A framework for digital transformation – for product managers

Today we are talking about digital transformation and why it matters to product managers and leaders.

Tim Bottke is an Associate Professor of Practice in Digital Transformation at SDA Bocconi School of Management in Milan, Italy. He is also a Senior Partner at Deloitte Germany, specializing in digital transformation. Tim has more than 22 years of top management consulting and digital transformation experience, working with clients in more than 20 countries. He is also author of the new book, Digital Transformation Payday: Navigate the Hype, Lower the Risks, Increase Return on Investments.

Summary of some concepts discussed for product managers
[1:54] What is digital transformation and why does it matter?

It’s a good question with a not-so-easy answer.  There’s not much of a common definition of what digital transformation is all about. It’s a transformation process toward digital. It’s just one tool that can help companies transform. It needs a good product to succeed. Just to say something is digital doesn’t make it any better. You need to find something that is better than the competition and is fulfilling customer needs. Digital can be a great help in making this happen but it’s not the solution in itself. Digital transformation is about the strategy you follow, because if you don’t know where you’re going, you spend a lot of money for digital hype buzzword technology that is not making any customer more happy or any product more profitable. Digital transformation is not an objective by itself. It’s a means to an end, and if no one has thought about what the end should be, it’s probably not a good idea.


[5:59] What is an example of a successful digital transformation?

Let’s take the example of a telecom company. In a traditional business model, if a customer had an issue with the product they had to call the call center or walk into a shop. Sometimes the people can help, but sometimes the customer has a terrible experience. If this experience is transformed to digital-first, the customer opens an app on the smartphone and does everything themselves—no human intervention and no possibility for anyone messing up in the process.

As product specialists, you should think about the segments you want to serve. In many markets, you have segments that are not digitally savvy, and for them some of these transformations can lead to a worse experience, because there would be fewer people in the call center or the people in the shop would no longer be trained to help. If you want to serve your larger customer base, every product needs to accommodate not just the digitally savvy people.

Many other industries are following the telecom industry. Take the car industry. Car companies never had any end-customer connection. They produced cars and gave them to retail networks, and only the retail networks had direct customer interaction. That’s now changing. More manufacturers are doing direct sales, and all the new companies like Tesla are thinking about their product end-to-end, including the sales journey, and taking full control of everything.

As more and more subscription-based models come into place for more and more products, the companies really need to know their end customers. By selling directly, they suddenly have data, When I started working in the telecom industry, we walked into stores and watched people buying things to see how they behave. The more digital everything becomes, people think data can replace that customer interaction, but data never show emotions.  If you don’t know how it feels to buy this product, you shouldn’t do a strategy for the product, because probably you’ll be terribly wrong, and no data on this planet will help you if you don’t do customer research in parallel.

[15:45] Can you share your framework for how to do a digital transformation project?

I know every consultant just loves having frameworks, but that’s not the reason I put a framework in the book. You can use any framework as long as it shows an end-to-end journey.

For my framework, I use the analogy of a chemical experiment. Digital transformation is a big experiment with an unclear outcome, but many of these experiments fail—some say 70% or 80%.

Strategy: Before you set out, design what you want to achieve with the experiment. You need a strategy. That sounds obvious, but you wouldn’t believe how many experiments are started without anyone thinking even for 10 minutes how they will use this to win in the marketplace.

The strategy tells you how to win together. Often people wrongly think they don’t need strategy because the work is digital. Or they just play to play, not to win. That’s not what business is all about.

Catalysts: Catalysts make the experiment run. Are there new technologies that can make your experiment run at the speed you want? Is there a change in customer demand patterns? Is there a change of skills in your organization? Are there new sources of funding? In the book you’ll find many types of catalysts, which you need to be aware of to see whether the experiment will start.

The Reactant: This is the scope of what you’re doing. Often companies say they’re doing digital transformation, but the scope is at the frontier of the business. Only a single product or process has been transformed, e.g, the front end of the web shop. The core business needs to be transformed if there are catalysts for doing that.

Reaction Mechanism: Are you Agile? Often companies think they are Agile but are not because they just Agilize parts of the business. Often product managers start being Agile, and it ends when they release the product, because it doesn’t help to be Agile in just one corner.

Experiment Outcome: Can you measure the value you generate for a company with digital transformation? Often people say you can’t measure value created by digital, but you can and should. Only then will the translation to value for the company come.

The key to this framework is it’s about going end-to-end and not just thinking about one area.

[23:40] How can we have an appropriate scope or reactant that will get momentum without being too overwhelming?

Often companies try to find a scope but don’t think about how that translates back to the core business. It’s not about doing everything at once. Instead, start somewhere where it’s easier to succeed and think about how to translate that back to your company.

Product people should be on the forefront of digital transformation, and they have the duty to think beyond a small area about the bigger implications and how they can help make that happen.

Action Guide: Put the information Tim shared into action now. Click here to download the Action Guide.

Useful links:

• Learn more about Tim and the SDA Bocconi School of Management
  
• Check out Tim’s book, Digital Transformation Payday
  
• Learn more about Deloitte
  

Innovation Quote

“For every complex problem there is an answer that is clear, simple, and wrong.” – H.L. Mencken

Thanks!

Thank you for taking the journey to product mastery and learning with me from the successes and failures of product innovators, managers, and developers. If you enjoyed the discussion, help out a fellow product manager by sharing it using the social media buttons you see below.