Sunil Gupta's Driving Digital Strategy is broader than it is deep, best treated as a primer. Gupta makes a compelling case for digital transformation, touching on everything from changing consumer expectations and micromoments to network effects and platform models. It moreover offers good examples of organizations that successfully leaned into a digital-first mindset. But, while rich in case studies, the book never digs into the details of what it takes to make the transition to digital. I suspect that many who pick this up were already convinced long ago. It's still a worthwhile read, though, as a refresher on some of the main forces driving the digital economy, and for its incisive insight into where transformations go wrong.

Gupta's posits that true transformation means reconsidering fundamental questions about your business model and its ecosystem. It's hard work, but necessary. Technological change demands it. Customers’ needs and expectations have changed, as well as the business risks and opportunities. Customers don't benchmark your work against your direct competitors. Instead, they are comparing you to Netflix, Google, and Amazon.

I don't imagine this is a shocking assertion, but perhaps it’s one some people still need to hear. Organizations need to redefine their business around customers—not their products or their competitors. Gupta cites a number of compelling examples. For example, The Weather Channel found that an advertising-based model was not viable once its audiences made the switch from television to mobile phones. But, they were able to pivot from reporting the weather to providing weather-related data. They were thus able to help retailers predict how the impact of weather on buying behaviours. It's a good story of an organization that reconsidered its core competencies and built new complementary products in the process.

“For Gupta, competitive advantage no longer comes from lower cost or product differentiation. ”

I don't imagine this is a shocking assertion, but perhaps it’s one some people still need to hear. Organizations need to redefine their business around customers—not their products or their competitors. Gupta cites a number of compelling examples. For example, The Weather Channel found that an advertising-based model was not viable once its audiences made the switch from television to mobile phones. But, they were able to pivot from reporting the weather to providing weather-related data. They were thus able to help retailers predict how the impact of weather on buying behaviours. It's a good story of an organization that reconsidered its core competencies and built new complementary products in the process.

Gupta makes the case that the best path forward is for businesses to reimagine themselves as platforms that enable transactions between suppliers and receivers. This has a few advantages. Gupta leans heavily on the network effect, whereby the value of the product grows as its user base expands, even without the addition of new features or products. For Gupta, competitive advantage no longer comes from lower cost or product differentiation. Rather, the advantage lies in that ecosystem of complementary, connected products that deliver network effects while increasing switching costs for the user.

Of course, Gupta acknowledges that this level of redefinition can be very challenging. Some companies shy away out of fear of channel conflict. He recounts the story of an insurance firm in India who was concerned that their investment in online, direct-to-consumer sales would conflict with their brokers. However, they wisely positioned the digital offering as a complement to the broker's service, suitable for simpler products. They were able to then turn these sales into a customer acquisition tool for the brokers when the customer's needs grew more complex and required more expertise.

But this kind of shift takes stubbornness and dogged commitment. Transformation often requires that organizations take a short-term hit. This can be a bitter pill to swallow, especially when success is measured by the quarter. The companies that while thrive recognize that this is only a stage they must go through. They fix their sites on longer-term success. For them, digital is not separate from their overall strategy. Instead of being a cost of doing business, technology is a critical enabler of the business.

This fact needs to be understood from the CEO on down. Companies that fail misunderstand the extent to which "transformation" means, well, transformation. It's a complete re-imagination of your business from a customer-first perspective. This is not simply a matter of kitting people out with some whiteboard and sticky notes and siloing them off in an innovation team to "act like a start-up."

In fact, as Gupta points out, this is a sure recipe for failure. Starting up an innovation team like this, he writes, "is like launching a speedboat to turn around a large ship. Often the speedboat takes off but does little to move the ship." Innovation advances at a rate faster than the organization can handle. This is well-illustrated by Venkatesh Rao's concept of "the builder's cone." If you're at the vanguard of change and waiting for the world around you to catch up, you're likely to feel frustration and even resentment.

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Meanwhile, the rest of the organization—still measuring using its old yard-stick—grows impatient because somehow, for all their design thinking and foresight, the innovation team hasn't yet produced anything concrete. The business wants to see measurable results. That's understandable. But it can force the innovation team to compromise their strategic work to focus on what's feasible today, under the constraints imposed by the prevailing culture and its processes. They get stuck in a reactive cycle of short-term thinking, sacrificing the longer-term vision. Nobody ends up happy.

Another pitfall cited by Gupta is the business runs a series of experiments to help rapidly execute digital transformation This can be a good idea. Unfortunately, many organizations pursue the experiments without a cohesive vision or strategy. They win some short-term success, but see little long-term impact. Some of the ideas don't scale well, Or, they address tactical issues without tackling the more fundamental problems that drive the need for transformation in the first place.

Successful transformation, or "meaningful transformation," as Marty Cagan calls it, takes three steps: first, hiring strong product leaders, who are in turn capable of developing an effective product strategy and winning the trust of the business; second, giving those leaders the room to recruit and develop empowered product teams; and third, redefining the relationship between the product team and the business such that the product team is seen as a true partner rather than subservient to their stakeholders.

The leap between 2 and 3 here is huge, but it doesn't happen without 1. You need the right people in place to drive the cultural change necessary to operate as a truly digital organization. Without that, there will always be a gaping chasm between the status quo—a business that sees digital as another means of doing what they've always done—and a business that is ready to compete in today's climate.