What If I Told You Digital Transformation is Just a Three Word Hierarchy?
It turns out there's an easy way to distill what digital transformation is and how it applies to your organization, even though the big consulting firms make it sound like a dark art.
Quite simply, digital transformation is based on a hierarchy.
Strategy
Processes
Systems
You traverse the hierarchy based on which phase you're in:
When you're designing, you start at the top and work your way down
When you're implementing, you start at the bottom and ensure that your work is traceable to things above it
Don't skip steps or levels during the design and implementation phases
Let's unpack this with an example so we can see how this abstraction works in reality.
Pretend that we're working in an organization that sells services to other businesses.
Our goal is to grow our business 10-20% per year and have most of those gains flow to the bottom line (i.e. we're not dumping money into the fire to achieve that growth).
How do we achieve that?
For starters, we need a strategy.
Now, our strategy cannot be something like "we offer the best services" because that is undifferentiated (i.e. any competitor can also say they are the best).
Instead, our strategy is we're the only organization that offers same day quotes for our services that don't require talking to a salesperson, thus making it easy to work with us.
Now, we need to design our processes to support that strategy.
To satisfy same day quoting without salespeople involved, we're going to need to know:
How our services are priced
What information is required from the customer
What sacrifices we're willing to make (e.g. offering custom negotiated pricing)
Once we have composed a process that flows nicely, we're ready to consider what systems are needed.
Figuring out what systems to use is based heavily on constraints around:
What systems already exist
How much money can be allocated to the project and ongoing costs
What skills our people have in house
With the systems selected, it's time to implement features and capabilities within those systems to support the processes that facilitate our strategy.
Just like that, we've gone top down and bottom up in the digital transformation hierarchy.
If you're thinking it's too good to be true, it's not: following that guidance is exactly how my clients achieve sustainable growth that outpaces their competitors.
TLDR: Digital transformation is just a hierarchy: strategy drives processes, which guide systems. Design top-down, implement bottom-up, never skip levels.
