taking and you need to learn quickly from mistakes.
If your organisation uses conventional key performance indicators (KPI), too much of a focus on setbacks will ruin the morale of the transformation team. More suitable approaches are the OKR (objective and key result) system used by Google and lean startup thinking (build, measure, learn) which focuses on validated learning. At the same time, you need to make sure that top management have the long-term commitment and mandate from the board for this gruelling "triathlon".
Digital transformation is not only about technology but also about culture. I would argue that cultural factors are at the root of most failed transformation efforts. For example, you need to rewrite the new end-to-end customer journey and proactively come up with products, services and processes to wow the new "digital customers" you want to reach. These people are much harder to please and their journeys are much more complex involving several influences, channels and decision points.
At the same time, internal processes must be rewritten from end to end and, like the customer journey, must be enhanced by digital technology to increase productivity and cut across functional silos. Destroying silos will be a key.
Those who can best utilise data will win. Your entire organisation needs to know how to work with data, how to use it for decision-making and how to automate some processes by utilising machine learning and exploring technology such as predictive analytics, data streams and interactive intelligence. This new digital capability has to be deployed to all levels in the organisation.
The IT department, which most corporations see as a "support" function, has to be upgraded with new talents and capability and a mandate to take a strategic leading role in digital transformation. Many organisations now have a chief digital officer to drive the end-to-end digital transformation programme.
New talents with new capabilities will be essential. In Thailand, there are simply not enough people locally with the talents in the hottest demand, so you might have to actively hunt abroad. Some skills such as big data analytics and data science are severely lacking locally and must be imported.
At some leading organisations I know, half of the management and many of the digital talents are foreigners and they seem to be doing really well. However, over the longer term, great businesses will work with leading local universities to design a curriculum to create local digital talents -- and obtain first access to the best graduates.
The ecosystem is the key. You need to turn your organisation into a platform and also help champion and build an ecosystem based on mutual benefits for participants -- with your organisation at the centre. Several banks, for example, have been opening up their platforms and collaborating with top digital startups to co-create innovative financial products and services for customers.
In the digital era, a thriving ecosystem with a corporation at the centre will beat a lone business every time. This is because you get access to lots of innovations from your partners and startups without having to do everything yourself. As well, the ecosystem is more agile and resilient than a single corporation could ever be.
A digital transformation is a triathlon along an uncharted route. It takes a lot of hard work and a long-term commitment. You will fail many times along the journey but it is imperative that you commit the right resources and the best talents to lead the way.
Those who successfully lead digital transformation will be the transformers in their industries and will thrive over long term. Those who think it's just a buzzword and a PR exercise risk being disrupted and might not survive in the next five years.
Krating Poonpol is the managing partner and CEO of 500 TukTuks, a Thailand-based venture capital fund.