A Guide to Digital Transformation

In today’s rapidly evolving business landscape, “digital transformation” has become a buzzworthy phrase but what does it really mean for organizations? Is it simply about adopting new technology? Or does it suggest a more fundamental shift in how businesses operate, deliver value and define their identity in a digital world?

While many organizations are eager to jump on the bandwagon, the truth is that digital transformation is not a one-size-fits-all solution. It is not about adopting the latest tech for the sake of it. It is about understanding how to integrate technology in a way that enhances an organization’s core purpose and long-term viability.

In this video, Abayomi Baiyere, associate professor and Distinguished Research Fellow of Digital Technology at Smith School of Business, explores the key phases and common pitfalls organizations face when undergoing digital transformation.

Baiyere also addresses the importance of leadership in successful digital transformation. Unlike with IT projects, digital transformation requires an enterprise-wide shift in mindset. Leaders must ensure they communicate effectively and garner buy-in. And the journey does not end with transformation; with a “future-ready” mindset, organizations can remain adaptable and continuously evolve to stay ahead of inevitable disruption.

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Abayomi Baiyere

00:08: What is digital transformation?

Each time I get to define digital transformation, I start by asking the question, Digital transformation of what? What you see with digital transformation is that digital technology is really central. But at the end of the day, you see organizations beginning to shift in their value proposition. Digital technology begins to be one of the core elements of their value proposition. And gradually, you see the identity is not just the identity of these incumbent companies that has this traditional way of looking at things, but as a digital village in the way they operate and the way they are being identified, as well as the products and offerings that they put forward.

00:50: Why has digital transformation become so important for organizations?

I actually think digital transformation is not for every organization because there are some organizations where what they do is just fine as it is. But digital transformation, because of the changes that are required, I think when an organization is in a position where it needs to do that transformation, if it misses it, it may just realize that it is no longer relevant in the marketplace of today. But if digital transformation is something that all organizations need to do, I’d say not necessarily. That does not mean digital technology is not going to be really important for all organizations. It still is, but it doesn’t necessarily mean that [it should be] transforming.

Now there’s a concept of digitalization, there’s a concept of digitization. Organizations need to do those. But when we’re talking about digital transformation, that’s not something that I think every organization needs to jump on just because everyone is talking about it.

You need to assess your digital capabilities if you’re going to embark on digital transformation because the rules are changing. And because of those changes, you don’t just rely on these trends of the past. You need to keep in consideration what do we have and what do we need in order to be able to make that transformation?

02:13: What are some of the challenges organizations face in their digital transformation journey?

I think I would like to focus on what I call the road bumps or the hurdles. They are framed as hurdles or road bumps to highlight that there is a way forward. These are not roadblocks. It does not mean they are necessarily easy, but it just means: expect them, so that when you encounter them, you can actually figure out a way around it and know it’s not “oh, that’s the end of it.”

The first one is what I call it the ambiguity road bump because organizations typically have what they’re good at. Perhaps you’re in a pharmaceutical industry, the manufacturing industry, you’re just good at that thing. But now you start hearing this buzz about a technology like, what is it? And that’s typically the ambiguity phase. It’s just normal because that’s not the forte of this organization. And that’s typically when they are in the ambiguity phase. And that’s important because if organizations don’t cross that, then they won’t get the next one, which is what I call the contextualization road bump.

Now with the contextualization road bump, it’s a phase where organizations [are thinking], “Oh, now we have a sense of what the technology is,” be it generative AI, be it blockchain, whatever the technology is. Now we have a sense of what it is, but the question then is, what does it mean to us? Now you’re trying to contextualize it to your organization.

The third one, which in my opinion is perhaps the most critical, is what I call the reconceptualization road bump. Now this is a hurdle where you need to take a step back and think, in order for us to leverage technology and to make the most of it, to squeeze the juice that technology offers, we need to rethink the way we do things. Because typically, most of these technologies are not plug and play. There’s a need to rethink your processes, your structures, in order to be able to accommodate it. And I think many organizations struggle with that because it is a creation process. It’s a rethinking process, and you will most likely face resistance because you’re rethinking the status quo.

The last one is where things get really real. We call it implementation road bump. And the implementation road bump is where [corporate] culture becomes a thing, leadership becomes a thing, talent becomes a thing. These are four hurdles that organizations should keep in mind as they embark on digital transformation.

04:43: What role must CEOs and other top leaders play in ensuring a successful digital transformation?

Many organizations approach digital transformation as though it is another IT project. And that’s where leadership becomes critical because if you go in with that thinking, you will be approaching it with incompatible logics. Because the logics of IT transformation are just so different from digital transformation.

I like to use the example of steam and water. Now with chemistry we know they are both made of hydrogen and oxygen. So, they’re essentially the same thing. But it would be a mistake to handle steam with the same way we will approach water. And I think that’s what happens when you start thinking of digital transformation like an IT project. Many leaders need to get that right. Many leaders need to make sure they communicate and get buy in from the organizations. And they need to recognize that these hurdles will be there. It’s not about avoiding them but finding a way to go through them.

Rather than thinking about one technology for digital transformation, I also think about digital technology as a whole towards a future-ready state. Future-ready state changes the thinking from having a boss or a goal of digital transformation. In an ever-changing world, you need to be always future ready. And that’s a form of a perpetual thinking of transformation.