Digital Transformation: It's the Customer, Stupid!
By Charles Araujo, Intellyx Principal Analyst

If you cannot explicitly articulate how investing in a new technology, changing the approach or re-engineering the business process will help you achieve your customer-centric vision of the future in direct and measurable ways, you probably shouldn't be doing it.

At Intellyx, we spend a lot of time talking to technology vendors. In our conversations, we explore emerging new technologies that are either disrupting the way enterprise organizations work or that help enable those organizations to cope with disruption.

The rate at which new companies and new technologies are emerging is staggering, and it can be difficult to keep up - even for those of us whose sole job is to do so. It's no wonder, therefore, that so many people draw a straight line between the concept of digital transformation and these emerging technologies. Unfortunately, it's the wrong line.

One of the core tenants of organizational change is that the leader must create a compelling vision of the future before any real change will occur. People must come to believe in this vision and must be able to see themselves within it before they will do the hard and often threatening work of changing their behavior.

By definition, digital transformation is an exercise in organizational change. Therefore, it is essential that anyone leading a transformational effort craft this compelling vision of the future. And that's why connecting digital transformation to emerging technologies is so dangerous: it's the wrong vision.

Digital Transformation's Philosophical Center
Digital transformation is not and has never been about technology. Technology is the engine that powers it, but the true essence of digital transformation has always been about changing the way organizations - and even the whole of society - work.

On a macro scale, we often talk about digital transformation as the fundamental shift in how organizations structure themselves and how their leaders manage and lead them - with technology underpinning the transformation.

The challenge with that definition is that it sounds so, well, big and gnarly. Changing the fundamental ways that you structure, manage and lead an organization is not just something you do on a whim. It takes courage, a whole lot of resources and a willingness to bet your organization's future - not to mention your career - on the outcome.

As a result, too many organizations are willing to accept a lighter, less destructive - and less risky - version of digital transformation. Whether by focusing on the technology or by setting only small, incremental goals and simply slapping the transformation moniker on it, many business and technology leaders are unwilling to step up and put forward a compelling vision of the future that represents this kind of fundamental change.

But it doesn't need to be that hard or complex. The key to making digital transformation less big and scary and to being able to create a compelling vision that will lead the organization forward is to get down to its philosophical core: the primacy of the customer.

The Shift to Customer Centricity
The full realization of digital transformation is an immense and involved process (for a visual representation, check out our digital transformation poster). There are a lot of moving parts that cover everything from those emerging technologies to the re-envisioning of business models to new approaches to IT execution and business management - and plenty more in between.

But at the center of all of those moving parts for every real digital transformation story is the shift to customer centricity and its emergence as the foundational driver of change. The principal underpinning of the transition out of the industrial age and into the digital era is the empowerment of the customer.

In the industrial age, it was all about mass producing a product or service. Organizations focused their basic operating paradigm on creating efficiency and eliminating waste so that they could reduce costs to either increase earnings or create competitive advantage.

The consumerization of technology changed all of this. New competitors found that they could disrupt industries by empowering the customer and offering them choice and flexibility. The digital era fundamentally represents a shift away from the mass-market operating paradigm to a customer-centric one.

At Intellyx, we call this phenomenon the ‘primacy of the customer,' and understanding its true meaning will help you craft your digital transformation vision, apply emerging technologies appropriately and keep your organization on the right path as you move forward.

Your True North: The Customer
When you boil down all of the complexity of digital transformation to this core idea of the primacy of the customer, it gets much simpler - and more meaningful. Many of the crazy stories we hear about digital transformation programs gone wrong are almost always because this focus either never existed or was lost along the way.

The easiest way to use this idea in your transformational efforts is to start by crafting your future vision with the primacy of the customer in mind. If your vision does not put the customer at the center of the story, you're almost certainly off base.

A compelling vision told from the customer's perspective ensures that you will not be overly focused on the technology, the organizational design or any other inward facing construct.

Once you have created that customer-centered transformational vision it should then become what we call your ‘true north.' Like ancient sailors using the north star to orient themselves in open waters, your vision should become the overriding benchmark by which you measure your efforts and decisions.

When you use it correctly, it is an incredibly powerful and simple mechanism to check yourself and your organization and ensure that you're making the right decisions for the right reasons. You can evaluate even the most technical project or decision in this way.

If you cannot explicitly articulate how investing in a new technology, changing the approach or re-engineering the business process will help you achieve your customer-centric vision of the future in direct and measurable ways, you probably shouldn't be doing it.

If you can, on the other hand, then you should be moving full steam ahead.

The Intellyx Take
The digital transformation stakes are enormous. But you don't need to make it more complicated than it needs to be.

Digital transformation is an ongoing journey that demands a fundamental shift in almost every aspect of how organizations function. It's heady stuff, to be sure. But at its core, it all boils down to the primacy of the customer.

Organizations who fail to recognize this fundamental truth will struggle with their transformational efforts and see massive investments of time and money spin out of control. Or, just as likely, they will fail to take the bold steps necessary to actually transform anything.

Both outcomes will be a result of losing (or never having) sight of their true customer-focused vision. Those organizations, however, that can craft this vision and then keep it at the center of their efforts will realize the true promise of digital transformation.

Copyright © Intellyx LLC. Intellyx publishes the Agile Digital Transformation Roadmap poster, advises companies on their digital transformation initiatives, and helps vendors communicate their agility stories. As of the time of writing, none of the organizations mentioned in this article are Intellyx customers. Image source: Nick Youngson.

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