The Digital Transformation Pyramid: A Business-driven Approach for Corporate Initiatives
Digital Transformation is currently one of the hottest business topics (and probably “the hottest”) in the corporate agenda. Truth be told, the crucial elements of Digital Transformation are still to be clearly outlined, and the areas of intervention in the corporate environment are therefore yet to be defined.Digital Transformation is not about technology
In a recent article, Alessandro Braga (CIO of Talent Garden, the largest European coworking network, and scientific coordinator of the Digital Transformation Master of TAG Innovation School, the training unit of Talent Garden) defined six pillars (that he calls ‘axes’) of Digital Transformation: 3 inside the company (people, process and technology) and 3 on the outside (customer, relationship and product/services). In an article published in the MIT Sloan Review, Peter Weill (Chairman of the Center for Information Systems Research at MIT Sloan School) and Stephanie L. Woerner (Research Scientist at Center for Information Systems Research at MIT Sloan School) identified two business dimensions to assess the digital readiness of corporations: customer experience and operational efficiency.
Overall, there is a clear consensus that Digital Transformation is not about technology, but is actually about a new way of doing business, and a new way of approaching corporate models. As George Westerman states: “When it comes to digital transformation, digital is not the answer. Transformation is”
Leveraging my on-field experience (I have been a Management Consultant for over 8 years, with extensive exposure to the corporate areas of strategy, organization, management control systems and corporate transformation) and on material I had access to during the past few years, I have elaborated a framework: the “Digital Transformation Pyramid”. I hope this will facilitate the definition of Digital Transformation initiatives and help understanding the impact of digital technology for corporate businesses.
In my view, there are 3 levels on which Digital Transformation needs to be approached within corporates:
An effective Digital Transformation program has to embrace at least two of the three levels – and, ideally, it must cover (in the long term) each of the 3 levels. For example, the definition of a new ‘Digital’ Business Model, without its execution through a new Go-to Market approach, is a pure theoretical exercise that will (maybe?) remain at board-level presentation and will not change the way a business performs. On the other hand, the implementation of a new IT system (such as an ERP or CRM) or the set-up of a standalone e-commerce is not a Digital Transformation initiative, if this is not part of an overall Operating Model transformation or of a new Go-to Market approach.
It is important to acknowledge that each of the 3 level of the pyramid has a strong influence on (and actually defines) the other elements of the framework. A successful Digital Transformation program, in fact, requires a “system” approach to embrace a truly transformational initiative. Strategy, execution or technology alone cannot transform a company: only an integrated review of (at least) two of the elements enables corporate transformation.
There are 5 building blocks that define the framework:
Each of the elements is relevant and the relationship among the elements must be taken into consideration in Digital Transformation initiatives. In fact, a new way of ‘doing business’ (both inside the company and in relation to the market) is the way a Digital Transformation program properly works. As a matter of fact, technologies impact the Operating Model and the Operations of a company, as well as supporting the evolution of the Go-to Market (for example through a new channel approach or through the review of the product portfolio or product features). Similarly, Business Model implementation requires the definition (and evolution) of specific Operating Models, Operations activity and Market approach.
