The Root Cause Episode 4: Digital Transformation Explained

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Hey, everyone, and welcome back for

another deep dive with us. Today, we're going to

be tackling digital transformation.

You know, it's a topic that I think is

on everyone's radar these days, whether you're leading a

new project at work or just trying to keep

up with all the latest trends or even just

curious about what the hype is really all about.

We've got some fascinating material to dig into today.

We've got excerpts from some articles talking about the

big picture of digital transformation, the role of AI.

And how these advancements are

impacting both businesses and individuals.

Exactly.

I'm excited to dig in.

All right, let's do it.

So where should we start?

So I guess a good place to start is

with that big question, what is digital transformation, really?

Because it's so much more than just slapping

some new tech onto an old problem.

Right.

It's tempting to think, okay, well, we

got some new software, so we're good.

Right.

But these articles really make it clear that it's

about a fundamental shift in how organizations operate.

Yeah.

How they think, how they work,

how they adapt at their core.

Exactly.

It's not just a one time fix.

It's an ongoing process.

Yeah.

And I think one of the big reasons

for that is that technology never stops evolving.

Right.

There's always something new coming out,

some new disruption, some new opportunity.

Yeah.

It's like trying to hit a moving target.

Exactly.

And it seems like a lot

of companies are recognizing this.

They are.

McKinsey found that a staggering 90% of organizations.

Wow. 90%.

Are undergoing some form of digital transformation.

Really?

That tells me this isn't just a passing fad.

Yeah, I agree.

It's becoming a necessity

for sure.

For survival in the modern business world.

Absolutely.

What do you think are the implications then?

Yeah.

For those businesses that don't adapt?

It's a critical question.

It is.

In a world where technology is

evolving at an unprecedented pace.

Right.

Companies that cling to outdated

methods risk falling behind.

Yeah.

They'll struggle to keep up with

customer expectations, compete on price.

Right.

And ultimately.

Stay relevant

Stay in business, basically.

I think a lot of companies are stuck

using tools that simply aren't designed for today's

complex and fast paced business environment.

For sure

when you're relying on manual data entry

Yeah.

And physical records, you're inevitably

going to run into issues.

You are.

What kinds of issues are we talking about?

With accuracy,

Okay

Efficiency, and the ability to scale your operations.

And I think those paper travels

are a great place to start.

Think about all the room for error there.

No backups if something gets lost or

damaged, and try scaling that up.

As your business grows, it

quickly becomes a logistical nightmare.

Yeah, it's not a very efficient system.

Not at all.

Spreadsheets were definitely a step

up from paper, right?

They offered more scalability and the ability

to automate some tasks with formulas.

True, but even with spreadsheets, you still have

the potential for human error, data visibility issues,

and difficulty seeing the big picture.

It's hard to get real time insights and

make informed decisions when your data is scattered

across a bunch of different files.

Right

Okay, so let's get down to brass tacks here.

One of our sources today is a

Wipfli report that focused on Manufacturing in 2024.

What's the reality check there?

Like, what are they seeing on the ground?

Well, they surveyed 330 US manufacturers, and

a whopping 99% of them said that

digital transformation is important to them.

So basically everyone

Pretty much.

But here's the catch.

Only 47% are actually using robotics and automation,

and even fewer, just 36%, are using AI.

So there's this huge gap between wanting

to transform and actually doing it.

Yeah.

What's holding them back?

Well, the report highlights a few major roadblocks.

Lack of expertise is a big one.

61% of manufacturers cited that as a barrier.

That makes sense.

AI can seem pretty intimidating if you're

not familiar with it

for sure.

And then there's the cost factor,

which 54% of them mentioned.

It's expensive to implement these new technologies.

Right.

So it makes you wonder, are they

overlooking the potential return on investment?

Are they just kind of stuck in

the old ways of doing things?

It's a good question.

I think for a lot of companies, it's a matter

of taking that leap of faith and trusting that the

investment will pay off in the long run.

Yeah, I think you're right.

It's definitely a challenge, but it's one

that companies need to overcome if they

want to stay competitive in today's world.

Absolutely.

One of the other articles we're looking

at today from McKinsey outlines six capabilities

that are really key for companies to

actually succeed with digital transformation.

And it's important to note that

these aren't just random bullet points.

Each one of these capabilities plays

a crucial role in the process.

Okay, so let's break them down.

First up is a clear strategy.

Seems obvious, but what does that

really mean in this context?

It means that your transformation can't

just be about doing digital stuff.

You need to be laser focused on specific areas

where these changes will deliver real business value.

So you need a plan, you need.

A roadmap, you need to know where you're

going and how you're going to get there.

Makes sense.

Okay, next on the list is in house engineering talent.

Why is that so important?

Because you can't just outsource

your way to digital excellence.

You need your own team of skilled engineers

working side by side with your business colleagues.

So you're building that expertise from within.

Exactly.

That's how you create a culture of innovation.

Innovation and agility.

And then there's the operating model.

It's got to be scalable, right?

Absolutely.

Going from a few small digital teams

to having hundreds of people involved requires

a whole different way of working.

So you need the right structures and processes

in place to support that kind of growth.

Right.

Okay, so we've got strategy, talent, structure.

What about the technology itself?

Well, the article specifically highlights

the importance of distributed technology.

This means giving your teams easy access to the

data, apps and tools they need to constantly innovate.

So it's about creating an environment where everyone

can contribute to the digital transformation journey.

Exactly.

And of course, none of

that works without accessible data.

Which brings us to capability number five.

Right.

Data is like the fuel

that powers digital transformation.

Your data architecture needs to be set up

in a way that makes it easy for

teams to access and use data effectively.

And then finally, there's the human element.

Strong adoption and change management.

This feels like the part that often gets overlooked.

It's so true.

Digital transformation isn't just about the tech.

It's about people using it effectively.

You need to plan for training process changes

and managing the human side of change.

Yeah, that can be tricky.

It can be

but it's essential.

So these six capabilities really paint

a pretty comprehensive picture, don't they?

It's not just about technology.

It's about strategy, people, processes and culture.

It's a whole organizational shift.

Exactly.

But we've talked a lot about the

what and the how of digital transformation.

How do you actually know if it's working?

How do you measure success?

That's the million dollar question.

It's easy to get caught up in the activity,

the buzzwords, the feeling that you're doing something.

But are you actually making real progress?

That's where measurement comes in.

And it's about focusing on the right metrics,

not just those vanity metrics that look good

but don't really tell the whole story exactly.

The McKinsey article highlighted three categories of

KPIs that are particularly relevant, value

creation, team health, and change management progress.

Okay, let's break those down

first, value creation KPIs.

What are we looking at there?

It's all about tracking how those digital

solutions are impacting the bottom line.

Are they increasing revenue?

Are they reducing costs?

Are they improving efficiency?

Those are the kinds of questions you need to be asking.

Then there's team health.

Are your teams productive?

Are they collaborating well?

Do they have the right skills and tools

to thrive in this new digital environment?

Right, because remember, this isn't just

about technology, it's about people.

If your teams aren't thriving, the

transformation is likely to stall.

And finally, we have change management progress.

This is about gauging whether people are actually

adopting the new ways of working, if they're

engaged in the process, and whether you're seeing

a shift in the organizational culture.

Overall, these KPIs provide a framework for

assessing how digital transformation is impacting your

own work and your team.

It's a way to move beyond the hype and get a

real sense of whether you're moving in the right direction.

I like that.

This all sounds incredibly powerful.

It is.

But as we talked about earlier,

Right

digital transformation can be pretty daunting.

It can

Especially for companies that might not have a

lot of tech expertise in house.

How does MASS Group deal with that?

That's actually a big part of how they work.

They know that putting these systems in place can be

tough, so they provide a lot of training and support.

Okay.

To their clients

So they're not just

Nope.

Handing you this offer and saying, good luck.

They're there to help you every step of the way.

Okay.

So we've covered a lot of ground here.

We've talked about what digital transformation is, why

it matters, the capabilities you need to succeed.

I hope this deep dive has given

our listeners a better understanding of this

complex and rapidly evolving landscape.

I hope so, too.

And I hope it's inspired them to

embrace the possibilities that lie ahead.

Because while there are definitely challenges,

there's also incredible potential for innovation,

progress and positive change.

And ultimately, it's up to all of us

to shape the future of digital transformation.

That's right.

We have the power to use these tools to create

a better world for ourselves and for generations to come.

So let's get out there and do it.

Thanks for joining us on this

deep dive into digital transformation.

Until next time, keep learning, keep innovating, and

keep pushing the boundaries of what's possible.