If you’ve ever googled what digital transformation is, then you might well feel intimidated or overwhelmed. A lot of the time, people will tell you that digital transformation means reinventing your whole business, others will tell you to innovate or become extinct, and of course, there’s the relentless focus on new, new, new!
Whilst much of this is true to some degree, we wholeheartedly believe that the process for digital transformation can start small. Not just can start small, but should start small. However, before we get to that let's look at some of the reasons why these two words, “digital transformation”, should be extremely important to you.
Technology continues to accelerate everything in our lives. The exponential rate of technological change has surpassed an important moment of no-return. This moment, coined as “second half of the chessboard” by Ray Kurzweil, describes our current location on the exponential curve of technological evolution.
“Second half of the chessboard” is a technology strategy paradigm based on the legend of how chess was invented, dating back to a mythical Emperor from India during the time 400 to 600 A.D. After challenging his subjects to create a game fit for a king, the Emperor was presented with a most interesting and intellectual game on a chequered board. When he asked the inventor how he would like to be repaid for such a ingenious game, the humble inventor proposed what seems to be a meagre form of compensation. He simply asked to be paid in wheat. He asked the king to place one grain of wheat on the first square, two grains on the second, four on the third and eight on the fourth. Doubling the amount of wheat on each square.
The legend has it that the Emperor laughed this off, until his advisors calculated exactly how much wheat this would be - significantly more than had ever been harvested across his entire kingdom, nine quintillion grains of rice, to be precise. To get a handle on how much that is, it is said that one large paddy field can generate a billion grains of rice. Nine quintillion grains would require harvesting 1,000,000,000 fields.
From here, the legends differ, some say the inventor was promoted to a high-ranking official within the empire, others say he was executed there on the spot for treason.
Converting this analogy into modern day digital terms, let’s now imagine the stacking up of wheat on each square as bytes of data, as shown in the diagram below. We start off with one byte of data in the top left and by the time we get to halfway point on the board square number thirty-one has more than 1 GB of data on it, and square thirty-two has more than 2 GB alone. By simply doubling, it’s taken us just thirty-two squares to go from one byte per square to more than two billion bytes per square, and almost 4.3 GB in total across all of the first half.
The next square, number thirty-three contains the same amount of data in one square as the whole first half, and in the subsequent seven eight squares, one row, we go from two billion to over half a trillion, and the further eight squares see that explode to over one hundred trillion.
Experts have concluded that we are already in the first row of the second half of the chessboard, having passed the mid-way point sometime between 2015 and 2016. With every year that passes technology achievements and advances double.
That was before the pandemic! The pandemic has been called the greatest accelerator to digital transformation that we are ever likely to witness - meaning our exponential growth has been even further accelerated.
In terms of technology strategy the chessboard reference talks to the point where exponential growth begins to have a significant economic impact on an organisation’s business strategy.
Much of this is grounded in what's known as Moore's law, first published in 1965, which stated that overall computer processing power will double every year. Since then there have been between 30 and 34 “doublings” (depending on how you define them), similar to the number of squares in half of the chessboard. The fascinating thing about this prediction is that it is one of the few long term forecasts that has been proven to be accurate.
We can look at this doubling phenomena in other terms; it took Facebook 3 1/2 years to acquire 50 million customers. Whereas, WhatsApp reached the same mark in only 15 months. Angry Birds gained 50 millions users in 15 days. The humble, almost extinct fixed line telephone, took 100 years to reach the same adoption as social media achieved in just four.
Mastering emerging technology has always made the difference between those companies that lead, and those companies that struggle or fail. The reason the chessboard analogy is important today, is because the time companies have this year to embrace and adapt to new technology trends today is half of what it was last year, and twice what it will be next year. That's the challenge of exponential times, the longer you take to get started the faster you fall behind.
So without trying to scaremonger, there is a real chance that if a business today has not already begun its digital transformation journey by the time it gets around to doing anything, in two years time the market would've changed beyond recognition, and the business may already be obsolete.
Speaking of his industry, the executive chairman of Cisco Systems, John Chambers, was quoted saying “companies need to reinvent themselves every 3 to 4 years”, to mitigate the risk of disruption and obsoletion. His choice of words was very specific. He didn’t say adjust or adapt, he said reinvent, or in other words, transform.
So, in essence we are living in a digital, hyper connected world where the pace of life and business is accelerating at a rate that humans alone can not keep up with. The only way businesses can keep up is to find ways to digitise and automate as many of their processes as possible.
It is also worth pointing out at this juncture that digital transformation is more than just digitising and automating existing processes, it is about creating new markets, new business models, new products and even new groups of customers, whether they are actual human beings or even machines. But we will save that for another time, let’s get back to the notion of starting small.
They say a journey of 1000 lightyears starts with a single step, and so should your journey towards digital transformation.
Given the hype of digital transformation over the last half decade, you could easily be lured into the false sense of understanding that digital transformation needs to be an overnight metamorphosis. This doesn't have to be the case, and we would argue that in doing so you are likely to make damaging, perhaps even irrecoverable mistakes.
Digital transformation should be seen as a process of using modern digital technologies to make successive incremental changes to your business, where each increment’s value builds on, and multiplies the value of the previous step.
This is all very well and good, but given so many options, where would you start? There are so many options and opportunities that it can become stifling to even make a decision as to where to start. For example the popular video conferencing service Zoom, whose growth has also been exponential for other reasons, now offers a marketplace of integrations into other products and services. In just a short period of time after launch, the marketplace already boasts a bewildering selection of technology companies and integration possibilities.
As an example, you’ll find a selection of sixty customer relationship management (CRM) technologies that now integrate with Zoom. Bear in mind that those are just the CRM systems that integrate with Zoom. When choosing a CRM there are many more options than sixty, and because of that, I expect that if I check that again in a couple of weeks time the number will be even larger still. But a CRM is just one choice in your journey to digital transformation. There are a plethora of others, so on eone technology over another soon becomes as difficult as jumping on board an exponentially accelerating elevator.
But this approach of choosing a technology solution to guide your digital transformation strategy is a misguided folly.
5G is not your digital transformation driver, artificial intelligence is not the one tool to solve all your problems, even the Internet of Things (IoT) cannot be held solely responsible for the transformation of your business. One should build a digital transformation strategy around improved intended outcomes, the value you want to create and the experience you want to deliver, and only then begin choosing the technology to deliver on that vision.
In an article I published on LinkedIn last year, I talk about the difference between dolphins and whales in terms of innovation. You can check out the article here. However to summarise: Whales dive deeper and spend longer time underwater between breaths. Whereas, dolphins dive less deep and come up for air more frequently. In terms of digital transformation and innovation, it is much more sensible to take smaller steps and checkpoint your progress towards your goals more frequently than to spend big budgets, over long periods of time only to find out that when you get to your target, if you actually ever get there, the world has moved on.
Whether your business has already begun embracing digital techniques and platforms, or whether you're only beginning the process of updating legacy processes and tools, choosing the next step in your digital transformation journey can be intimidating, worrying and confusing. That’s where we can help.
Our approach is to help you identify quick, yet powerful wins to help transform elements of your business, one dolphin-sized step at a time. We want to help you embrace the good of what you already have, identifying the opportunities to build on top of that, rather than rip out and replace everything you've built over the years.
In the coming series of articles on our website we will explore some of the areas businesses can look for powerful quick wins to drive your digital transformation agenda.
Follow us on LinkedIn to keep up to date, or get in touch if you have a question.