E261 | The Keys To A Successful Digital Transformation with David Rogers
In the digital era, achieving successful transformation is not just important—it’s essential. For business leaders and executives, the challenge lies in approaching this change strategically and efficiently. Fortunately, they can navigate this by adopting an iterative approach to organisational change, concentrating on relevant business problems, and nurturing a culture of experimentation and validation. Add in the elements of continuous learning and execution, and you have a comprehensive strategy for digital transformation. This week, our guest David Rogers guides us through a framework to help you tackle these challenges.
David is an author, faculty at Columbia Business School, and an advisor to senior business leaders. Over the years, he developed a passion for helping companies navigate the complexities of the digital age. It was observing the struggles of organisations clinging to their pre-digital identities that sparked David’s interest. Seeing a clear dividing line between companies born before and after the internet era, he recognised the blind spots that often held them back.
He realised that these companies were stuck in their ways, and their assumptions about their business were outdated. He encourages organisations to get better at shutting things down, accepting change, and moving forward. While many established companies were struggling with the rapid pace of digital transformation, there was a significant minority who were succeeding. This prompted David to delve deeper, discovering that successful companies followed a specific pattern. Rather than viewing digital transformation as a threat, these companies created a shared vision unique to their firm, addressing their particular needs and challenges in the digital age.
Today, David focuses on helping companies navigate this complex process. His optimistic outlook and belief in the power of change are inspiring, showing the world that digital transformation may be daunting but far from impossible.
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On today’s podcast:
- Helping established businesses adapt to digital transformation
- Understanding your customer’s problem first
- Driving change in a rapidly changing world
- The Barriers to digital transformation
- Rethinking Governance inside an established business
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Essential strategies to drive successful digital transformation
David Rogers is the world’s leading expert on digital transformation, a member of the faculty at Columbia Business School, and the author of five books.
His landmark bestseller, The Digital Transformation Playbook, was the first book on digital transformation and put the topic on the map. Rogers defined the discipline by arguing that digital transformation (DX) is not about technology but strategy, leadership, and new ways of thinking. In his latest book, The Digital Transformation Roadmap, Rogers tackles the biggest barriers to DX success and offers a blueprint to rebuild any organisation for continuous digital change.
David has helped shape the way companies around the world transform their business for the digital age, working with senior leaders at corporations including Google, Microsoft, Citigroup, Visa, HSBC, Unilever, Procter & Gamble, Merck, GE, Toyota, Cartier, Pernod Ricard, China Eastern Airlines, NC Bank Saudi, and Acuity Insurance, among others.
He regularly delivers keynotes at conferences on all six continents and has appeared on CNN, ABC News, CNBC, Channel News Asia, and in The New York Times, The Financial Times, The Wall Street Journal, and The Economist.
At Columbia Business School, David is faculty director of executive education programs on digital business strategy and on leading digital transformation. He has taught over twenty-five thousand executives through his programs in New York City, in Silicon Valley, and online. His recent research has focused on new business models, innovating through experimentation, governance for growth, and barriers to change in digital transformation.
Facing digital transformation as an established business
David’s last book was his first on the topic of digital transformation. He drew a dividing line where he saw the organisations that were established before the internet started. These companies knew who they were, their customers and competitors, and they grew and established themselves in that environment in the pre-digital era.
After developing that sense of themselves, their product, customers and their needs, the world changed, and they didn’t realise it, says David.
“They didn’t understand all the blind spots that were holding them back, all these unchecked assumptions they were making about their business. So if that’s your lens, that makes a pretty good dividing line. It’s like, did you emerge and develop your skills and intuition? It’s like the equivalent of a human growing up and moving from childhood to adulthood. You lose some neuroplasticity, but you gain all this intuitive sense about things that you’re expert in, and that can be a big problem if you’re suddenly thrown in a different context, and all your assumptions are wrong.”
Since then, David has started working more often with companies going through this journey of rethinking themselves in the digital era. They need to rethink where the landscape looks ahead for them in the digital age, with new business models emerging, new capabilities, and new entrants.
“When I started, I’d ask CEOs, what do you see as the biggest obstacle to your, again, what we were calling digital transformation? And they’d say one of three things. They’d say the technology is hard. I don’t have enough resources and money, or I don’t have enough support from the CEO. If they weren’t the CEO themselves, everyone thought that was the hard part. Now, nobody says that. I never get that answer.”
What everybody says now is that it’s the organisation, it’s people, it’s change, and it’s culture. People use different languages, but it’s about getting the organisation to change. But, even when you understand that and see that you need to go differently about your business, it’s very hard actually to get the organisation moving in that new direction, adds David.
Driving change in an ever-evolving digital world
As organisations become more complex, change becomes more challenging. Even though David works with clients to help them with their digital transformation, his tools and frameworks apply to any transformation. And right now, the world is the reason behind this change issue and, for organisations, this needs to become much more flexible and not be run the way we ran businesses in the 20th century.
We can’t make the same trade-off of control and efficiency versus flexibility, adaptability and speed because the world is accelerating. And the world is accelerating because of this whole sequence of digital technologies. It’s not one technology. It’s not that a change happened, and we’ve got to get used to it. And then once we’ve adapted, we’re done, and we can enter a steady state, says David.
“Every few years, we have another [change]. It’s when you have a technology that doesn’t just make an impact but sets up a whole wave of more technologies. That’s why smartphones are so impactful. Because it wasn’t just the phone, it was how it unleashed and teed up all these additional technical breakthroughs and new business models.”
The five barriers to digital transformation
Multiple surveys looking at companies that have embarked or been working on digital transformation in the last few years show a +70% or 8+0% failure rate. This means they have not achieved what they wanted through this significant allocation of resources and strategic effort. When David looks at this data, his optimistic side thinks of it as 20, 30% of companies succeeding, which brings an excellent opportunity for learning how they’re doing it.
So what are some of these things that those companies are doing repeatedly?
The first is about vision. They define a vision that is unique to their firm, says David.
“What’s going on in that world? How is that world-changing in the digital area? How are our customers’ needs rapidly evolving? What are the new entrants and changing capabilities, and what does our landscape look like? So, that’s the first thing that most companies don’t do. But those who are doing a great job do. So they do have that sort of that kind of shared vision.”
The second is priorities, picking the problems that matter the most. This is a fundamental discipline at effective companies. It’s not just something happening at the top in some Chief Strategy Officer retreat, says David. It’s something happening at every level of the organisation. It’s that people are constantly focusing on what are the problems that matter most to our business right now and using that to define strategy.
You can’t do innovation in a vacuum inside an established business. It has to be rooted in the organisation itself.
“It’s about picking those problems and continuously reassessing them and deepening your understanding so that you are, as the entrepreneurs love to say and I love to repeat, fall in love with the problem, not the solution.”
The third one is about experimentation and what David calls “getting good at validating new ventures”, building that muscle of knowing how you run teams and projects with tremendous humility, which is an undervalued leadership trait. David finds that great leaders are obvious and upfront about how little they know.
Identifying the main issues worth addressing within a corporation opens up space for effective experimentation and validation. David believes that nurturing a corporate culture valuing continuous learning is crucial for drafting strategies and identifying the right problems.
“To do strategy, there are two inputs: you have to have continuous external knowledge and learning, always learning about what’s happening with the customer, the market, competitors, new business models, new technologies. But it’s also got to be a really powerful internal knowledge.”
In execution, he stresses the need for proper sequencing and alternative, flexible funding models that allow for a smoother change management process. Understanding why an iterative approach to practical organisational change matters helps draw more attention to the importance of adaptability in a rapidly changing business environment.
Sticking to predetermined strategies isn’t viable in this digital age, as changes occur swiftly, and organisations need to keep up.
What problem are you solving?
“One thing you must answer before you do anything is what problem are we solving? That is the first stage. Are we solving a real problem for a genuine customer? And almost everybody overlooks that. And the best innovation teams always start with that. It doesn’t have to be a year-long investigation, but you’ve got to spend some time talking to customers and validating their problem. What are they doing right now?”
For companies to remain relevant and competitive, they need to embrace this change method. By continually learning and adapting, organisations remain flexible for future changes, refine their strategies, meet current business needs, and predict future hurdles and opportunities. Subsequently, constant reflection and reassessment welcome novel ideas and promote innovation, driving success for the organisation.
David developed the Four Stages of Validation model to answer all those questions. But he insists that even though the economic side matters, you need to understand the problem you’re trying to solve first.
“Yes, you need to know the total addressable market. Yes, you’ve got to know the unit economics. Yes, you’ve got to know the profit margin at scale. All these things are critical, but you can’t ask those first if you don’t know what you’re building because you don’t know what problem you’re solving. “
Rethinking Governance inside an established business
The fourth barrier to digital transformation, according to David, is governance. For him, the basic principle is to understand that it doesn’t mean that everything that has been done before will be thrown away and that a group of startup people will ‘run wild’ in a $100 billion company.
It’s about being flexible.
“It’s about saying we’re not going to apply the same rules for budgeting, resource allocation, people, metrics, compliance, and approvals and project sponsorship that we do for our core business that we know really well. We just won’t carry over all those governance rules to new innovation opportunities.”
David says there are three paths to growth, but whatever structures you create around them, you need to look at these things differently. Particularly when you’re dealing with any opportunity that’s got greater uncertainty to it. That’s what David would call ‘path two or path three opportunities.’ The best template is VC funding.
Now, it’s a little different inside an organisation, but you’re applying the same model of financing, which is iterative and exponential, and you’re applying the same metrics, which is not one set of metrics.
“The big shift is not which metrics you’re using. In your main business, you have KPIs, meaning they stay in place. And we always know what are the key numbers we’re looking for as we run this part of the company with a new opportunity. They’re continually changing. It’s an iterative process. What metric you need to measure as you go through the four stages keeps changing, even within one of the stages. So the metrics are changing, the finance is happening, and iteratively the teams are composed and governed much more like a startup.”
They have much more autonomy, much more accountability, and they’re much more certain. If it’s getting serious, they need to become single-threaded, which means they’re doing nothing but this. And again, all of these things are an adaptation of the model you see in startups and VC, adds David.