Risky Business

Mike Taylor | 22 October 2020

A digital transformation will always involve some risk, but you don’t have to leave everything to chance. 

 

We’re always being told about the virtues of risk-taking, and for good reason. In order to get to the top – in any field – you have to offer something that no one else offers. That requires doing something that has never been done before. That means venturing into new territories with no frame of reference to compare it to. That’s taking a risk.

Digital transformation, when boiled down to its simplest form, is making innovation the centre of how you serve your customers. That’s also taking a risk. 

There’s really no getting around it, risk is an unavoidable part of the digital transformation process.

But unavoidable does not equal unmanageable, and being a risk-taker does not mean leaving absolutely everything to chance. 

At BBT, we’ve developed something of a systematic approach to risk-taking that seeks to maximise innovation whilst keeping risks as low as possible. So far, it’s worked in our favour (and our clients’ favours too). 

The key is to manage your scope. Now, this doesn’t refer to the scope of your vision itself. Feel free to dream big, reach for the sky (and any other platitude you’ve heard a million times before). We’re talking about the scope of actually achieving your vision once you’ve realised it – what steps you’ll have to take to get from where you are now to where you want to be. 

 

Identifying your risks:

 

Business transformation risks are typically made up of four key components. 

They are: 

  • The systems/technologies used as part of the business model. 
  • The people involved –  your employees, contractors, external suppliers etc. 
  • The industry your company operates within.
  • Your customers. 

The more you introduce change to any of these four components, the more risk you introduce to your business. So, you can drastically reduce the overall risk of the process simply by changing what’s absolutely necessary and keeping what’s already proven to work when possible.

For example:

Say you have an idea that consists of using brand new technology (such as AI) to deliver a product/service to a different industry and new customers. You’ll need a new team to build this. You’ll also be targeting a new industry that you have no experience in, and be going after all new customers. The amount of risk you are taking on is potentially substantial as you are fighting ahead on 4 separate fronts. 

However, if you are looking to digitise a new way of delivering your product or service using new technology, with an existing team (people you know and trust), within a well-known industry and selling to existing customers, your risk will be far lower because there’s only one unknown to deal with.

See how we did this with one of our clients to deliver a new way for real estate agents to maintain focus and improve productivity with My Real Estate World

Here’s how we do this:

 

The Tech

This is the part of your company that will typically always change as part of the digital transformation process. Whilst this will introduce some risk, you can further manage it via a little something called the Minimum Viable Product Approach, detailed here:

 

  • Consider your immediate goal – what do you want to achieve using the new capabilities given to you by the adoption of digital technologies? 

 

  • From there, implement a version of whichever technology you choose to adopt that’s developed enough to meet these base objectives, but without all the bells and whistles (hence the term minimum viable product). 

 

  • Over time, add extra features and capabilities, and measure the success of the product frequently. 

 

  • With this approach, not only will you be able to manage risks by keeping costs lower (as you’re only investing in your minimum needs), but you’ll also be building a product informed by on an ongoing analysis of how well it’s succeeding. 

 

  • Because the MVP approach allows you to go to market sooner – you’ll also be able to get feedback quicker than your competitors. This means you’ll be able to create a better, more refined product sooner than them – and that’s an advantage you do not want to miss out on.   

 

The Team

Whilst a total overhaul of your business product or business systems is bound to require bringing on some new people and skills (be they contractors, suppliers or an increase in FTE’s). If you don’t know exactly how to best use some of the digital technologies you’re looking to adopt (let alone which technologies to adopt in the first place), You’ll need to bring on someone that does. 

That said, getting your existing team on board and enabled to thrive amongst your new ways of doing business will also help lower risk. 

A totally new team is a massive unknown (and thus a massive risk) for your company. The existing team already know your business, the industry, and your customers – thus, they’ll have a better grasp on how to better serve your customers with this new tech. Assuming you’ve already cultivated a team you know works and works well, all you’ll need to do is upskill/reskill them to work with the new technologies and systems. 

It’s also important you are constantly communicating what changes are on the horizon for your organisation. This affects them as much as it does you, so they’ll appreciate being kept in the know. 

In short, consider the team as a whole. Where there can be a simple upskilling of your trusted employees, do that. When you need fresh expertise, bring them onboard. 

 

The Customers

Of course, the ongoing goal of any business is to attract more and more customers. But rather than just placing your sole focus on attracting new business, you can further manage risk by putting effort into improving the lives of your existing customers. 

Firstly, unlike new customers, you’ve already sold them on your business and established their loyalty to the brand. Assuming you’ve accurately identified a way to use digital tech to improve the overall experience your business can provide, it’s safe to assume that your existing customers will only be happier that you’ve improved something that they were already willing to pay for. 

Considering that 88% of people report that positive testimonials influence their purchasing choices (according to VENDASTA), keeping your current customers happy will help acquire new business anyway via word of mouth and testimonials.

 

The Industry

Pretty straightforward, and related to the above – a digital transformation involves transforming HOW you do business, but it is still that same business. Provided you keep improving the lives of your customers as your central goal, your industry should not change.

 

Wanting to know more about Digital Transformation and how to work through the process? We (literally) wrote the (e)book on that. Download it here: Digital Transformation & Your Business