Digital Business Transformation - Nigel Vaz - E-Book

Digital Business Transformation E-Book

Nigel Vaz

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Fuel your business' transition into the digital age with this insightful and comprehensive resource Digital Business Transformation: How Established Companies Sustain Competitive Advantage offers readers a framework for Digital Business Transformation. Written by Nigel Vaz, the acclaimed CEO of Publicis Sapient, a global Digital Business Transformation company, Digital Business Transformation delivers practical advice and approachable strategies to help businesses realize their digital potential. Digital Business Transformation provides readers with examples of the challenges faced by global organizations and the strategies they used to overcome them. The book also includes discussions of: * How to decide whether to defend, differentiate, or disrupt your organization to meet digital challenges * How to deconstruct decision-making throughout all levels of your organization * How to combine strategy, product, experience, engineering, and data to produce digital results Perfect for anyone in a leadership position in a modern organization, particularly those who find themselves responsible for transformation-related decisions, Digital Business Transformation delivers a message that begs to be heard by everyone who hopes to help their organization meet the challenges of a changing world.

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Table of Contents

Cover

Title Page

Copyright

Dedication

Preface

Competitiveness and the “Digital Moat”

Why I've Written This Book

What We Mean by Digital Business Transformation

COVID‐19 Taught Us How to Change Faster

What This Book Will Do for You

SECTION 1: NOW

CHAPTER 1: The Death of Business as Usual

It's All Change

Truth, Knowledge, Vision

Constant Beta

Digital Assets and Liabilities

Digital Business Transformation: Why It's More Than Just Technology

CHAPTER 2: The Four Forces of Connected Change

Customer Behaviors

Technological Change

Business Models

Societal Change

CHAPTER 3: What Is Slowing Down Established Businesses?

Top‐down Decision Making

Organizational Silos

Legacy Technology

Short‐termism

Talent Shortages

Values and Culture (and Purpose)

“Not Invented Here”

SECTION 2: NEXT

CHAPTER 4: Characteristics of a Digital Business

The Inconvenient Truth

Decoding What Digital Companies Do Well

Decoding How They Do It

CHAPTER 5: The Big Hairy Audacious Goals (BHAGs) of Digital Business Transformation

The Two BHAGs of Digital Business Transformation

Goal 1: Developing the Muscle of Continuous Change (the PS How)

Goal 2: Building the Capability to Identify and Realize Value (SPEED)

CHAPTER 6: Strategy

Swarm Intelligence

The Role of Strategy

Anchor Strategy on Your Customer, Not Your Competition

Determine “Where to Play” by Looking at Your Market Differently (the D‐3 Model)

“How to Win”: View Your Transformation as a Portfolio of Moves

Build “Your” Capabilities: The Partner Ecosystem

Bringing Products to Market: The Elusive Product‐Market Fit

CHAPTER 7: Product

Operating in Constant Beta

The Relentless Hunt for Value

The Inconvenient Truths of Product

The Forces of Change in Product

Agile, Lean, and DevOps

Banking Case Study: Transforming Product

CHAPTER 8: Experience

Everything in Your Business Contributes to Your Customer Experience

What Is Experience, Anyway?

Orienting to the Customer

Brand Is the Experience and Experience Is the Brand

Data and Computation

What Makes a Great Experience? LEAD (Light, Ethical, Accessible, Dataful)

CHAPTER 9: Engineering

Technology as a Cost Center to Technology as a Value‐driver

Spaghetti Tech: The Layers of Enterprise IT

Moore's Law

Legacy Technology

The Impact of Product and Rise of Engineering

Technology and Engineering

Architecture: Cloud

Microservices

Ways of Working: Agile, Lean, DevOps

Engineers

Automation

It's All About the Talent

CHAPTER 10: Data

Data as an Asset

Getting Started with Data

Utility: How Do You Get Useful Data on the Right Audience?

Data Architecture: Is the Data in a Format and Structure That Are Accessible?

Data Science and Artificial Intelligence

Designing for Data: How Do You Design Your Products, Services, and Experiences to Collect Data?

Ethics: How Does Becoming Data‐led Impact Your Ethical Responsibility?

CHAPTER 11: Leading a Gryphon Organization

Learning to Think Differently

Characteristics of a Gryphon Organization

SECTION 3: HOW

CHAPTER 12: Components of Successful Digital Business Transformations

1. Always Remember the Ultimate Goals of Digital Business Transformations (the DBT BHAGs)

2. Align the Team Around a Shared Vision

3. Get C‐Level Buy‐In

4. Anchor in Outcomes

5. Seize Your Quick Wins and Communicate

6. Move Fast

7. Be Thoughtful About Your Governance Choices

8. Choose Partners Who Will Co‐create and Are a Fit for Your Team

9. Keep Your Teams Small and Cross‐functional

10. Consider New Approaches to Funding That Match the Way Projects Work

CHAPTER 13: What Transformation Journeys Actually Look Like

They Are Never a Straight Line

They Require Treating Digital as More Than a Channel

They Are Almost Always Driven by Uncertainty

Without a Clear Vision, Functions Get Disconnected Fast

The Many Paths to Transformation

CHAPTER 14: The Beginning

Why There Is No “End”

Where Do We Go from Here?

What's in Your Digital Moat?

What Are You Building?

Everyday Superheroes

Notes

Preface

Chapter 1: The Death of Business as Usual

Chapter 2: The Four Forces of Connected Change

Chapter 3: What Is Slowing Down Established Businesses? – Blocks, Brakes and Behaviors

Chapter 5: The Big Hairy Audacious Goals (BHAGs) of Digital Business Transformation

Chapter 6: Strategy

Chapter 7: Product

Chapter 8: Experience

Chapter 9: Engineering

Chapter 10: Data

Chapter 11: Leading a Gryphon Organization

Chapter 13: What Transformation Journeys Actually Look Like

Chapter 14: The Beginning

Acknowledgments

Index

End User License Agreement

List of Illustrations

Chapter 1

FIGURE 1.1 History of land‐based transportation

Chapter 4

FIGURE 4.1 Today's top five US companies by market cap (as of April 24, 2020...

FIGURE 4.2 Shared qualities of leading digital businesses

FIGURE 4.3 End‐to‐end transformation

FIGURE 4.4 Factors impacting the “experience” of ecommerce in retail

Chapter 5

FIGURE 5.1 The Publicis Sapient “How” frame

Chapter 6

FIGURE 6.1 Evolution of business purpose statements

FIGURE 6.2 The D‐3 Model: Defend, Differentiate, Disrupt

FIGURE 6.3 Customer journey transformation

FIGURE 6.4 Three models of transformation

Chapter 7

FIGURE 7.1 Model for enacting change quickly and at scale

FIGURE 7.2 The principles of Agile, Lean, and DevOps

Chapter 8

FIGURE 8.1 Opportunities to create value

FIGURE 8.2 Connecting service design to delivery

FIGURE 8.3 Service design foundations

FIGURE 8.4 Parametric design modeling for Amsterdam Bridge

FIGURE 8.5 World's first 3D‐printed metal bridge

Chapter 9

FIGURE 9.1 Cost of computing

FIGURE 9.2 Moore's Law – cost of storage

FIGURE 9.3 End‐to‐end transformation

Chapter 13

FIGURE 13.1 Changing customer needs drive industry disruption

FIGURE 13.2 “Nine Box” of digital business transformation

FIGURE 13.3 Entry points to digital business transformation

Guide

Cover Page

Table of Contents

Begin Reading

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PRAISE FOR DIGITAL BUSINESS TRANSFORMATION

“With the knowledge of the practitioner and a gift for the anecdote, Nigel offers a comprehensive and insightful overview of the seemingly boundless space of digital business transformation. Just as impressively, he has done so in a highly readable and accessible format. This book is a compelling account of why digital business transformation is so much bigger than technology alone.”

—Alan Jope, CEO, Unilever

“Digital Business Transformation explains with clarity and urgency why companies need to continually evolve to stay ahead of the curve. It’s a timely and thoughtful ‘how to’ guide for those seeking to disrupt themselves and their industries. Nigel speaks with authority. He and Publicis Sapient’s deep real-world experience and leadership in the digital space have been highly impactful in our own journey of transformation.”

—Arne M. Sorenson, President and CEO, Marriott International

“For any organization working towards a new digital future and more innovative culture, Digital Business Transformation is an essential read. This book explains not just why building digital capabilities is crucial to value creation, but how business leaders can navigate the challenges and reach the decisions they must make in order to innovate and remain relevant.”

—Beth Comstock, former Vice Chair of Innovation and Chief Marketing Officer, General Electric (GE), Author of Imagine It Forward

“Digital transformation has been dramatically accelerated due to the COVID-19 crisis. Nigel Vaz’s book on Digital Business Transformation is a very timely and essential contribution to understand today’s new digital landscape. His book connects the key ideas of rapid technological change, human behavior and societal shifts with strategies for enterprises to adapt and grow. This is essential reading for the successful transformation of business — with the human element at its core.”

— Hiroshi Ishii, Jerome B. Wiesner Professor of Media Arts and Sciences, Associate Director of MIT Media Laboratory and Director of Tangible Media Group, Massachusetts Institute of Technology

“Digital Business Transformation provides compelling insights into how companies can use technology to build a ‘digital moat’ around their businesses, deliver incredible customer experiences and stay one step ahead of the competition. It couldn’t come at a more relevant time.”

—Parker Harris, Co-Founder and Chief Technology Officer, Salesforce

“Digital Business Transformation is a vital reference for everyone in businesses today — grounded in insights and actionable ideas to create customer value, build loyalty and drive long-term growth. Nigel provides a persuasive case for putting technology at the core of an enterprise’s transformation — and the necessity of harnessing the power of data to fuel a transformation across every element of the organization.”

—Shantanu Narayen, Chairman, President, and CEO, Adobe Inc.

“Digital Business Transformation underscores the intensifying need among businesses to digitally transform as they look to create sustainable growth in today’s environment. Nigel breaks down the core qualities held in common across so many of today’s leading digital companies, and gets to the heart of why technology is vital in delivering new sources of customer value. This is an essential read for everyone in a business trying to adapt and prosper.”

—Thomas Kurian, CEO, Google Cloud

“Written during the most extraordinary time in living memory, Nigel has created a timely playbook for leaders to accelerate transformation journeys through the post‐pandemic rebound and towards renewed growth. This book outlines why and how businesses should constantly disrupt themselves and create new working models that will support shifting the organizational mindset. At a time when inclusivity, sustainability and trust in business is more needed than ever, Digital Business Transformation captures the multi‐faceted nature of building a better future during this great reset for businesses, customers and society.”

—Alain Bejjani, CEO, Majid Al Futtaim

“Successful approaches to ongoing transformation and evolution require a big picture, socio‐technical approach. Nigel distills his lifetime of experience in working with top leaders and organizations into Digital Business Transformation, which masterfully sets out the connected capabilities and culture shifts necessary for any modern enterprise to create ongoing value for their customers and business.”

—Anthony Mullen, Senior Research Director, Gartner

“With consumer and business change accelerating faster than ever after the global pandemic of 2020, Nigel Vaz has crafted a compelling vision for technology‐enabled business transformation in the post‐COVID world. Digital Business Transformation powerfully charts the course for continuous, value‐creating innovation by taking a rigorous and holistic enterprise‐wide approach to transforming not just technology, but culture too.”

—Douglas Hayward, Research Director, Worldwide Digital Strategy Services, IDC

“Nigel shares practical tips on building a digital moat for traditional companies that are confronted with disruptive digital transformation. From the perspective of the automotive industry that is navigating change across the car as an IOT platform, electrification and automation, Digital Business Transformation pulls together many pragmatic frameworks to provide a playbook that addresses technological, consumer and societal change in perfect balance.”

—Mamatha Chamarthi, Chief Information Officer NA & APAC, Fiat Chrysler Automobiles

“Nigel's deep understanding of how businesses and markets are disrupted through the power of data and technology is balanced perfectly with his experience of the human elements of change. Digital Business Transformation is an exposition on why and how to abandon traditional linear strategies and think about transformation as a journey to delight customers as you ride the waves of change.”

—Mark McClennon, Global Chief Information Officer, Burberry

“At T‐Mobile, we thrive on the type of permanent disruption that Nigel Vaz artfully explores in Digital Business Transformation. This book is a great read for leaders who are focused on staying a step ahead of their customers' needs, wants and expectations. Nigel gives smart insight about the things we at the Un‐carrier are focused on every day – constantly evolving and changing at the speed of changes around us, and creating a culture that is hyper‐focused on unlocking customer value and experience at every turn – and reminds us how these priorities will lead to success.”

—Mike Sievert, President and CEO, T‐Mobile

“Nigel is a leading thinker on how business can transform, with unique perspectives gained from practical experience helping large and mid‐size companies transform. I have worked with him and his teams on four digital transformations, spanning two decades, and know these approaches and perspectives deliver results. All that expertise is distilled into this book: It's a must‐read for any leader in a company today, in any stage of your transformation journey.”

—Mittu Sridhara, Chief Technology Officer, Careem (an Uber company)

“The creation of personalized, seamless experiences that blur the line between physical and digital is the priority for leading businesses today. Nigel Vaz gives clear and expert advice on the strategies and capabilities necessary to help companies transform.”

—Mohamed Abdalla Al Zaabi, CEO, Miral (Yas Island – Abu Dhabi: Warner Bros. World, Ferrari World, Yas Waterworld)

“Digital Business Transformation expertly identifies the journey through the evolution of business when – against a backdrop of immense customer and technological change – the best current and future businesses are weaving together experience, engineering and data to create new models of value. Vaz's work is an indispensable roadmap to a world that requires businesses to compete in totally new ways.”

—Riccardo Zacconi, Cofounder and Chairman, King (creators of Candy Crush)

“Nigel has evolved to become one of the best minds in the digital business space with a rich background of significant achievements as an individual and leader. He brings a powerful storytelling ability to a complex subject that many are trying to unravel and understand. This exceptional book will no doubt benefit leaders of both established businesses and start‐ups.”

—Tomi Davies, Chief Investment Officer, Greentec Capital Partners and President, African Business Angels Network (ABAN); Author of The African Project Manager

“In Digital Business Transformation, Nigel Vaz sets out in writing what he and his company know and do so well: support established businesses to face their digital future by evolving what they are, what they do and how they do it. It contains all the necessary ingredients, and is a fantastic recipe for success.”

—Tony Prestedge, Deputy Chief Executive Officer, Santander UK

“At a time when businesses are grappling with COVID on top of an ever‐changing competitive landscape, Digital Business Transformation provides a great and timely guide for leaders to accelerate their technology‐enabled business transformation. This book expertly shows how to approach transformation holistically, from rapid innovation to re‐invention of the business.”

—Zaka Mian, Group Transformation Director, Lloyds Banking Group

DIGITAL BUSINESS TRANSFORMATION

HOW ESTABLISHED COMPANIES SUSTAIN COMPETITIVE ADVANTAGE FROM NOW TO NEXT

NIGEL VAZ

 

 

Copyright © 2021 by Nigel Vaz. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per‐copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750‐8400, fax (978) 646‐8600, or on the Web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748‐6011, fax (201) 748‐6008, or online at http://www.wiley.com/go/permissions.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762‐2974, outside the United States at (317) 572‐3993 or fax (317) 572‐4002.

Wiley publishes in a variety of print and electronic formats and by print‐on‐demand. Some material included with standard print versions of this book may not be included in e‐books or in print‐on‐demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com. For more information about Wiley products, visit www.wiley.com.

Library of Congress Cataloging‐in‐Publication Data

Names: Vaz, Nigel, author.

Title: Digital business transformation : how established companies sustain competitive advantage from now to next / Nigel Vaz.

Description: Hoboken, New Jersey : John Wiley & Sons, Inc., [2021] | Includes index.

Identifiers: LCCN 2020041518 (print) | LCCN 2020041519 (ebook) | ISBN 9781119758679 (hardback) | ISBN 9781119758662 (adobe pdf) | ISBN 9781119758686 (epub)

Subjects: LCSH: Information technology‐‐Management. | Information technology‐‐Economic aspects. | Organizational change. | Strategic planning.

Classification: LCC HD30.2 .V39 2021 (print) | LCC HD30.2 (ebook) | DDC 658.4/038‐‐dc23

LC record available at https://lccn.loc.gov/2020041518

LC ebook record available at https://lccn.loc.gov/2020041519

Cover Design: Emir Orucevic

Cover Image: Publicis Sapient

For my wife, Emma, my son, Ethan, my parents as well as Michelle, Darryl, Nathan, Dylan, Eric, Peter, Angela, Jen, Jo, Dan and my Publicis Groupe and Publicis Sapient family.Thank you for inspiring me in everything I do.

“Sometimes it is the very people who no one imagines anything of who do the things no one can imagine.”

– Alan Turing

Preface

Organizations are reimagining, reshaping, and retooling for an era in which traditional business rules and industry frontiers have been blown wide open.

The accelerated progression of technology and its rapid uptake by consumers have pushed the issue of digital business transformation to the top of the agenda for organizations globally. The opportunity, or existential threat, that these seismic changes represent is focusing the minds of business leaders and business owners on the future of their companies and industries as never before. You may be one of them.

Every week, I am in meetings with C‐level executives of some of the best‐known and beloved brands in the world. Invariably, the conversation centers on the challenge of transformation: the identification of new sources of value for their customers; fending off competitive threats from digitally native entrants; learning how they too can operate with digital at the core of their business; and doing this all in an agile, iterative fashion that keeps pace with the ever‐increasing rate of change in the world.

Competitiveness and the “Digital Moat”

Warren Buffett, the CEO of Berkshire Hathaway, knows a thing or two about identifying and investing in companies with strong competitive advantage: He's built a $68 billion personal fortune off the back of that knowledge. In early 2020, Buffett lost an estimated $21 billion in net worth as a result of the economic impact of the global coronavirus pandemic yet is still understood to be the fourth richest man in the world in a list topped by Amazon founder Jeff Bezos. As we'll see, both of these are interesting asides.

The reason for our interest in Warren Buffett is that he popularized the idea of the “economic moat”: the investor's approach to identifying the longevity of a business's competitive advantage.

At an annual meeting of Berkshire Hathaway shareholders, Buffett explained his principle as “trying to find a business with a wide and long‐lasting moat around it, protecting a terrific economic castle with an honest lord in charge of the castle … it can be because it's the low‐cost producer in some area, it can be because it has a natural franchise because of surface capabilities, it could be because of its position in the consumer’s mind, it can be because of a technological advantage, or any kind of reason at all, that it has this moat around it.”1

It has, as noted above, generated significant returns both for Buffett and his Berkshire Hathaway shareholders. It is, however, worth noting that the annual meeting at which he explained the “economic moat” approach was in 1995, a quarter century ago. It was in 1995 that the commercialization of the Internet really began. It was also the year in which two companies were founded: eBay and Amazon. However much the “economic moat” investment approach might have stood the test of time, it is accurate to say that it was conceived in a largely pre‐digital age and, self‐evidently, before Amazon set itself on a course to exceed a $1 trillion market capitalization in early 2020 and before Bezos in 2018 became the world's richest man.

What the reader of this book needs is to build and maintain their “digital moat.” The following chapters are designed to help you do that. What's the difference between an “economic moat” and a “digital moat”? Certainly, they're not mutually exclusive because both focus on the development of your competitive advantage.

Warren Buffett's original “economic moat” focuses on one or a combination of moat types: low‐cost production or distribution; scale; high switching costs for customers or suppliers; and intangibles, such as brand, intellectual property rights, or government regulation and licenses.

A company such as Coca‐Cola has many of the qualities that define a wide economic moat. It has one of the strongest brands in the world and extraordinary geographic coverage, which adds to its awareness and customer loyalty. It also has the production advantages associated with scale (Coke and Pepsi between them control 70% of global volume in the carbonated soft drinks market), and its structural focus on producing the concentrate for drinks, rather than on the processing, bottling, and distribution gives it two advantages: lower cost and control over product quality in a taste‐sensitive market. There are no high switching costs for customers here, yet the strength of Coke (and, in fact, Pepsi) is that core customers tend to remain loyal to their preferred brand regardless of price and promotion activity from their main competitor.

A “digital moat” is the sum of the capabilities you put in place to create value and be competitive in a digital world. It is your company's ability to evolve hard‐to‐duplicate, digitally supported products, services, and experiences that continually align with changing customer behaviors and technology.

A company that has one of the largest digital moats today is Amazon. It created a culture that continues to enable digital evolution through the use of agile teams with distributed decision making to the lowest part of the organization. This has created an unparalleled ability to pilot and scale adjacent products and services on its commerce platform: from its own private label goods to food delivery and even turning an internal capability, cloud computing, into an external business with Amazon Web Services.

Similarly, Uber, at its core, created an ecosystem which was based spatially around a person. Wherever you were, things could come to you. From people going to food, food could come to people. From people having to find cars, cars could come to people. From people having to interact with multiple service providers for trains, planes, buses in their vicinity, those could all now start to get connected. The Uber app digitally enabled the physical world around you and created an interface for you to engage with it. In addition, Uber created a model that attracted a supply of drivers. Through digital, drivers had an easy way to access income while enjoying the flexibility of work hours that accommodated their lives.

Both Amazon and Uber are examples of companies with wide digital moats: They were born digital and maintain their moats by being digital to their core. This book is for established businesses who want to build their own strong digital capability through digital business transformation. To effectively transform a business, its leaders or owners need to look at their business model as a whole and need to shift their companies or organizations significantly from where they are today.

Why I've Written This Book

A great deal of the work I do involves meeting, advising, and helping the CEOs and leadership teams of large, established organizations on the transformation of their business for a digital age. Often, these are far more than “pre‐digital businesses.” The companies we work with have deep and centuries‐old foundations, unparalleled industry expertise, and brand names that are not so much famous as imprinted on our collective psyche. Never mind “pre‐digital,” some of these organizations are “pre‐electricity.” This is important because they have proven, more than once, their ability to adapt to change. They have been through some of the most fundamental technological advances, generational changes in consumer behaviors and expectations, and geopolitical upheaval including world wars, macroeconomic shifts, and globalization. They have still come out on top.

Despite the proud history of these companies, their leaders recognize they have a problem and an imperative to address it. Their problem is the same as my problem, which is the same as your problem, and, in all likelihood, that of anyone who has been moved to pick up this book.

My purpose in writing this book is to help leaders get past what can be the hardest part of any personal or enterprise transformation: the choices we make every day to move toward what will drive our future success. Often, this will mean letting go of things that made us successful in the past, to make room for new skills, relationships, ways of working, and opportunities.

In this book, we decode the digital DNA of leading businesses: those things that successful companies today instinctively do or qualities they naturally possess. Decoding and understanding digital DNA is a crucial first step. It comes before transplanting that DNA into any established business.

My company, Publicis Sapient, has been in the business of digitally transforming our clients’ businesses for more than 30 years. We've partnered with clients across all industries and helped them stay relevant in the digital age through the launch of the first online banks, travel portals, stock trading platforms, and retail commerce platforms. For the vast majority of those years, I have been part of that journey and it is safe to say that without Publicis Sapient, my colleagues, and our many extraordinary clients, none of what follows would have been possible.

This book is intended to help readers with the understanding and practice of transforming a business for a digital age. It is written from a practical perspective developed from decades of partnering with clients on how to take a holistic and multidisciplinary approach that infuses digital into how companies produce stronger business outcomes. The key ingredients I'll describe are your SPEED capabilities: Strategy, Product, Experience, Engineering, and Data.

I discuss many examples from the front lines of how companies defend, differentiate, or disrupt (D‐3) themselves and their markets, and I try to guide leaders on how they can deconstruct decision making across every level of an organization once they embark on this journey. For most of our clients and likely the readers of this book as well, the question is no longer whether you need to transform but how. More often than not, building digital capabilities is not the hardest part of your transformation. Creating stakeholder buy‐in and accountability, addressing operational process hurdles that slow decision making, and breaking down organizational silos to create a truly connected system are a much greater challenge.

What We Mean by Digital Business Transformation

This book uses the term “digital business transformation” rather than the shorter and more generic “digital transformation.” There is a good reason for this.

Often, “digital transformation” was and, for some, still is associated solely with technological change. Digital business transformation is nothing but business transformation for the digital age. Rather than digitizing parts of the business or adding some limited digital revenues as a stopgap, the focus of this book is on how to become digital at the core: to build and sustain a digital moat that is complete, wide, and deep. Digital business transformation is a holistic approach to changing the way an organization thinks, organizes, operates, and behaves.

Four forces of connected change are causing companies to rethink everything about how their businesses operate:

Customer behaviors

Technological change

Business models

Societal change

As disruptive technologies and companies continue to raise consumer expectations, business environments (stretching from products and services to manufacturing and marketing) are constantly changing. Digital business transformation closes the gap between what consumers expect and what their traditional business models can deliver.

Digital business transformation is a journey that trumps its destination, a journey that asks businesses to reimagine and rapidly realize new ways of working and satisfying consumer expectations. It has a slightly different meaning for each organization and uses different tools to address the unique challenges of each business. Most important, digital business transformation could mean the difference between an organization surviving the next five years or not.

COVID‐19 Taught Us How to Change Faster

This book begins with a deliberate emphasis on change: its nature and its speed. As we'll see, change was and is exponential even before COVID‐19 came along to devastatingly illustrate how rapidly change occurs in today's world. Coronavirus is the defining, shared episode of almost all adult readers’ business lives. That is not to make light of the pandemic, for it is as great a human tragedy as most of us will ever experience.

From a business perspective, it has acted as an accelerant in the wholesale transformation of business relationships and interactions between companies, customers, suppliers, and employees. This speed and impact were neatly summed up by Microsoft CEO Satya Nadella, when he observed: “As COVID‐19 impacts every aspect of our work and life, we have seen two years’ worth of digital transformation in two months.”2

As an interesting if morbid aside, when the Black Death spread across Europe and into Asia and Africa, it did so at an average 1.5 kilometres a day. Why? Because that plague occurred in the fourteenth century when the most common form of locomotion was walking, and the fastest was on the back of a horse. The Black Death is known to have spread through the maritime and land trading routes of the time, which, although well established, were slow. COVID‐19 spreads at approximately 926 km per hour (or 575 mph), the speed at which infected passengers might be traveling on a long‐distance commercial passenger aircraft.

COVID‐19 magnified the rate of change in the world around us, including the business environment. Countries, companies, and individuals rapidly moved from seeking to protect health to adapting our work and our lives to this new context: Challenges in our existing infrastructure and processes became apparent, but so too did opportunities to do things differently and, potentially, better than before.

Who would have thought that within the space of a few short weeks the employees of many businesses around the world would be working from home? That those would be the fortunate ones and elsewhere hundreds of millions of people would be laid off from work or furloughed, and that, as a consequence, governments would be paying their wages, experimenting with universal basic income, or rolling out record‐breaking financial stimulus packages? That industry events globally as well as public gatherings generally would be canceled? That schools would be closed and a third of the global population would be on some form of coronavirus lockdown at home?

Coronavirus has had a profound and unprecedented impact on the way we behave, on how we interact socially, how we consume, and how we work. It illustrates our shared humanity in the most visceral way. It shows that our similarities are greater than our differences, while also exposing the gaps between the rich and the poor, between those with privilege and those without. It is an experience that resonates across borders and impacts individuals, small and large companies alike, and industries in their entirety.

You may now be thinking that we are all aware of the existential impact of coronavirus on companies and people across the world and the need to transform, but other than providing a more recent context, why is it important for digital business transformation?

With the spread of COVID‐19 globally, what is being witnessed is the exponential rate of change. You could see change rapidly happening around you and react to it as it was happening. Companies, as well as public institutions such as schools, did not have the luxury of waiting a few weeks to see what happened: They had to absorb imperfect information as it came in and react immediately, while also planning for long‐term implications.

Now what happens when the changes happening around us are not as obvious or, in some cases, seem invisible? That's exactly what's happening to established businesses as it relates to technological change. Technology is, in fact, advancing at an exponential rate. For companies built to identify and harness that change, they can apply it in the context of consumer needs better and faster than incumbent brands, leaving those not equipped for that context left to react. That is the crux of the divide between digitally native companies and established businesses and what this book is designed to address.

On the other side of all this, there will be a responsibility and, yes, an opportunity to assess and define what business looks like in a post‐COVID world. Where emerging technologies and disruptive business models were pushing organizations to digitally transform, coronavirus has forced the immediate adoption of new ways of working and of channels to connect with customers, the best of which will remain once the pandemic has gone.

Coronavirus came along and effectively, if tragically, illustrated the interconnectedness of human behavior, emerging technologies, business models, and societal impact in a way that could not have been predicted. In its way, unpredictability is rather the point.

What This Book Will Do for You

The intent and design of Digital Business Transformation is to assist the reader in doing just that, putting in place a set of organizational capabilities and ways of working that in turn drive the business outcomes that will make your company or organization relevant and competitive in a digital world.

While Digital Business Transformation is written with C‐suite leaders of established businesses in mind, it is also very much a road map for every level of business person and business type: from the large to the small and medium‐sized enterprises. At its heart, this book decodes the qualities and traits (or the DNA) of leading digital businesses and explains what established businesses need to do in order to replicate those qualities, an opportunity open to large “pre‐digital” businesses as well as to smaller companies that are starting out or scaling up.

Digital Business Transformation is divided into three parts: Now, Next, and How.

Part One, “Now”, explores companies’ present state and the context: a world where the rate of change is exponential and the forces of change are connected and happening all at once. The key takeaway from these chapters is a better understanding of the nature and scale of change that you are facing, and the ability to identify the brakes and blocks that are holding your business back.

Part Two, “Next”, shines a light on companies’ future state: decoding what leading digital companies do well and how they do it, and what is required of established businesses in order to build their own digital moat. In “Next”, you will discover the six factors necessary to the creation of a digital organization. These are the SPEED capabilities of Strategy, Product, Experience, Engineering, and Data, as well as the ability to think and behave differently and become a “Gryphon organization.”

How do you get from “Now” to “Next”? The third and final part of this book is “How”. It provides the reader with different transformation paths, depending on your business need and situation, and insight into attributes of successful digital business transformation programs.

SECTION 1NOW

CHAPTER 1The Death of Business as Usual

It's All Change

Change is not what it used to be. The business leaders of today, and those of tomorrow, will find it much harder than their predecessors to face down challenges and respond to change. This is not due to any personal limitations on their part. It's quite the opposite.

John D. Rockefeller, Andrew Carnegie, and Henry Ford all had it easy compared with the reader of this book. For them, business challenges came sequentially. They were experiencing linear change, which, while significant, was of an entirely different magnitude than the effect of all the change happening at once: human behavior, emerging technology, and the availability of funds and investment to create entirely different business models. For them, change did not accelerate away more quickly than it was humanly possible to chase, comprehend, and to adapt.

In the early years of the twentieth century, when Rockefeller, Carnegie, and Ford were building their business empires and amassing their fortunes, the term “CEO” was an abbreviation for “Chief Electricity Officer” rather than “Chief Executive Officer” as it is today. This reflected the fact that electricity was a business‐critical technology that warranted its own leadership function within the organization. It was a linear change, with a specific solution. As will likely be the case with the “Chief Digital Officer” of today, the role of Chief Electricity Officer was transitory and disappeared as soon as it became apparent that their specialty, in fact, sat at the heart of and powered the entire organization.

Not all established businesses are successful at riding the wave of change. We all know the stories of Blockbuster, Kodak, Nokia, and a host of other legacy businesses and we won't be revisiting those cases in this book. Even those businesses didn't fail absolutely and, for the most part, did not entirely disappear – it is even possible to visit the last remaining Blockbuster store in operation the next time you're passing through Bend, Oregon.