Digital Transformation: It starts in the mind

Governments around the world are establishing infrastructure to turn their country into digital economies. While the infrastructure is necessary, digital transformation can only begin with a shift in mindset, which has been slow to come for many business leaders. COVID19 has fast-tracked businesses going online, but whether that was because of a change in mindset remains unknown. Many moved online mainly to comply with social distancing. Others found Zoom easy to hold meetings. These are workarounds the situation COVID19 caused - not digital transformation. Before delving further, let’s clarify digital transformation.

Sales and retailing, the revenue-generating functions, are the front-end of a business. The back-end (e.g. logistics, marketing and management) is equally involved in achieving the sales outcomes. Many businesses have shifted the front-end or the customer experience online in response to COVID19. This may appear like a digital transformation occurring. However, without digitising the back-end, businesses may not be able to support the digital customer experience. Interestingly, the reopening of markets following the shutdown saw customers gladly shop at brick and mortar stores, and that returned businesses to the traditional format. These businesses have clearly not undergone digital transformation.

So what is digital transformation? To answer the question, let’s establish what is not digital transformation. Businesses generously invest in technologies to automate some of their processes like communication and filing. With these alone, they have not undergone digital transformation. Digital transformation is also not an IT solution to enhance business processes. Instead, digital transformation is a strategic position that a business takes in the marketplace. It is a mindset that permeates the entire enterprise transforming the way it operates.

Simple as it may be, digital transformation begins with a shift in mindset. That is a shift from the traditional way of operating to a digital form. Yet, it is the most challenging part, mainly because of a clash of ideologies (traditional versus digital). An example from history highlighting the clash of ideologies was the move in belief from a flat-earth to a round-earth. While it is easy for us to believe the earth is round, it cost people like Galileo Galilei, his career and life. It is the round-earth view that gave rise to globalisation. Indeed Galileo is a martyr for our modern societies.

Interestingly, another shift in mindset is underway: the round-earth is shifting to become a connected- earth. This mind shift is offering businesses numerous opportunities. Without this new mind-shift, businesses will be merely tinkering the old way of doing business with modern-day communication systems. Perhaps that is why many businesses have failed with their digital transformation. Digital transformation commences with a digital mindset. Once established, the mindset drives the acquiring of expertise and relevant technologies.

Of the many benefits of digital transformation, the most exciting one is the agility it provides businesses. The transformation enables businesses 1) to be hypersensitive to the market conditions, 2) make data-driven decisions, and 3) super-fast execution of marketing activities. These capabilities make businesses highly competitive in the current environment and insulate them for future pandemics. For these reasons, businesses need to consider undergoing a complete digital transformation, and that starts with the mind.

If your organisation is considering digital transformation, get in touch with the author at mathew.parackal@otago.ac.nz