Start small, finish big: 8 building blocks for digital transformation

Start small, finish big: 8 building blocks for digital transformation

By SMU City Perspectives team

Published 1 November, 2023


Digital transformation is a journey whereby you use technology and data to make your business model more customer-centric so that it creates a positive experience, and your customer benefits.

Hoe Siu Loon

Associate Professor of information Systems (Practice), Singapore Management University

In brief

  1. Digital transformation is a multidimensional concept with no one-size-fits-all solution. It is simply the integration of technology into current organisational processes to create more value for the customer.
  2. There are eight building blocks for successful digital transformation, starting with a clear vision and action-oriented strategy, and various execution roles that when combined, improve the organisation’s chances of success.
  3. Scale should not be the initial focus of digital transformation. Companies can see promising results by combining simple and cost-effective technology with smart customer-focused designs. 

As digital currents reshape how we work, play and live, organisations must navigate the tide of change to stay relevant and robust. The term ‘digital transformation’ is used to describe the journey these businesses take in adapting and adopting digital technologies to continue creating value for their customers, but the steps to achieving this ‘transformation’ have generally been undefined, leaving each industry, sector and business to come up with their own interpretation of the process.   

Referring to digital transformation as a “multidimensional concept with many moving parts”, Hoe Siu Loon, Associate Professor of Information Systems (Practice), explains why there is no one-size-fits-all solution, and why many organisations that pursue digital projects may not be able to fully realise the benefits of their investment. He says, “The complexity of the technology is not the whole idea. It’s how savvy you are in improving the way you do things to deliver value to your customers more efficiently and effectively. This means understanding the building blocks that can enhance your organisation’s probability of success in your digital transformation journey”. 

In his book titled Digital Transformation: Strategy, Execution and Technology, Assoc Prof Hoe lists eight building blocks that can guide organisations on their journey based on his analysis of case studies and conversations with industry leaders. While there are no guarantees for success, businesses can view these as key areas of concern that are worth paying attention to, and eventually build into their business.

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Beginning with the need for a well-thought out strategy and followed by various ‘execution’ roles, Assoc Prof Hoe’s book discusses how different types of digital technology can be applied in various business domains. Regardless of whether you are a multinational corporation or a small-medium enterprise (SME), here are five important points to keep in mind about the digital transformation journey:  

1) A good strategy creates direction and unifies the team

On the importance of developing a blueprint for digital transformation, Assoc Prof Hoe explains that a good plan encapsulates some of the strategic choices that the organisation wants to take. This could mean focusing on a particular business segment first or exploring the use of a specific technology to see how it can deliver value to the customer.  He says, “The starting point may not necessarily be the endpoint, but it has to give some guidance on where we are moving. And as we move along, we'll find out more”. 

By setting a clear shared vision and deciding how resources will be deployed to achieve that, all members of the team can be privy to their role in the mission at hand, and this increases the organisation’s chances of success. 

2) Different roles and skillsets are needed to drive the change needed

Once the direction has been set by the organisation’s leaders, different team members will then need to bring the vision to life. In his book, Assoc Prof Hoe lists various themes within this stage of ‘execution’, and he explains how each can help the organisation deliver their specific digital transformation initiatives. Some of these roles might require technical expertise, such as digital product management or DevSecOps to launch digital platforms, while others involve people management; such as overseeing training programmes or the setting up of frameworks and processes to aid decision-making and help people embrace the change ahead.

Assoc Prof Hoe explains that in order to create the optimal conditions for successful transformation, an organisation needs to address each building block and align them such that they work together seamlessly as a whole. “All these building blocks are capabilities on their own, and executive management oversight on them is necessary, because if any of the capabilities are downplayed, then bottlenecks result,” he shares. While he acknowledges that not all organisations will be ready to act on each capability at a given moment, he encourages them to provide some emphasis to each, while committing to those they have the capacity to execute. 

3) Small and simple transformations are still transformations

Addressing the misconception that digital transformation needs to be big and impressive, Assoc Prof Hoe explains that as long as some form of technology is used to improve the way the organisation delivers value to the customer, then ‘transformation’ has occurred. This could mean using robotic process automation to streamline business processes or simply using free Artificial Intelligence (AI) tools such as ChatGPT to reduce the time taken to create a first draft of media content.

He says, “People often associate digital transformation with using cutting-edge technologies, but technology is actually not the main driver. It’s more about how savvy you are in making life easier through technology so that your customers can get what they want”.  Using the Singaporean bus-timing chatbot ‘Bus Uncle’ as an example of how companies can blend AI technology with a fun and user-friendly interface, he encourages companies to keep the focus on their customer’s needs and wants instead of technological sophistication. 

4) SMEs should focus on long-term cost minimisation through investments

While public companies and multinational corporations often have the funds to undertake major digital transformation projects, resource-strapped SMEs are often held back by the cost needed to invest in the technology, infrastructure or skills training needed. Assoc Prof Hoe says, “While cost minimisation is an important driver and business goal, SME leaders should try to look at their investments over a longer term. And perhaps they should be more patient to reap any cost savings.” 

By taking small steps sooner rather than later, these companies can pick up the experience they need to make even larger changes and stay ahead of their competitors.  

5) Human interaction will always play an important and distinguishing role

In his book, Assoc Prof Hoe discusses the emergence of the digital platform business model, such as online marketplaces or social networking services, that support online and real-time connection with other stakeholders in an ecosystem. These platforms may not always be fully virtual, and might sometimes call for personal interaction at either the front or tail end, leading to a hybrid or “phygital” model.

He says, “For these hybrid models, we should maximise the parts where a human-machine interface is possible. But there will come a point where the human interface needs to come in, for example, to handle a complaint or to handle exceptions. So I think that part of it will also become a differentiator for the company to excel.” This means that even for fully digital platforms, companies need to find smart ways to include a human element to augment the experience, so that customers can feel a sense of assurance. 

In conclusion, he encourages organisations to stay nimble in the digital age by staying curious about the latest technological advances and being open to experimentation, even at the risk of failure. “You don’t have to go for the high-end technology, which you don't understand. Basically, understand the range of technology, what its capabilities are, and then think through your area of work and how these capabilities can help you run faster, better, cheaper to deliver better customer value”.

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