5 building blocks for successful digital transformation

Business models are changing, and companies must adapt digital strategies to become more agile, according to MIT research.

5 building blocks your company needs for successful digital transformation

In a constantly changing business landscape, companies that want to successfully digitally transform must pay attention to what is possible, what customers want, and what they are willing to pay for, Jeanne W. Ross, principal research scientist at the MIT Sloan Center for Information Systems Research, said in a session at the 2019 MIT CIO Symposium.

"Unlike past business success, success in the digital economy is not so much about brilliant strategy. It's about being able to execute constantly changing strategy," Ross said. "That is a huge difference."

SEE: Special report: Digital transformation: A CXO's guide (free PDF) (TechRepublic)

Design—the people, processes, and technologies that deliver your value proposition—will trump strategy, Ross said.

Most established companies have not been designed to constantly change what strategy they're executing, Ross said. Examining the established people, processes, and technology, it's clear that we've structured businesses to deliver today's strategy efficiently. The goal is to move from a world that is stable around current processes to one designed for agility, which represents a massive change, Ross added.

Though digital is all about speed, it takes companies a long time to accomplish, Ross's research found.

While going digital means delivering digital offerings to engage customers in a seamless, personalized experience, it also means fundamentally understanding the new value propositions and solutions available, Ross said. That means leveraging the virtually unlimited data, connectivity, and processing power available to businesses today.

"With those three capabilities, a lot of new things have become possible," Ross said. "There's a range of digital solutions we could conceivable introduce."

However, customers won't necessarily pay for all of those solutions, Ross said. Understanding both what you can do and what customers want will help evolve your strategy, she added.

The five digital transformation building blocks

Here are the five building blocks to a successful digital transformation, according to Ross:

1. Shared customer insights: The organizational ability to constantly understand and improve your knowledge of what the customer will pay for, and how digital technology can deliver those demands.

2. Operational backbone: A coherent set of standardized, integrated systems, processes, and data supporting a company's core operations.

3. Digital platform: A repository of business, data, and infrastructure components used to rapidly configure digital offerings.

4. Accountability framework: Distribution of responsibilities for digital offerings that balance autonomy and alignment.

5. External developer platform: A repository of digital components open to external parties. "This is truly the last piece," Ross said. "As we develop our digital platforms, customers will ask for more, and realistically we're not going to be able to deliver it all."

In following these steps, organizations need to be sure to fight digital fatigue, Ross said. "Keep it focused," she added. "We can't pursue everything all the time. Do one thing right. Most companies have had the experiencing of setting big goals and achieving none of them. You need to set a scale that you can achieve things with."

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