Low cost, low risk wins in digital transformation

By Michael Rendell, Partner, Monstarlab.

  • 3 months ago Posted in

Digital transformation has the power to unlock innovation, drive customer experience and deliver business results. But it’s not uncommon for businesses to struggle to realise the value of their digital transformation strategies, and to do so at the speed required to remain competitive in today’s fast-changing marketplace. With digital transformation initiatives often running up a sizable bill, failure carries not just financial risk, but also risk for an organisation’s market position. So how can businesses take a more cautious, yet still effective approach to their journey towards digital expertise?

Internal reflection 

It’s an eternal truth that many of the most effective digital transformation opportunities come from internal ideas. The people on the shop floor or in the office often know how to best transform the business. To adopt lower-risk, lower-cost transformation strategies, organisations should spend more time and effort gathering and nurturing internal intelligence on what slows their team down and what would make their lives easier. 

But as the saying goes, a prophet in his own land is the one that gets ignored. Many organisations seek expert advice or look externally at what the likes of Uber, Apple or Amazon do and become captivated by the new technologies being deployed. 

In fact, focusing on the latest technology without aligning it with business goals is one of the top reasons why digital transformations fail. Moreover, it leads to the risk of missing internally generated and cost-effective opportunities. By creating an environment that is more reflective of internal challenges, organisations can identify simple yet effective transformation opportunities that don’t involve third party consultancy fees or costly technologies.

Adapting to an evolving landscape

The pace of digital transformation strategy evolution is such that, in order to minimise the risks, an organisation must be comfortable experimenting, adapting, evolving and starting projects in which the outcome may not be clear as yet. Rather than having a set end goal and defined business case in mind, a more organic, experimental and agile approach is required. That probably means having a few experiments on the go at any one time, some of which will fail. But in today’s ever evolving landscape you have to be confident that you can change direction as you go. Who would have predicted the huge shift that generative AI brought about in the space of six months? Companies have to be able to adapt.

The roadmap to successful digital transformation

One of the most straightforward ways to drive business transformation is by creating super apps, where an app is built as a platform with a whole ecosystem around it. For instance, Careem in the Middle East (now owned by Uber) went from being a ride-hailing app to ‘the everything app’ for the region. Super app projects can be comparatively low cost by using relatively simple open-source technologies and inexpensive, low-key development resources. These projects do not require the transformation of the entire business, drawing in other apps already built to sit on the central platform and, as a result, taking months rather than years in development and deployment.

Blockchain technology also represents a simple and cost-effective way to transform supply chains, tracking transactions throughout to build transparency and enhance sustainability. For example, food and clothing companies can track a product’s provenance and journey to address increasing requirements for transparency, security, product quality and sustainability credentials. With blockchain, it’s now possible to identify individual inputs, costs, and carbon emissions of shipping the product at every stage of the supply chain. Fashion brand Nobody’s Child recently announced the launch of digital product passports (DPPs), allowing shoppers to make more conscious and informed choices when buying their products online and in-store.

The third example of upgrading organisational processes is generative AI, as demonstrated by Tesla’s use of the technology in their follow-up sales calls. The AI engine generates empathy, responding to what the customer is saying and creating a very human-centric relationship, which makes it almost impossible to tell the difference between the AI-generated avatar and a human being during the conversation. This is now relatively simple technology to apply with voice activation, voice control and avatars. However, using the large amount of data from previous sales interactions, it’s possible to build something that acts like a human being. With a machine taking on many time-consuming processes, the human being is freed up to conduct the most relevant and valuable activities, saving the business time and money in the long run.

Risk-aware not risk averse

While these upgrades have clear benefits, organisations should also be aware of the risks. When looking for quick, cost-effective wins, the tendency towards open source or technologies that have already been tried and tested means everything has the potential to become homogenised. It’s therefore important for organisations to consider how to maintain a distinctive company culture and identity and demonstrate their USPs when using these technologies.

This is particularly true for super apps. Whilst tech can allow them to grow exponentially, the downside can be that they lose their sense of focus. Businesses must, therefore, be mindful of ensuring that their commercial purpose is kept on track. 

In addition, though businesses need to be agile in their transformation strategies, the danger is that they may never come to any conclusions, and nothing ever gets finished or delivered. So, organisations need to strike a balance between adapting to change and ensuring goals are reached.

Finally, the risk of relatively low-cost, simple digital transformation strategies also means that the market becomes far more open to new competitors who can adapt quickly without an incumbent’s legacy problems or infrastructure requirements. This reinforces the need for organisations to move very quickly to cement their position in the field.

Navigating the DX landscape to realise potential

Digital transformation holds immense potential for innovation and business success, but its realisation often proves challenging for companies aiming to stay competitive in a rapidly evolving market. To navigate this landscape, businesses should prioritise internal reflection, tapping into the valuable insights of their teams. Rather than blindly following external trends, a focus on aligning technological advancements with specific business goals is crucial. Embracing an adaptable, experimental approach to digital transformation, characterised by ongoing reflection and adjustment, is essential.  

The integration of super apps, blockchain technology, and generative AI represent a few practical and cost-effective examples of technologies that can be harnessed with relatively low risk and low cost, but organisations must remain vigilant about maintaining their unique identity, and strike a balance between agility and goal attainment. In this dynamic landscape, swift action is imperative for organisations to secure and strengthen their positions in the market.

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