The Digital Transformation Playbook by David Rogers (2016)

The Digital Transformation Playbook by David Rogers (from now on: Rogers 2016), professor at the New York Columbia University, has been published on April 2016. I read it thanks to Fabio Paracchini @fcvg –he handed it over to me in an immaculate, shiny hardcover format. To the best of my knowledge, this is the second notable book offering an overview and a framework on the topic, following Leading Digital by George Westerman, Didier Bonnet e Andrew McAfee, published in 2014 (from now on: WBM 2014). I wrote about WBM 2014 more than one year ago.  Before getting into Rogers 216, I have to say that I am a bit puzzled by the relative rarity of these works. Let me clarify. The literature on the relationships between technology, business and society at large is vast, to say to least. However, studies that are precisely focused on the phenomenon dubbed as “Digital Transformation” are still few and sparse, especially if we restrict the range to solid, extensive analysis, discussing it in terms of boundaries, origins and evolution. Yet the formula is very much in vogue. Most likely I have missed this or that other book or paper. So anyone willing to point me in the right direction is very much welcome.

Rogers 2016 has a different genesis than WBM 2014. The latter started from two primary research cycles that provided the authors with an empirical basis, from which they shaped an interpretative model. Rogers has followed a more articulated path. The beginnings come from an earlier book by Rogers dedicated to people and consumer behaviour (sorry, I haven’t read it: The Network Is Your Customer: Five Strategies to Thrive in a Digital Age, 2011). Then Rogers has drawn from a series of interviews, personal exchanges and feedback collected over the years as he was advising companies or giving executive education course all over the world. Finally he has researched a number of academic papers, magazine stories, analyst reports and blog posts, all rigorously cited in the notes.

One of the more valuable contributions of Rogers 2016 is the identification of a number of cases that explain how all of those companies founded before the Internet came around cope with what we call “Digital Transformation”. The analysis starts with the definition of five domains: customers, competition, data, innovation and value. A newly launched startup or a well-established corporation would show very different choices and course of actions in tackling these strategic contexts. Yet both of these types of businesses have to transform themselves according to “digital era principles”. From this point of view, Rogers 2016 has a very similar standpoint to WBM 2014, in which too the primary focus was on all of the businesses that are not centred on digital technologies, even though they have to use them. This is not optional: their customers and collaborators have adopted these technologies anyway. In other words, here we are looking at those enterprises that at times are loosely categorized as “traditional” companies, implying that under this label falls any entity that has not its core in the Internet technologies. I think that this a good reason for making the reading of Rogers 2016 mandatory for anyone in the service business, not less than it was the case for WBM 2014. Be you someone working at an agency or consultancy, a solution provider or a vendor, of global scale or in a specialized niche, corporate or freelance, I think these books are highly relevant to your work.

As said, the case studies make one of the most interesting aspects of Rogers 2016. Even a 244 years old business like the Encyclopaedia Britannica can successfully embark on a digital transformation journey. The famed publisher, once dependent from the sales of the leather bound paper edition, has reinvented itself as a solution provider for the educational market. To get it there, it has shaped a new balance between its scientific heritage and a novel, more dynamic operational model. The Weather Channel is another case of radical transformation. It used to be a pure media company, highly specialized in weather forecasts, based on the daily elaboration of huge amount of data. Then it found out that these capabilities were not only a key asset but also a source of innovation and competitive advantage. Starting from them, they have developed an all-new range of services for a number of industry verticals that relies strategically on weather modelling and forecasts. Data have become the cornerstone of their transformation (The Weather Channel has been acquired by IBM in 2015; a few months ago they have announced a new “hyperlocal” weather forecast service).

…for each Britannica there is a Kodak or a Blockbuster

On the other hand, Rogers warns that for “each Britannica there is a Kodak or a Blockbuster”, or, in other words, there is a company that refuses to acknowledge the new rules of the game, trying to avoid the strategic change required by the digital reality. Once again, the advice recalls similar warnings of this inevitable wave of change already emphasized by WBM 2014. On a second thought, these warnings might sound a little bit too obvious for those of us that are in the agency or consulting business. One could wonder if these calls to action actually resonate as they should. Perhaps we are in a transition phase, in which many companies prefer to tackle the all thing with a lot of caution, encouraged by the fact that in their field there is still no startup going after their business with a disruptive technology and an innovative business model. It would be interesting to assess if that’s the case in analytical terms, looking at the specific situation of each country and each market.

One more very valuable and distinctive contribution of Rogers 2016 consists in the elaboration of a set of strategic planning tools, based on a combination of scientific literature and hands on consulting expertise, as they draw from the workshops led by the author. They cover pretty different domains, from ideation to mapping and planning. If used as analysis models they indeed can lead a team in defining shared and sound conclusions, following a rigorous process. This is the “playbook” core of Rogers 2016, rich of advice for real life practice, encouraging readers to take advantage of these helpers to better cope with digital transformation challenges.

There is further contribution of Rogers 2016 that sounds particularly new and original to me: it is the discussion on the “disruptive innovation” concept coined by Clayton Christensen, following the earlier path of “creative destruction” defined by Schumpeter. First Rogers starts defining the subject – a much-needed step considering that the expression has become a sort of buzzword. “Disruption” does not mean “extremely innovative”. So yes, a company, product or service are “disruptive” when they provide something of unprecedented value to the market, thanks to a business model that traditional competitors are not able to replicate. This is not to say that whatever extraordinary innovation anyone is able to achieve is less valuable in any way. However, it would trigger different market dynamics. They might open up novel business spaces, but without making traditional competitors plunge into a crisis, as is happens when proper “disruptive innovation” occurs. Having said that, Rogers delve into the discussion of Christensen theory; according to his model, “disruptive” innovators displace traditional competitors by reaching new customers with initially less robust but cheaper solutions, exploiting some sort of new technology. Then they keep improving them until they become mature enough and of greater value than those offered by the incumbents. Now, Rogers acknowledges famed independent analyst Ben Thomson for a critical intuition on the nature of Christensen model: it works well with business to business market contexts, but it fails to explain the cases in which consumers are those that determine success or failure of a given product or service. If we take the iPhone, which is more of a product-service system than an isolated product, what has happened is has displaced the dominant incumbent with a combination of higher quality and price, something very far from the pattern identified by Christensen. There was no price discount at all and the overall experience was superior from the very beginning, so that it became an instant success even with the customer of the best Nokia phones. The “disruptive innovation” brought in by Apple has provided consumers with something of unprecedented value and over time has proved to be impossible to replicate by Nokia in a short timeframe. Rogers’ explanation to this case is a theory of “business disruption” that would make Christensen model a special case of Rogers’ approach. Using the logic and the concepts typical of the business model theory, Rogers focus his attention on two core elements, the “value proposition” and the “value network”. According to Rogers, we have “disruptive innovation” when a company manage to bring radical change in both of these dimensions, and only then. To make its argument, Rogers discusses three big cases. Beside Apple vs. Nokia, he focuses on Blockbuster vs. Netflix and Warby Parker vs. Luxottica. I enjoyed very much the reading, here: these pages are very timely and clear, and they illustrate well how the theoretical models presented earlier are translated into real business stories.

One last topic that unfortunately is only briefly outlined concerns the role of agencies and consultants. As Rogers weights the competencies needed to face the new behaviours of digitally enabled consumers, he writes that outsourcing would be a serious mistake. The turn that organizations are facing is so important that delegate it to someone else would be to concede that they are not able to steer their future direction. On the other hand, Rogers is also ready to acknowledge the positive role played by external partners. Discussing rapid prototyping, he recalls e.g. the case of R/GA with a quote of the former CTO John Mayo-Smith. For a partner committed to the innovative Nike projects like R/GA it was essential to “build something” even in a 2 weeks’ cycle, so that athletes and other stakeholders could be shown something real to get feedback, and feed it into further fast development cycles. So, apparently the cooperation between agency and client company can be beneficial, as the first not only provides efficient delivery but also conveys with it new values and a new way to work, modelled on digital principles. I think that this is a very important issue, not only from my point of view as an agency professional. The capabilities and the technologies that are shaping the big changes ongoing now are very distributed: as said earlier, we have the big platform player, with their unique dynamics (GAFA and other similar leaders) and the all spectrum of solutions providers; we have the marketing and communication holdings and the independent agencies; the large consultancies and the individual freelancers. All of these actors collaborate in constellations that to me are also proper “value networks”, different for each company, playing an important role in the company business model. I believe that thorough investigation of these dynamics is necessary: we need to identify patterns and best practices. Rogers 2016, not less than WBM 2014, will be a valuable companion for those willing to start the work.

I report here another review of Rogers 2016: Kathy Anne Cowie, “Book Review—Inspiring Transformation for Decades to Come”, Global Business and Organizational Excellence, July/August 2016; it is a premium content, available on demand or via a library subscription (I bought it on Readcube).

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