In a world where digital technology is moving month by month, digital transformation is not a single event or an endgame.
There was a time when business leaders thought the biggest decision in their digital strategy was whether to build a website or an app first. The responsibility rested with the technology team or the marketing mavens, and the goal was to convert new customers or create new tools.
But in a world where digital technology is moving month by month, digital transformation is not a single event or an endgame. At a time of complex change, where the walls of industry have been blown open, it is an endlessly turning wheel of evolving technology.
According to technology analyst IDC, 85 percent of corporate decision-makers say they have two years to make hard inroads into digital transformation or risk falling behind. In this world, no company can afford to stand still.
The EY disruption readiness survey last year found that more than two thirds of investors want companies to undertake potentially disruptive innovation projects, even if they are risky and may not deliver short-term returns. And yet, many corporate leaders are focused on digital strategy to do business more efficiently and cost effectively – but not differently.
Digital transformation is both ambiguous and urgent with greater possibilities for the future than ever before. And it no longer has a clear beginning and end. Many business leaders are not sure what they should do, just that they should be doing something now.
As a consequence, we see many companies acting in the "theatre of innovation", where they are “doing” digital – say, experimenting with an app or rolling out a 3D printing project – that is not linked to business value or serving customers. Creating a seamless experience for customers cannot be achieved without looking at the operating model that underpins the experience.
EY teams are helping clients to accelerate ahead of the speed of change by looking beyond the next round of digital “products” and instead learning to reimagine their ways of working, organizational structures, talent strategies and more.
Einstein was right. “We cannot solve our problems with the same thinking we used when we created them.” How do we make sure we are asking the right questions to address – and solve – the right problems? The secret is to rethink our problems in the first place.
Design thinking is now a well-accepted approach that applies both empathy and experimentation to challenge-ingrained assumptions and redefine age-old problems. Where in the past companies pushed a product out to market with an “if we build it, they will come” attitude, design thinking encourages companies to understand customers’ pain points to unlock new value.
The term was coined in the late 1950s by Stanford professor John E. Arnold to describe his systematic problem-solving methodology. Today, Stanford’s d.school outlines five pillars in the design thinking process: empathize, define, ideate, prototype and test.
This process – of taking an idea from “concept to code” – still starts with a flash of brilliance or a strategic conversation and ends with potential solutions being tested by customers.
EY teams understand that design thinking for many organizations has already become a diluted cliché, with abstract notions of “design” leading to a misalignment with business objectives. We recognize the need to place the emphasis on “thinking” as much as on “design” to drive a more business-aligned design thinking.
It’s an approach that is the "tip of the spear" that can define a problem, gain clarity on an objective – whether that’s customer acquisition or lowering the cost of service – and then achieve alignment through an organization. The answers come from understanding transformation as a way to unlock both value and human potential.
EY teams recently helped one global real estate client use design thinking to drive digital transformation through its business. We worked with the leadership team to understand the user experience, to ideate and prioritize digital initiatives before building a business case for three big bets. The design thinking process helped the client’s team gain alignment on their strategic direction, and to understand the urgency of the task. Those walking out of the workshop rated digital transformation far higher on their priorities list than they had walking in.
We are living in the age of change. Digital transformation is disrupting every industry and no company is invulnerable. But trying to predict the future is a fruitless game. Prepare for the future, rather than try to predict it. The companies that succeed will “bake in” preparedness over prediction. They need a transformative mindset to inspire co-workers, customer, stakeholders and wider society. They’ll build the organizational infrastructure to continually sense new opportunities, and then be agile enough to move quickly and decisively in that new direction. And design thinking, baked into a company’s core, is the secret sauce.
Driven by people, powered by technology, this is business transformation for a better working world.