Can we measure the digital transformation?
24 March 2017
We all can agree that measurement is one of the greatest obsessions in management. Measuring beyond the easy or the obvious (since you can count “likes,” it’s easy to think that we can explain the performance of social media actions) is a complex task. More complex applications are under the permanent risk of converting this measurement into an end in itself instead of what it’s trying to present. In any case, finding indicators and ways of understanding these phenomena we can observe objectively. So, can we measure the digital transformation?
If we want to measure something, we will have to start with a clear understanding of what it is. Since this is a term which, as we have previously mentioned, seems to have emerged more from the consultants’ ability to communicate than from a truly consolidated concept, we will require a model. Many professionals, not strangely in larger organizations who feel they have to change, ask me what to measure.
We (Good Rebels) have synthesized how to deal with it in three areas:
A) Changes in customer relations.
B) Changes in business models.
C) Changes in the organizational structure.
We leave the use of data as a cross-cutting issue. Apparently, we base everything on the evolution of technology (although I think that Biology and other sciences should also enter into the equation).
In addition to the model, I would make the following observations:
A) Indicators can be common to any organization, but one should look for those that serve or those needed on their own.
B) Measuring “transformation” probably makes a lot of sense when your organization is one with a legacy (stretching from the Industrial Revolution?).
C) What people have learned from measurement does not cease to be valid in the context of digital transformation.
Some ideas for measuring digital transformation
With these observations made, I propose (which, of course, is not intended to be definitive and exhaustive) that we tackle this question in the following way:
- Change the focus in customer relationships to the omnichannel model: that is, whether all transactions (including post-sale) can occur across all channels without having to change channels or get personal assistance from a real-life human (even if human assistance is available to whoever requests it). Also, it must be possible to change from one channel to another with minimal friction. Then – despite it still being deemed”business as usual” – we will have to check if the customer experience is superior, and whether it is accepted.
- Change in business models (which is still considered innovation) that is still measurable through traditional measurement techniques: how much revenue comes from these new schemes and over what unit of time. This point of view requires -perhaps more than others- that we walk in the other’s shoes: What is reasonable? Does it have to be like this, or is the traditional blueprint with mutations from the customer experience where the essence of this transformation produces itself? Obviously, it has interesting connections to benchmark with a whole sector. For example, it can be relatively straightforward to know how much of a parking lot goes into a pay-for-use scheme from a privately owned model (one of the major automotive industry forecasts).
- The organization has many elements that relate to many underlying attitudes that we inevitably seek, but do not always measure. Of course, a lot of it relates to the leadership and management style you want to impose. For example: how many hours do people work remotely every year? Let’s assume a context where not only people try to “find a work/life balance,” but promote the reduction of hierarchy through individual responsibility, and we connect it with other performance factors (and economic: reducing total office space, for example). We should measure -and it is not the first time in the history of management that I know of – the involvement in the generation of ideas of change and in the construction of knowledge management (quantity and quality of participation in collaborative tools which, on the other side, can work remotely).
I’m undoubtedly mentioning a small selection. But the truth is that it’s always going to be better to identify key indicators to ensure a better follow-up that doesn’t overwhelm people with information overload (note that many do not understand that the most important word in “key performance indicator” is the short one: key). I think there’s an opening for everybody to create their own.
Of course, talking about this is always interesting, and it is possible that some of you may want to share your thoughts about my choices. Or, you may want to bring up or other situations and what your organizations are doing.
Do not be afraid to stretch yourselves.