Power of Digital Transformation: AI, Strategy, & the Future

The weekly newsletter of the Business of Tech, giving you new insights into the world of IT service delivery.

Looking for stories from the podcast stories? Check out the pod itself on Apple Podcasts, Spotify, or daily in your inbox. Stories are available to everyone for five days,and Patreon supporters forever.

Was this forwarded to you? Join the list!

Unlock Digital Transformation & AI

As we continue analyzing AI from an MSP and technology advisor standpoint, I can’t help but return to a concept we’ve been seeing since long before ChatGPT took over the conversation: digital transformation.

I know, I know: examining AI and digital transformation at the same may seem like a buzzword tongue tie, but putting on my customer growth hat, I actually find that the overlap between the two is a great place to ground ourselves.

To turn what’s often a theoretical conversation into a tangible strategy for smaller businesses, I welcomed award-winning professor, consultant, author, speaker, and podcaster Michael Lenox onto a bonus episode of The Business of Tech. He recently published his first book Strategy in the Digital Age.

I’ve mentioned before how much I love talking to academics (especially ones who are fellow Virginians), and Lenox is no exception. With over 25 years of marketplace research experience, I found our conversation nothing short of refreshing.

Ready to reframe digital transformation from a small and medium-sized business perspective – particularly in the face of AI? Here’s what we got into:

The State of the Business Cycle

Lenox kicked off our conversation with an important reminder: digital transformation in the digital age isn’t what businesses tend to think it is. According to Lenox, what a lot of companies are forgetting is that digital technology isn’t just adding a new widget or plugging in the latest AI. Technology is fundamentally reshaping markets, and it’ll take a lot more than an update or gadget to keep up.

I, for one, couldn’t agree more. I’ve always believed that digital transformation isn’t just something that can help a company – in this marketplace, it’s essential for survival.

So, how can we scale this concept down for smaller businesses or folks that work with them?

Lenox outlined what he calls the strategist challenge, a core idea that valuable competitive positions emerge from the intersection of three things:

Your value and mission as an organization
The opportunities the market provides
Your capabilities that you bring as an organization to meet them

Seems simple enough – so what’s the challenge?

According to Lenox, the opportunity set of the digital age is tough to address due to the fact that it’s constantly shifting. In his own words:

“I think the hard, critical question that a lot of organizations need to be asking themselves is, ‘in this digitally transformed world, how can we best position ourselves there?’ A lot of times it’s not throwing everything out that you’ve done in the past and reinventing anew. In fact, I can think of no examples of companies that’ve been able to successfully just get rid of everything. How do you [instead] leverage the technology to add value given your current set of capabilities?”

The market moves so quickly that the goal of digital transformation shouldn’t be to get ahead of change (that would be impossible) – instead, the goal should be to leverage your unique position to make the most of where you are now.

The Role of the Technologist

So far, we’ve focused on the business aspect of digital transformation. As much as we – the IT types – care about business stuff, a lot of times, we’re too plugged in at the technology level to keep everything straight.

I asked Lenox about this disconnect, and he put it like this:

“If your digital transformation is being solely led by your IT organization, you’re probably set up for failure. You need top management buy in.”

Digital transformation can’t be achieved by throwing money at cloud computing at data collection, but it can’t just be too focused on just business, either – leaders on both ends need to align on questions like:

What are the applications we can create?
What’s the value we can create for not only our customers, but other stakeholders? Maybe efficiency, enhancing opportunities?
How do they speak to this competitive positioning question?
How does this speak to who we are and what we’re trying to do as an organization?

To know you’ve got the right buy-in from the right people, Lenox recommends looking for what he calls “digital champions,” the people who understand what technology can do, but aren’t necessarily technologists themselves.

To illustrate the importance of these types of voices, he pointed to the famous Kodak example. Though the company failed to adapt to the digital world, it very much saw the shift coming. Kodak leaders had tangible plans they wanted to implement as far back as the 1970s, but they couldn’t overcome the organizational transformation hurdle, particularly at the core business unit levels. In short, there was a serious lack of cohesion between technologists and business strategists.

If digital transformation is on your mind, you won’t get far without a unified vision from a diverse pool of leaders.

Implementing AI

With AI coming in hot, it’s worth asking how much emerging technologies like AI really matter in the grand scheme of things.

On this front, Lenox points to the concept of the S-curve, which is when a technology doesn’t provide much efficiency when it’s first implemented. But once you get through the rough patch, you could experience exponential growth.

With ChatGPT capturing the popular imagination for the better part of 2023, he believes that now is the time to experiment with the technology in order to learn. And it’s up to us to properly frame this period of learning.

To get the ball rolling on this mindset shift, Lenox recommends asking yourself this key question: “How do you build a culture that allows you to experiment with something that by its very nature is going to evolve and change in ways that are hard for any of us to fully understand at this point?”

To break this down even further, Lenox pointed to how the language we use can strike the balance our clients need between fear and inspiration.

On the one hand, if you don’t move quickly, you’ll suffer later. But, on the other hand, it’s important to explore positive framing as well: what can these technologies do for you? Have you thought through where they can add value? How might this change how you position yourself in the marketplace?

To really get through to your people, don’t forget to return to that larger strategy level. Don’t lead with the technology – lead with what the technology can do for you, your stakeholders, and the broader community you operate in.

Finally, there’s another responsibility the technologist must take on when implementing AI as a part of digital transformation: ethics and policy. Without checks and balances, this technology becomes a slippery slope into privacy concerns, security risks, and much, much more.

Lenox’s advice is simple:

“You constantly have to be asking yourself, is that okay? Do we feel comfortable with that? Is that serving our values and mission to be using data or analytics or autonomy in that way?”

If you’re in the same camp as Lenox and myself, you likely also see much of the burden of digital transformation (for AI in particular) falling on our shoulders. There’s a lot to think about, but considering the potential for positive change, it’s not a bad position to be in.

To read Lenox’s exploration of digital transformation in full, you can find Strategy in the Digital Age on Amazon, Barnes & Noble, or wherever you buy books, or on his personal website www.michaellenox.com.

That’s it for this one! We’ll be back with another deep dive next week – as always, I’m available for feedback at [email protected]

More from MSP Radio

Missed Things?

How about our latest videos to catch you up?

The Daily Podcast available as videos

Recruiting Veterans and MSPs with Billy House, MSP Hire

Lessons from a hiring expert of remote teams, with Adrian Esquival

Why providers should care about IP & Copyright, with Steven Weigler

IT Solution Provider Compensation Report reviewed with Peter Kujawa of Service Leadership

Want the Daily News?

All the stories from the daily Business of Tech Podcast are available in the daily digest, and stories are available to everyone for the first five days, and Patreon supporters forever. Catch the audio of the show anytime on Apple Podcasts, Spotify, YouTube, or wherever you find podcasts. Links at businessof.tech

Want to change how you receive these emails?
You can update your preferences or unsubscribe from this list.