Digital Transformation is a term like cloud computing, big data, and innovation, that have come to be used so broadly, they could be used to mean just about anything. I also know people who have digital transformation on their LinkedIn profiles, but it’s not clear what they mean by that or what specific experiences they have had.
One of the biggest challenges with any big change is that it can be expensive and risky, and it can be much easier for senior leadership to say “no” than pursue the change unless there is a clear forcing function (such as a competitive threat), or an overwhelming business case. Things that prevent a major transformation are very well explained in the book, The Innovation Biome, by Kumar Mehta – available on Amazon and required reading for anyone working in or near this arena.
Many have written specifically about digital transformation, and there are all sorts of pictures depicting what it is and how to think about it. This one by Mike Rogers is an interesting take on it.
For the past ten years, I have led work at several big companies including Disney, Starbucks, Microsoft, and others. In some cases the work was labeled digital transformation at the outset, and in other cases, it was only called that after the fact. What I have learned is that there are some classes of work where it was called digital transformation before the work began, and some where it did not, and I am going to use some examples to elaborate on why it matters.
- Start with a very simple business goal. In one case, the organization had a goal to grow revenue by 50%, and that led to discussions about how to achieve that, which led to the identification of a radically improved customer experience, which ended up being a very innovative use of technology that had never been done before. The company made a huge investment in this effort, and the return on investment was much faster than they anticipated.
- Start with technology and then back into a business goal. Another project started with the idea of digital transformation that also related to a radical change in customer experience. Because the business case was only a secondary consideration, the project went down a number of paths that turned out to be a mistake. In retrospect, it’s obvious that if the business case had been the driver, it’s likely that fewer mistakes would have been made. While this effort took years longer than it needed to, to see the light of day, it finally did, and it was every bit as successful in terms of return on investment as the other project.
- Start with the realization your business and your employees deserve better. In this case, a large global organization realized that all of its internal systems and processes for things like accounting and human resources were badly out of date. It dawned on them that even while those departments were not what made the company unique or special, those employees still needed to be building skills they were proud of – that gave them some hope for advancement and promotion. So that was a project that was labeled digital transformation from the outset, and while the return on investment was subtler – the decision was clearly a good one for the ongoing success of the company.
Over the last year, I have been working in an industry that is new to me, commercial aviation, and what I have observed is that there is a category of digital transformation that is new to me, but it won’t surprise me if there are attributes of this opportunity that extend to other industries as well. Most aircraft flying around today are old. Boeing 737s that were made 40 years ago can still be flying around today, and Airbus A320s, which are newer, can still be over 20 years old. There are data buses on all aircraft, that in large part for safety reasons, broadcast status information about the aircraft, whether it is in the air or not, every minute, sometimes more frequently. Everything from how fast it is going, how much fuel the aircraft has, the level of potable water on board, to whether a door is open or closed, and on and on. There are two things that are shocking about this data:
- In some classes of aircraft, there are over 23,000 different pieces of information being broadcast at least once per minute.
- Airlines have historically had no way to get this data off the airplane, so it is what some in the industry refer to as digital exhaust. It’s right there all day every day, but no one can access it.
This information would be so useful to the airlines in many, potentially obvious, categories:
- Real time route optimization. You would expect that in today’s world, pilots are getting real time updates on things like wind and weather so they can make informed decisions about how to save time or fuel on their flights. They can’t do that today because they have no access to this data.
- Aircraft health and maintenance. With over 23,000 pieces of information, not only could you be alerted about when something is damaged or broken, even rudimentary machine learning on this data would easily enable airlines to be more predictive of when an aircraft is going to have an issue, and fix it ahead of time. They can’t do that today because they have no access to this data.
- Turnaround. There are many moving parts and people involved in cleaning, refueling, catering, luggage, boarding, to prepare a plane for departure, and if there is a sensor that knows if the starboard door of the plane is not open, then catering has not begun, and the plane will be late if catering does not start in the next ten minutes and the right person can be alerted. They can’t do that today because they have no access to this data.
Tapping into this wealth of data for both real time as well as historical patterns analysis as well as opportunities for machine learning and artificial intelligence leads to obvious opportunities for cost savings, operational efficiencies, and increased safety. So this then is another class of digital transformation that wasn’t even possible until very recently. There are some simplistic and perhaps obvious comparisons to the Waze driving application and the real estate site Zillow, that those businesses were not possible until certain data was available as well.
APiJET is a company I have been involved with for nearly a year, and they have figured out how to deliver this data to commercial airlines. Elevāt.IoT is another company doing something similar on the ground with industrial equipment. So there are companies that have found a way to get to this rich data and it will be interesting to see what other industries find ways to transform by tapping until previously untapped reservoirs of data. If you know of others like these, I would love to hear about them.