What is the digital entrepreneur?
Digital entrepreneur is a business individual involved in creating unique values within extreme business risk conditions by using digital transformation technology. Digital entrepreneur excels in two dimensions: the what of technology (digital capability) and the how of leading change (leadership capability). Digital capability is about where and how to invest in the digital opportunities. Digital leadership is about how to use digital technology to achieve business mission.
Why it matters?
Studies have shown that transformative digital entrepreneurs outperform competitors by achieving 10% more in revenue and 25% more in net profit. This achievements will not be attained if digital entrepreneurs are not competent enough in digital and leadership capabilities. According to (Westerman, G. 2013. Leading Digital), digital businesses can be classified as per the following:
- Level 1- beginners: when a business shows little digital and leadership capabilities. Examples: manufacturing, medical and pharmaceutical industries.
- Level 2- fashionist: when a business shows higher level of digital capability but accompanies with low level of leadership capabilities. Examples: telecommunication, travel and hospitality industries.
- Level 3- digital mastery: when a business shows higher levels of digital and leadership capabilities. Examples: high technology, online retails and banking industries.
- Level 4- conservatives: when a business shows higher level of leadership capabilities but accompanies with lower level of digital capabilities. Examples: insurance and utility industries.
In this article, I will be focussing on the digital mastery or digital entrepreneur groups and how the digital and leadership capabilities impact the growing startups.
What are the digital capabilities and how they impact startups?
Digital capabilities are skills that enable an entrepreneur to creating a compelling customer experience, improve operations and reinvent the innovative business model.
Creating a compelling customer experience: Transforming the customer experience is the heart of the digital transformation. Digital technologies are changing the game for the customer interactions. Customer experience aims at increasing reach and customer engagement through new digital channels. Digital entrepreneur creates a compelling customer experience through using digital platforms to increase customer discovery, retention and growing. Digital transformation will enable customer data and analysis for reinventing of the right business model and offerings. The outcomes of the creating a compelling customer experience are successful identification of the customer segments, creating unique value propositions, choosing the right set of distribution channels and customer relations and capturing values.
Improving core operations: Digital capabilities enables exploiting the power of core operations through connecting people, processes and technology in a unique way to help you achieving better customer experience and outperform competitors. Digital entrepreneur will lead to efficient management of resources, better control of operations, innovate opportunities, increase customer reach & engagement and financial outcomes. Digital capabilities will enable entrepreneurs to assess strategic assets available and think of ways how to plan operations, develop capacity building and improve efficiency of core operations.
Innovating business model: Digital entrepreneur will think how to increase the customer experience and improve core operations to deliver a unique value propositions to customers. Digital technology aims at providing valuable resources and information to discover opportunities. Beginner competitors will take longer period and less efficiency to acquire information on market and opportunities. Reinventing the business model to better serve the target customers will requires quick, accurate and sufficient information on business opportunities available. Innovative business model is characteristic with innovative value developed, delivered and captured within a quick time frame and with disruptive offerings.
What are the digital leadership capabilities and how they impact startups?
Digital leadership capabilities are skills that enable an entrepreneur to craft a digital vision, articulate an actionable strategy, build up a governance, engage with employees and create a transformed relationship between IT and business professionals.
Crafting your digital vision: Digital vision is a combination of an intent (a picture of what needs to change) and outcomes (i.e. measurable benefits). Crafting a digital vision is an outcome of anticipating opportunities within a challengeable business environment. It is recommended to be top-down lead by top management. Transformative vision will lead to strengthening competition positioning and generating healthy cash flows. Vision is to be effectively communicated to lower management levels and employees for better engagement and assistance of implementation. Digital vision will take one of the three perspectives: increasing customer experience, improving internal operations and reinventing the right business model. A transformative vision will require a strategy to be implemented successfully.
Articulate an actionable strategy: A strategy is presenting a roadmap to achieve the business vision. A strategy should be usually showing the best direction to move, clear aims, relevant initiatives, actions plan, KPIs and resources required to conduct the strategy. It should be based on relooking into the required strategic assets and how to improve them to achieve the strategic vision. Strategic assets can be evaluated through the basis of VRIN (valuable, rare, inimitable, non-substitutable).
Engaging the organization: Successful implementation of a transformative vision depends highly on the scale of organizational engagement. Unlike incremental changes that can be done by few people, transformation can only be achieved through engagement of many. Vision will require a lot organizational changes such as redesigning organizational processes, invest in a new technological tools, appoint talented, develop new digital skills and introduce new ways for working. Leaders will lead the efforts to engage employees in implementing the digital vision and making it a reality. Also leaders will need to encourage engagement of employees for improving the vision as time is evolving through open conversation and encouraging innovative ideas.
Governing the transformation: Digital governance will help to steer the company’s digital activities in the right direction. Digital governance is a management system that explains how activities are carried over, by whom and set the control level desired. Governance system will be based on three distinctive perils: building a leadership roles (to transform the vision), organizational structure ( to carried over the activities across the organization) and digital business culture (supportive values and norms). The purpose of having a governance system is to ensure consistency and appropriateness of activities to achieve the business mission. Digital governance will focus on achieving two key goals: Coordination ( prioritizing, synchronizing and aligning initiatives across the enterprise) and sharing (using resources across the organization). Digital governance will function through a combination of governance committees ( overseeing and approving initiatives), leadership roles ( implementing initiatives) and shared resources (allocating necessary resources for each initiative).
Strengthening relationship between IT and business professionals
Leadership capabilities comprises of crafting a vision, building a governance, encourage engagement across the organization and encouraging a strong relationship between IT and business leaders. Without proper aligning of digital capabilities with business needs, digital projects will not be seen as a viable investment with a higher ROI. Building a digital capabilities as for creating customer experience, improving operations and reinvent a digital business models are key capabilities. Digital entrepreneur should require both balancing capabilities for digital and leadership in order to transform a successful business and initiatives.
How do you transform a digital project?
Transforming a digital initiative will usually go through phases such as framing the digital challenge, building digital capacity, mobilizing the organization and finally sustaining digital transformation.
Framing the digital challenge: Framing of a digital challenge will go through the following stages:
- It begins with anticipating a major challenge that hinders customer experience or decrease efficiency of operation or losing market shares.
- Conduct an pre-assessment to test feasibility and prepare a business case.
- Building an organizational awareness on the anticipated challenge for better engagement and creating a crowdsource of flow of ideas.
- Assessing strategic assets required to solving the anticipated challenge and knowing your starting point.
- Challenge your business model to be innovative in developing and delivering the unique value propositions.
- Crafting a transformative vision and align it with the top team.
Building digital capacity: building digital capacity aims at building skills (digital & leadership) and assets to enable digital transformation. Assessing existing strategic assets and bridging gaps with the right investments (develop new skills and assets) are the key steps to transform digital initiatives. Focussing investment will go through the following processes:
- Translate your vision into an action: Articulate an actionable strategy to achieve the vision.
- Building your governance: steering committees, leadership roles and shares resources.
- Fund the transformation: allocate budget to finance digital transformation projects.
Mobilizing the organization: Transformative change programs only succeed when leaders are able to earn employee’s trust, engage them and mobilize them into action. Mobilizing the organization will be done through the following steps:
- Signalling: marketing digital initiative with emphasizing on outcome benefits.
- Earning the right engage: building sufficient momentum with employees by co-creating solutions and support actions.
- Setting new behaviors: encouraging a culture shift by using digital technology to change the way people work and collaborate.
Sustain the digital transformation: This is the time where skill gaps are bridged, organization is doing the right activities, leaders busy with planning for another digital transformation projects. Without a concerted efforts to sustain the transformation initiative, your vision and business objectives will be in risk of failure. Digital sustainability can be maintained through the following steps:
- Building foundation capabilities for the IT digital platforms and IT-Business relationship.
- Align incentives and rewards for the employees to incentify and reward them for the good works done.
- measuring , monitoring and iterating as through having management system in place to measure and monitor results.
Written by: Munther Al Dawood
Enterprise Development Services