Required Reading: TSIA Leaders Pen the Digital Transformation Playbook
In their latest book, Digital Hesitation: Why B2B Companies Aren’t Reaching Their Full Digital Transformation Potential, J.B. Wood, president and CEO of the Technology & Services Industry Association (TSIA), and Thomas Lah, the organization’s executive director and executive vice president, provide detailed guidance for building and managing a technology-centric company through its next five years of development. Called an essential digital transformation playbook, it highlights the challenges companies face and how to overcome them. CRM editor Leonard Klie recently had a chance to delve into this with the authors in more detail.
CRM: What are the benefits a complete digital transformation can bring to companies today?
First let’s define complete digital transformation. We are talking about companies that invest in digital capabilities for customers that reduce complexity and accelerate their ability to realize value. If a company pulls the levers outlined in this book, it could increase market share, reduce cost of sales, and improve overall profitability, all on the back of a new business model that is more scalable.
You say most B2B companies are failing to reach the full potential of their digital transformation efforts. Why is this happening, and what is at stake for the companies that don’t do it right?
It takes time and treasure to stand up the capabilities we outline in this book. So that alone gives companies reason for pause. But the greater issue is that most technology companies have business models that have been very successful. Traditional hardware and software companies have enjoyed very high profits. Born-in-the-cloud companies, even though they are unprofitable, have enjoyed very high valuations.
When you have a business model that has been working, it’s tough to change. However, companies that do not pursue this complete digital transformation are going to look incredibly dated. Imagine an airline that required you to book tickets through a live agent. Tech companies that don’t migrate their business models will eventually look just as ridiculous.
You say losers in the B2C wars of the past two decades got beaten because of how they interacted with their customers. Can you give examples, and how would digital transformation have helped?
In B2C, Amazon crushed retailers that did not invest in providing a low-friction digital experience. Amazon Web Services is now posing the same threat to B2B technology providers. The lesson is clear: Customers want to hit the easy button. Complete digital transformation is all about creating an easy button for customers: allowing them to purchase solutions without speaking to a salesperson; helping them understand where their adoption of technology lags industry peers; creating a platform where industry partners can build solutions that they can easily access. These are all examples of leveraging the capabilities of complete digital transformation.
What are the major challenges that companies face with their digital transformation efforts?
Again, digital transformation often coincides with a business model transformation for many companies. This is creating the following challenges:
• executive teams and boards of directors are hesitant to disrupt current business models;
• senior executives have little to no experience building these new digital capabilities; and
• companies underestimate the time and treasure required to navigate this transformation.
We could go on, but you get the gist. This is a significant transformation that most professionals will experience maybe once in their entire careers.
What actions will companies need to take to overcome these challenges?
This is why we wrote Digital Hesitation. The goal of this book is to create a vision of future profitable tech business models and then identify the specific capabilities companies must build to get there. We even have a chapter that outlines how companies that currently sell on-premises, disconnected products can begin that journey. But we would say the very first action a company must take is to acknowledge the need to begin this journey!
What is the one takeaway you want to leave for readers of this book?
Right now, executive teams are attempting to prove what has not yet been proven. Executives are trying to justify a business model transformation by creating detailed financial models that prove these next-generation capabilities will result in business models that are just as profitable as the old models. That is a losing approach. Instead, executive teams need to look at industry trends over the past five years, extrapolate them out over the next five years, and then ask themselves, will our business model remain unscathed?