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The Building Blocks of Digital Transformation: Intelligence, Integration and Impact

September 23, 2016 • STRATEGY & MANAGEMENT, TECHNOLOGY, Digital Transformation, Transformation

By David Dubois

Leading an organisation’s digital transformation simultaneously entails driving change within three key pillars of one’s business: intelligence (competitive insights); integration (organisational structure and capabilities); and impact (value creation). Building on industry cases, David Dubois introduces a framework aiming to help leaders to meet these challenges and successfully drive the digital transformation.

 

As virtually every industry has, is or will experience significant digital disruptions, the question of how to transform one’s organisation is on top of every CEO’s agenda. Indeed, both academic and industry research show that companies that know how to align digital technology and strategic goals can reap substantial benefits in terms of revenue and profit generation as well as market capitalisations (e.g. CapGemini 2012; Niessing and Dubois 2016).

In the last two decades, disruptions have taken various forms: from social media platforms empowering customers, to the internet of things, and enabling information generation around one or several objects. Altogether, they gave birth to brand new ecosystems and business models redesigning the competitive landscapes across industries (McKinsey 2014; Brynjolfsson & McAfee 2012). At their core, the disruptive nature of digital technologies stems from their ability to (1) significantly reduce information asymmetry between different actors embedded in an ecosystem – typically a supplier and a customer (e.g. a driver and a potential passenger, a lender and a borrower) and (2) make this information instantaneously and easily accessible.

In the last two decades‚ disruptions have taken various forms: from social media platforms empowering customers‚ to the internet of things‚ and enabling information generation around one or several objects.

For C-suite executives and entrepreneurs alike, leading the digital transformation is often challenging because it involves driving change simultaneously in three key areas of one’s business where digital technologies represent a game changer. The first is business intelligence, with digital technologies yielding unprecedented amounts of data about business ecosystems from consumers to competitors and collaborators. The second is organisational integration, as digital technologies bring greater connectivity between people and/or processes. The third relates to the kind of customer value a company can bring by leveraging digital dynamics.

For each area, an obvious starting point for company leaders is to ask whether and how the company can align its business objectives with the use of digital technologies: first, how to leverage digital data to transform knowledge-creation processes and create a competitive advantage? (intelligence); second, how to leverage digital channels to transform organisational processes and create agility? (integration); finally, how to leverage digital dynamics to improve one’s value proposition? (impact).

As important as addressing these questions is to assess where the company’s efforts fall onto these areas (i.e. intelligence, integration, and impact) and planning how to bring the company’s transformation to the next level. Indeed, a typical digital transformation is a gradual process entailing three stages: an initiation stage (i.e. the focus is on the discovery of new opportunities), a ritualisation stage (i.e. the focus is on interacting within the digital ecosystem) and an internalisation stage (i.e. the focus is on prioritising digital solutions to lead a business) (see figure 1 below). Identifying where one stands and pacing one’s change is key to successful transformation as many failures to embrace digital technologies result from a desire to leapfrog a stage or a misunderstanding of where one stands.

 

figure1

 

Next, I briefly describe what each stage of the transformation looks like within the area of intelligence, integration and impact.  



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About the Author

davidDavid Dubois is an Assistant Professor of Marketing at INSEAD. His expertise lies in understanding (1) the design and implementation of effective digital marketing strategies and (2) value creation processes in luxury and fashion. In addition to teaching in the MBA program, he co-directs INSEAD’s Leading Digital Marketing Strategy program.

 

References

• McKinsey 2014: http://www.mckinsey.com/business-functions/organization/our-insights/the-seven-traits-of-effective-digital-enterprises
• Brynjolfsson & McAfee 2012:
https://www.amazon.com/Race-Against-Machine-Accelerating-Productivity-ebook/dp/B005WTR4ZI#nav-subnav
• CapGemini 2016:
https://www.capgemini.com/resource-file-access/resource/pdf/The_Digital_Advantage__How_Digital_Leaders_
Outperform_their_Peers_in_Every_Industry.pdf

• Dubois and Niessing 2016:
http://knowledge.insead.edu/customers/making-digital-marketing-strategy-work-4770
• Dubois 2016 (a): http://knowledge.insead.edu/leadership-organisations/the-most-influential-ceos-on-twitter-4705
• Dubois 2016 (b):
http://knowledge.insead.edu/blog/insead-blog/integrating-digital-intelligence-into-brand-strategy-4533

 

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