Digital transformation is not about technology but about value chains
Date: 06/08/2016
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Digital transformationMany organisations think of digital transformation as a way to inject technology into their existing business. But digital transformation is not about technology. Digital is only an enabler and an opportunity to design new, competitive customer experiences and value chains. This is a golden rule when working on your organisation’s digital transformation.

This holiday we travelled through France, following the sun, booking our hotels just one or two days in advance. The process was simple: we checked on the app of Meteo-France where the sun was heading for the coming days, we checked the area on Google Maps to see where are the most interesting towns or things to see, looked for a nice hotel on booking.com, double checked its reviews on TripAdvisor and finally made the booking in a few clicks. It might seem fancy, but from a customer’s point of view, this process isn’t really disruptive. I did the same thing 30 years ago, using a local newspaper to check the weather, a map of France, a hotel or camping guide and some coins for the phone booth to make the reservation.

What really changes

So the process hasn’t fundamentally changed. Neither did the travel experience. It’s still the same thrill when you arrive at the hotel, hoping you made the right choice, not knowing if it will match your expectations. Two things have changed although: the user experience and the business model behind it.

Digital platforms still allow me to go through the same process, but in a much faster, easier, and smoother way. Yes, the process has been tweaked to create more convenience, but it has not fundamentally changed. Of course I can see the efforts of data marketing pushing me to specific offers, but to be honest, it doesn’t really make a difference. Data marketing in this sector is still in a very early, pushy and rather ineffective stage…

The change is much more dramatic when you look at it from the business side. 30 years ago, travel publishing companies like Michelin or Guide du Routard sold editorial content to me, which I needed to perform my buying process. I had to pay them for their content. After a few years, or whenever travelling to another country, I had to pay for updated or adapted content. To provide this product, these companies had to pay a lot of people to gather, edit and publish content. When I finally made the transaction with a hotel, the publishing company was not involved in the game anymore.

Where there is disruption

The disruption of companies like booking.com does not come from the fact that they are “digital”. Yes, they enhance my customer experience by tweaking the process, using digital to increase the convenience. The disruption comes from the fact that they use the potential of digital to redesign the value chain which supports the travel process. They don’t pay for the content they provide, their customers provide it to them, for free. They don’t sell this content; they only use it in support of their process. In times where too often people think that digital is about disintermediation, they get their money from taking up an intermediary position, with a strong brand, collecting a nice fee on every transaction between a customer and a hotel. So in a nutshell, they rethought the customer’s travel experience and the existing value chains, using digital as an enabler, not as a purpose.

Digital transformation is about redesigning the value chains

This is the point I want to make for those who are working on digital transformation.

  • It’s not about getting your company “digital”. It’s about completely rethinking your customer experiences and your value chains, using the features offered by digital to support these.
  • This also means that digital transformation is not the privileged playground of a digital team, but a concern for everyone in the company who’s involved in part of the customer experience or the value chain.
  • In this transformation journey, it is the management’s responsibility to keep their focus on enhanced customer experiences and value chains, and to resist the sirens of digital “gadgetification” on the surface.

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