Digital Transformation Payday

The Data-Driven Guide for your Digital Transformation Payday

In Digital Transformation Payday: Navigate the Hype, Lower the Risks, Increase Return on Investments, Tim Bottke, Senior Strategy Partner at Deloitte and Associate Professor for Strategy and Digital Transformation at SDA Bocconi, a Financial Times/Forbes/Bloomberg Businessweek Top-Five European business school, delivers a provocative, new perspective on digital business transformation—using research to get beyond the hype and uncover its real financial payback.

Have you ever asked yourself: “Should I really embark on a digital transformation journey that is likely full of pain, failure, and high cash-outs? One that puts a lot of pressure on our stock price and my nerves? Who will thank me for that? Will there ever be a measurable return on invest for all these technologies that supports positive market value impact?” If so, this book is for you.

You’ll find unique insights and guidance for managers, executives, board members, and investors as you navigate an immense array of strategic and operational choices, opportunities, and pitfalls. You’ll also learn to demystify digital strategy and technology buzzwords, better define the initial focal point and process of your firm’s digital transformation, and establish new ways of thinking in terms of value impacts—and how to measure them—right from the start.

The book also includes:

• A proven framework for defining your next digital transformation effort end to end, and configuring your initiatives for maximum return on investment
• Empirical data to help you understand your company’s odds of navigating your chosen digital transformation initiatives with financial payback

An indispensable resource for business leaders, Digital Transformation Payday will also earn a place in the libraries of entrepreneurs, founders, leaders of established companies, and digital enthusiasts.

Practitioner Foreword xiii

Academic Foreword xv

Preface xvii

Acknowledgments xxiii

Part I Will Your Digital Transformation (Ever) Pay You Back? 1

1 The Bad and Good Reasons for Your Digital Transformation 3

2 Why Digital Transformation Advice Can Get You Off the Payback Track 9

3 Digital Transformation Payday: A New Framework for Accelerated Payback 19

Part II Five Key Elements Drive Digital Transformation Payback 31

4 Supply-Side Catalysts: Digital Technologies Alone Do Not Do the Trick 33

5 Demand-Side and Overarching Catalysts: Customers and Workforces Have Changed; From You They Expect Nothing Less 61

6 Reactants/Scope: Make Sure Your Investments End Up Transforming Your Core 69

7 Reaction Mechanisms/Process: Agile Done Wrong Can Be a Very Effective Tool of Value Destruction 77

8 Outcomes: Digital Transformation KPIs Are Worth the Pain and Resistance 85

9 Design/Strategy: The Vacuum in the Majority of Digital Transformations 93

10 End-to-End: Our Framework in Action 99

11 “Smaller” Firm Excursus: David versus Goliath? 107

Part III Three Predictors in Your Business That Influence Your Digital Transformation Payday 111

12 Some Groundwork for Prediction: Does Digital Transformation Cause Paydays? Well, It Depends 113

13 Predictor Markets: Different Industries Require Different Labors for Payback 127

14 Predictor Financials: Your P&L and Balance Sheet Context Indicate Your Ability to Achieve Your Payday 133

15 Predictor Communications: It Is About What You Sing and How You Sing to Influence Your Payday 143

Conclusion: How to Keep Your Digital Transformation Paydays Coming 149

Part IV The Science Behind the Book 153

Appendix A: A Lazy Reader’s Guide to Key Digital Transformation Definitions From Practice and Science 155

Appendix B: How to Measure Digital Transformation Efforts In Annual Reports with Dictionary-based Automated Textual Analysis 163

Appendix C: How to Compile a Unique Financial Database of More Than 20,000 Annual Reports 167

Appendix D: How to Start Understanding What the Annual Reports Say About Digital with the Help of Natural Language Processing (nlp) 173

Appendix E: How to Link Digital Transformation and Value with the Residual Income Valuation Model 177

Appendix F: Supplementary Analytics for the Fearless 185

References 197

About the Author 207

Index 209

TIM BOTTKE is a Senior Strategy Partner at Deloitte and Associate Professor of Digital Transformation at the SDA Bocconi School of Management in Milan, Italy. He has over twenty-two years of experience advising executives in more than twenty countries on technology and sustainable transformation.

Every year, tens of thousands of firms try their hand at digital transformation. Many, if not most of them, are unsuccessful. This has left many executives and business leaders wondering if the significant risk and high cost involved in digital transformation is worth the opaque return on investment promised by consultants and strategists.

In Digital Transformation Payday: Navigate the Hype, Lower the Risks, Increase Return on Investments, accomplished digital strategist and Senior Strategy Partner at Deloitte, Tim Bottke, delivers a provocative and eye-opening new perspective on digital business transformation. Going beyond the hype and uncovering its real, verifiable financial payback, the author offers unique insights and guidance for managers, executives, board members, and investors tasked with guiding their organizations through the digital jungle.

You’ll find a proven framework for defining and executing your next digital transformation initiative from start to finish, configuring your plan for maximum return on investment. You’ll also get empirical data that helps you understand your company’s real-world odds of successfully navigating your chosen digital strategy.

An essential resource for business leaders interested in or about to begin a digital transformation journey of their own, Digital Transformation Payday belongs on the bookshelves of entrepreneurs, founders, established company leaders, and digital enthusiasts looking for practical, no-nonsense guidance.

PRAISE FOR DIGITAL TRANSFORMATION PAYDAY

“Digital Transformation Payday offers practical advice and valuable evidence as to how and where specific technologies can positively or negatively relate to value. This book is a must-read for any leader looking to understand how technology investments drive their overall enterprise value based on their industry and financial structure to help guide their digital strategies.”

— Vincent Roche, CEO and Chair of the Board of Directors, Analog Devices

“Bottke wrote nothing less than a straightforward and pragmatic user manual for one of the most vital topics of today’s business environment: digital transformation and its returns.”

— Bram Schot, AO Board Member, Shell plc; Former CEO, Audi; Professor of Practice for Leadership and Transformation, Bocconi University; Senior Advisor, Carlyle Group & Global Cleantec Capital

“Is your digital transformation bound to be ‘Money for Nothing’ or ‘One Moment in Time’? With Digital Transformation Payday, you can make sure there is still a chair for you when the music stops.”

— Philipp Leutiger, Chief Digital Officer, Holcim

“Essential reading for any CXO, to explain the value of digital transformation up-front and to reap the rewards once the initiatives come to fruition.”

— Alexander Pavelka, Head of Data and Analytics, Red Bull

“Bottke’s Digital Transformation Payday offers a unique perspective on the promise and perils of digital transformation.”

— Jonathan Goodman, Global Chair, Monitor Deloitte; Vice Chair and Member of the Board, Deloitte Canada

“Bottke spells out not only the accelerators of the transformation journey, but also the numerous decelerators in a thought-provoking framework which can drive your future success and enable many digital transformation paydays yet to come.”

— Joel Fastenberg, CHRO Asia Pacific, Leading Global Financial Services Firm

“I’ve spent quite a long time in digital transformation projects in the last few years. Very often I’ve had the impression that returns on such investments were given for granted more than thoughtfully evaluated. Bottke’s book is particularly insightful in providing answers to the tough questions an executive would — and should! — typically ask.”

— Walter Susini, Senior Vice President, Marketing, The Coca-Cola Company

“This is not your typical fluffy ‘let’s be digital’ book. Read it to create real value with digital, not to play around.”

— Jaime Rodriguez-Ramos, Operating Director, I-Squared Capital