Digital Transformation in Practice

Digital transformation is an established trend and the current catchphrase in corporations everywhere. But, while many realize the imperative to change, it’s not always clear precisely what that entails, where to start, how best to implement, and what benefits to expect. 

The frequent strategy of digitalization, or the layering of digital tools and technology onto existing processes, provides incremental value, which soon flattens out. At the other end, companies born with digital DNA (for example, Amazon) are capable of incredible innovation and adaptation. The reality is, most companies must transform to develop digital DNA. Applied digital innovation projects are the key. These are projects that deliver value while introducing digital capabilities (skills, software technology, infrastructure), balancing risk and reward, while simultaneously injecting more digital DNA into the organization, enabling future agility and innovation. True digital transformation is dependent on developing that digital DNA. 

Digital Transformation Defined

Digital transformation can be considered a process of facilitating and accelerating an organization’s journey of ever-greater digital maturity with a consistent delivery of business value. To be truly transformative to the business, there must be new possibilities discovered through innovation, with the company growing a ‘digital DNA’. It is enabled by a set of powerful computational tools, including simulation, image processing, artificial intelligence (AI), and machine learning (ML).

A strategy is crucial for this journey and for applying these tools effectively in each individual business. There is much more to digital transformation than technology. While important, technology adoption is often incremental and readily implemented into existing workflows with limited challenge to managing the change. While this does generate value, often in expert efficiency and with relatively easy change management, the real prize is in enabling scientific discovery that has orders of magnitude for positive impact on the business.

To realize an organization’s full value potential in digital transformation journeys, change must be extended to people – their mindsets, skills, behaviors, reinvented processes, and new operating and customer-facing business models. We don’t just want to provide people with a hammer. We also want to teach them architecture and carpentry.

Levels of Business Impact

The science behind much of today’s business is complex: Experts have built up methodologies based on decades of intuition and human-centric discovery methods. Raw data may be just partially captured – some of it in non-digital forms – making it difficult to leverage and reinterpret. The transformation process can appear overwhelmingly long and expensive.

It is tempting to make incremental changes to existing processes by ‘layering on’ selected digital technologies without changing the underlying operating and business models. However, this only provides marginal improvements. In today’s world, that is not going to keep a company competitive.

Twenty years of experience in transforming workflows, labs, and people in multiple industries has shown Enthought that there is plenty of low-hanging fruit to be had on a digital transformation journey while still exposing new possibilities. A place to start is by streamlining one existing process at a time. For example, instead of experts laboriously and manually labelling or characterizing data (e.g., silicon chip defects, medical images, or seismic features), digital tools can do the job faster, more consistently, and on a larger scale.

These incremental gains in speed and efficiency are quick wins. Scientists and engineers now have time to do work more commensurate with their advanced knowledge. But, maximizing the benefit of this newly available talent requires more. An important step is building a digital foundation to enable innovation via techniques for querying, visualizing, and analyzing data to uncover new insights. 

The value created through the implementation of new technologies can be captured at multiple levels – operational, business, and enterprise. As scientists and engineers expand their thinking and better understand digital technology capabilities, the advantages of the transformation become more and more apparent. Perhaps simulations could replace physical experiments. Deeper understanding helps formulate an effective digital strategy and reveals new opportunities for innovation worth pursuing. Progress is made one step at a time, taking a series of small wins that lead to the longer-term goal of transforming the company. Willingness to learn, training, and a firm commitment are imperative at all levels of the company.

Lessons in Digital Strategy   

For a safer and faster return on investment, optimizing current process(es) is the way to go because doing something different is riskier and will usually take longer. It will also require a higher level of investment and significant, sustained support from senior management. But if your customers’ expectations are changing or your competitors are going further, optimization alone may not enable an adequate response to opportunities – or threats.

Take for example, a tale of three booksellers (but the lessons are equally relevant to B2B companies). In 1995, the World Wide Web was in its infancy, and a compelling battle was starting between the old and new ways of conducting business.

• Borders pursued a non-digital strategy with traditional brick-and-mortar stores and massive book inventories. The company could not respond quickly to changing customer behavior, began losing money in 2007, and went out of business in 2011. 
• Barnes & Noble optimized its existing operating and business models by layering digital technologies on top of its existing physical stores model. This bought some time, but competitors, primarily online, gradually eroded the company’s market share, and Barnes & Noble was purchased by a hedge fund in 2019. 
• Amazon pursued true digital transformation. It re-conceptualized mail-order catalogs by selling books entirely on the internet and offered a far bigger selection at significantly lower prices than feasible with physical stores. It started using customer data, the byproduct of online sales, to provide personalized experiences and improve marketing and operations. Any changes to the marketing strategy and online store could be rolled out in hours or days versus years and delivered disproportionately large benefits. The company had groundbreaking data and found new ways to use it. Novel initiatives were tried at frequent intervals. Some succeeded, some did not, but each provided a valuable lesson. 

Borders’ lack of a digital strategy was clearly not conducive to long-term success, an observation that is even truer today. Barnes & Noble’s strategy of digitalization that layered on digital technologies added short- and medium-term incremental value through linear growth. But in both cases, slow feedback loops for providing business insights, inadequate availability and use of data, the inability to respond quickly, and the high cost of failure limited innovation. Linear ROI did not provide protection from exponentially growing competitors. 

Most substantial science-driven companies today were not “born” digital. Adopting digital DNA is key to digital transformation. Digital DNA comprises elements such as digital infrastructure, data, and tools that are portable across a company’s multiple businesses. It also encompasses another key component: organizational agility that empowers employees to use their initiative to solve problems and a pervasive mindset of experimenting, learning, and adapting. 

This is the true digital advantage to a science-driven business. Insights driven by real-time data, the capability to act swiftly, and an appetite for fast, inexpensive failures enable rapid innovation and, ultimately, exceptional success.

A Balanced Approach to Risk

For established, successful businesses, there is a sweet spot between not taking enough risk like Borders and Barnes & Noble, and going all-in like Amazon, which showed no profit for years. Enthought’s time-proven approach to tapping into the sweet spot of balanced risk is Applied Digital Innovation. 

Our experience comes from working with science-based businesses that already have a valuable output, such as a specialty material, chemical formulation, or seismic analysis. Knowing that the end result has value mitigates business risk. However, it is not simply a question of converting data to a digital format and collaborating to develop domain-suitable application programming interfaces (APIs) to query and analyze it. Such optimization might increase the value of the scientific process incrementally by 10% to 20%.

It is important to have a strategy that recognizes the potential beyond the quick, measurable benefits on a discrete project. The Enthought approach is to collaborate with our clients to leverage the opportunity provided by each project and take steps to help change their DNA in that area of business.

The starting point is to examine the most value-adding workflows, using the intent to reinvent them, and building the digital infrastructure with improved data quality so it can be curated and used for secondary analyses and discovery. Next, Enthought works to redesign those existing processes, which may be people-centric or based on primitive technology, using the best available digital technologies and computational capabilities to help uncover insights connected to rapid action. This could significantly shorten time to market, improve competitiveness, and boost revenues. It may also change how people work and free them to do more valuable activities.

Helping scientists, engineers, and technical staff understand the possibilities of what they can do with these technologies can enable future agility and innovation – the hallmarks of digital natives.

One Critical Characteristic  

One critical characteristic of science-driven companies is the unique nature of their data sets which can contain huge untapped value in unexplored anomalies, correlations with other datasets, or undiscovered features invisible to the human eye. Scientists already have the mindset to investigate and understand unexpected results from their workflows, ones inherently designed to solve problems. It’s the anomalies that provide opportunities to move from the structured and optimizing to the innovative and creating. Exploiting this powerful characteristic of these data sets requires digital DNA. 

The Enthought approach is to collaborate with scientists to develop their digital DNA, to be able to generate insights and act on them expeditiously, to try things out and fail (or succeed) fast. A scientist can imagine a world of possibilities in their domain that apply to their business. A computer scientist can imagine a world of possibilities through scientific computing. It is the combined knowledge – the essence of digital DNA – that is required to realize new possibilities.  

 

Contact us if you’re interested in digital transformation for your company.