Did Digital Die?
We spent the entire last decade going through a digital transformation. And what do we have to show for it? Less than ten percent of organizations have fully transformed. Organizations that were our digital icons like Uber or WeWork are now not desirable comparisons. Digital investments by incumbent organizations have, in some instances, turned into digital zombie organizations. So "Did Digital Die” in the last decade? Are we in the post-digital era now? Before you continue, the answer is no. Digital did not die. However, there are several warning signs and subsequent actions that should not be ignored as part of your digital transformation.
Over the last three months, I have talked to many organizations that have started to question their digital transformation efforts. They are seeing too many technical, organizational, financial, and skills related obstacles – all of which are increasing the executive digital doubt in their organization. Let’s look at some of the evidence that would suggest Digital may be dead or dying.
Concern no. 1 – Very few organizations have completed a digital transformation:
We are now more than 12 years into the most recent digital transformation wave. After this amount of time, it would be expected that a decent number of organizations would be through a complete transformation and categorized as digital native organizations. However, surveys from McKinsey, Gartner, and a recent study by Intel/EMC, but the percentage of companies that have gone through a complete digital transformation at less than 10%. While many companies are running large scale transformation programs, few have finalized a change from "complete analog to digital native" organization. And that is after 12 years! Could it be that organizations set a too high ambition for digital? Or was it never possible for every company to become a fully digital organization?
The answer is that a digital transformation is continuous but also moving asymptotically towards a state that is not 100% digital or becoming a digital native organization. How far a digital transformation will take an organization will depend on the vertical industry and competitive factors within that industry. For every company, it is therefore critical to work on building executive patience, by setting expectations that digital is NOT a transformation but a continuous state of change. That means talking about digital transformation is wrong because it assumes you are moving from one state of operation to another. Instead, digital transformation is about a continuous change of technology, processes, and people. CEOs and business leaders need to take this into account when setting expectations within the organization, with customers, suppliers, and investors.
Concern no. 2 - Digital icons are not the digital benchmark anymore!
It used to be that digital icons such as Uber, Google, and WeWork, constituted a digital benchmark of perfection. The reason was not just the sophisticated usage of technology, but equally a different business and financial model. Some of these digital icons have ceased to be benchmarks of perfection. In some situations, you can ask yourself whether the economic benefit of describing your company as a technology company has evaporated. Just 24 months ago, valuations of so-called technology defined companies (or born-digital organizations) were far higher than that of similar “classic” companies. Consider a taxi company versus Uber and Lyft or AirBnB compared to classic catalog vacation rentals, WeWork versus Regus, GM, compared to Tesla, and the list goes on. These digital icons have been one of the main drivers in the quest to transform incumbent or classic organizations across the globe, and one of the drivers for this has been investors seeing higher valuations of technology lead organizations digital organizations. That is not true any longer.
Furthermore, many have become challenged by large company processes and regulatory issues. These are problems often solved by incumbent organizations. What is emerging is, as also outlined recently by Gartner, that the goal is not complete digitalization. We are not in a binary battle between no digital and total digital but instead need to view the end state as a spectrum where the digital equilibrium changes based on time, the human element, and the ability to digitalize things and ecosystems. The icons may be traditional organizations executing digital change flawlessly. Perhaps looking at companies like ING, ENEL, Capital One, or VW provide more real transformation examples, than companies based in Silicon Valley.
Concern no. 3 – Digital Zombie organizations in abundance.
In the process of becoming digital, many organizations have created digital spin-offs or digital entities within their organization with the expectation that these entities establish a spearhead in the overall digital transformation. The spin-offs happened as part of a bi-model (Gartner model) or two-speed IT (BCG model) strategy. Not all of these efforts have been successful, and it has created many digital zombie organizations. Organizations that are not successful or living up to the expectations of their business plans. Digital zombie organizations are unsuccessful entities that continue to operate despite not delivering the expected results.
The Post Digital Era – what do we do now?
Digital is transforming businesses, and transforming society, but following a decade of digital efforts, we have surely learned something:
Digital is not a transformation but a constant state of change between technology, processes, and people
Digital executive patience is critical, set realistic expectations with all executives
Digital is not about two binary situations, no digital versus digital, but a digital spectrum where we approach the goal asymptotically, balancing digital and analog depending industry.
Your digital ambition should include more realistic icons. There is no digital perfection. Not even in Silicon Valley.
Digital is about data, analytics, artificial intelligence, and machine learning. Without this as your core, your digital strategy will fail.
Digital didn’t die in the past decade but suffered some setbacks. This next decade will be a continuation of the digital change with organizations taking Cloud, AI/ML, 5G, and Quantum Computing to the edge of their ecosystems.