About eight in every ten enterprises have undertaken digital transformation initiatives over the last five years. But only one in three such enterprises has improved their performance. The reasons for success are manifold. Enterprises that pay attention to detail and cover all seven bases listed in this IT blog for technology professionals reap success.
1. Begin with the End in Mind
Indulging in digital transformation for the sake of it, or because others are doing it is a recipe for disaster. Focusing too much on technology or obsession with innovation becomes counterproductive. Replacing legacy technology is the core of digital transformation, but it is only the means to an end.
Have clarity on the objectives. Consider how the enterprise has to change, and see how technology can enable the company to reach the desired state from the existing state.
Develop a clear vision of the destination. Translate the vision into an executable business strategy. Break down the vision into actionable, measurable goals. Goals allow the enterprise to work towards a definite target and set milestones.
Gartner estimates half of the enterprises who commit to digital transformation do not set vision or have proper goals. Many CIOs focus on process optimization, without considering the relevance of the process. Such inaction is dooming the exercise to failure.
2. Focus on the Customer
Most enterprises look inward when committing to digital transformation. The popular reason for indulging in the exercise is to digitize the operating model. But enterprises that drive successful digital transformation initiatives focus on customer experience. They make interventions to improve the customer journey or launch new products.
Understand the customer, and drive digital transformation efforts to what the customer wants. For instance, deploying chatbots reduces costs for the business and makes customer support faster. But without training the bots to handle the most common issues, it only creates an obtrusive layer between the customer and a human agent. The customer, annoyed at the roadblock, will go elsewhere and the company will end up losing more revenue than the operational costs saved.
3. Do not Overlook the Human Quotient
Sustainable digital transformation sets in when the workforce adapts to changes in technology.
Digital transformation requires tweaking employee roles and responsibilities to align with transformation goals. Employees who do not agree to it can sabotage the initiative, as has happened many-a-times.
Institute a coherent people strategy, side by side with the technology strategy. Success depends on:
- Clarity on the required role change. Leaders and managers have to indulge in outreach to clarify doubts, clear misconceptions, and stifle rumours.
- Convincing the workforce how the transformation will benefit them, and seek their buy-in.
- Training the workforce for new competencies, and hand-holding them through the learning curve.
Make sure everyone moves in the right direction, at the same pace. Often the pace of technological change exceeds the ability of humans to grasp it, creating dissonance.
Resistance to change is inevitable when change forces people out of their cosy status-quo. GE faced still resistance to change from its 25,000+ workforce when implementing digital technologies in sales. The changes disrupted the way of work entrenched over 20 years. The change managers forged ahead, articulating the transformation goals with clarity. They listened to the rank and file and acted on the feedback received from customers and field sales agents.
4. Do not underestimate Leadership
Successful digital transformation is both science and art. The science is technology. The art is effective leadership, motivation, and influence, to make people embrace technology.
- Position digital-savvy leaders in place before the transformation initiative begins. Successful leaders communicate effectively, to inspire people.
- Motivate senior line managers and other leaders. The initiative gets credibility if senior leaders with established reputation support the move.
- Identify a group of early adopters and innovators, and promote them as influencers. Position them as champions of digital initiatives.
A fundamental issue inhibiting digital transformation is a lack of digital mindset. The onus is on leaders to cultivate the digital mindset across the rank and file.
BBC’s Digital Media Initiative, launched in 2008, aimed to alter data management practices and content delivery styles. The project, in partnership with Siemens, broke down by 2013. Attempt to execute the project in-house failed due to lack of technical capabilities. BBC lost £125.9 million in the fiasco. The root cause of failure was the lack of effective leadership. Poor governance, lack of executive monitoring, and inability to end silos doomed the initiative.
5. Structure Teams Well
A recent Forrester study lists the top three hindrances to adopting a digital strategy as:
- Lack of digital expertise and skills (57%)
- Functional disagreement on digital ownership (52%)
- Organizational inertia (51%).
Success often depends not only on a competent and committed team but effective team organization.
Organize employees into product teams, with a focus on providing a better experience for the customer. CarMax’s Digital Transformation exercise offered customers the convenience of buying a car from the website or a mobile app. The product teams revolved around a product manager, a lead developer or engineer and a user experience specialist. Functional roles, such as development, finance, and operations, worked around these roles.
Have periodic reviews on how teams meet business objectives and customer needs. John Deere broke up its portfolio of projects and implemented it in two-month increments.
Foster collaboration within and among teams. Over time, teams create information silos. Pitney Bowes offers a good benchmark. The company formed tech strategy teams and global innovation roundtables to foster collaboration. All teams shared their practices on continuous integration and continuous delivery. The company benchmarked the efforts of trailblazing teams and developed a standard set of practices around it.
Adopt DevOps and agile processes for effective teamwork and transparency. Digital transformation succeeds when stakeholders collaborate to solve the problem. It often takes a courageous leader to broker cross-organizational relationships.
Aggregate the data across the enterprise and articulate a cohesive data strategy with logical goals. Without relevant data, powerful technologies such as AI and machine learning are useless.
6. Pay Attention to Culture
Digital transformations require cultural and behavioural changes. An open culture breeds innovation.
Innovation also requires calculated risk-taking, transparency, open sharing of information, and seamless collaboration. Digital transformation remains a non-starter without instilling a culture that values these traits.
- Deploy formal mechanisms such as reinforcing behaviours and ways of working.
- Encourage employees to offer feedback
- Make a concentrated effort to let go of command-and-control supervision, unless the nature of work demands it.
Changing technology is a walk in the park, compared to a cultural shift.
7. Do Not Assume Top Management Agreement
Digital transformation is costly. Quantify the benefits on offer through the transformation exercise. The C-suite is unlikely to give the green signal without a positive ROI.
Blanket approval is not enough. Only four out of ten companies have a C-suite backed steering committee to drive digital transformation. The lack of such a body could cause serious downstream funding issues, leading to half-baked implementations. For instance, Artificial Intelligence and IoT deliver competitive advantage. But deploying such complex and disruptive technologies requires considerable investments and board-level decisions.
As the stakes of technology get higher, digital transformation becomes a do-or-die initiative for enterprises. Getting digital transformation right delivers massive competitive advantages. Getting it wrong, or simply not doing it, pushes the enterprise into obsolescence.
