Digital transformation is a radical evolution of the way a company uses technology to drive business performance. While this shift in business strategy and philosophy requires buy-in from every level of the organization, it’s the company leadership that must be the catalyst for change.
Working with digital transformation initiatives for our clients, I have learned that employees and departments are often welcoming of change and ready to dedicate themselves to new processes and learning new skills. It’s at the C-Suite level where digital transformation encounters the most resistance – despite the wide acceptance that the only alternative to digital transformation is an irrelevance, lack of market share, and eventual extinction.
From my experience spearheading transformation initiatives, I’ve identified five key tactics that contribute to successful digital transformation.
1. Start with Culture & People
Digital transformation isn’t achieved by simply purchasing some new software or new technology. The employees and the culture at your company are what ultimately will define your digital transformation success or failure. Research on digital transformation initiatives from BCG supports this approach, with 90% of the companies that focused on culture reporting strong financial performance, compared to 17% of companies that neglected culture. When we begin a digital transformation initiative, we start with people.
To ensure everyone is aligned behind the transformational initiatives, I recommend conducting an internal survey to help you understand the current state of the company, and gain vital feedback from stakeholders. You need to empower staff with the skills and training they need to implement new processes and solutions, fostering an agile culture where people can identify and move quickly to capitalize on new opportunities.
From my experience working on digital transformations, I’ve discovered this can be a challenge for companies that have focused on core competencies for many years. Aversion to risk and drive for cost efficiency has served traditional business structures well in previous decades, but this top-down approach leaves companies ill-equipped to empower employees and embrace the agile culture.
Leadership has the responsibility of establishing the guidelines and inclusive structure that encourages the people and teams to make decisions that progress the company towards the desired business goals and vision for the future.
2. Asses Current Technologies & Capabilities
When I begin a digital transformation journey with a client, the first step is to conduct an assessment of current technologies and capabilities. This discovery process helps you to answer the following questions and define the current state of your company:
- What are your customer’s expectations?
- Are you meeting consumer demand?
- Which areas can be improved?
- Which digital technologies can help you to meet your strategic business objectives?
- What does the exceptional customer experience look like at your company?
Once you know the answers to these questions, you might discover your company faces a more fundamental challenge: is your current business model being challenged, and will it need to change?
Before you embark on a digital transformation initiative and invest in new technologies, you need to have a deep understanding of your current business processes and capabilities. As a leader of digital transformations, I’ve learned that for companies to realize their digital vision, identifying where you have gaps in your current data infrastructure is imperative. What insights do you need to deliver your ideal customer experience, and how can you access that information?
3. Define the Ultimate Vision
I can’t overemphasize the importance of defining a clear vision of success when embarking on a digital transformation initiative. Clearly articulating what the future looks like and highlighting how it will make a positive impact on the stakeholders at your company is absolutely essential.
The clients that have achieved the most success with their transformation communicate a clear vision and ensure buy-in at all levels of the organization. If you take a look at the global companies that have dedicated vast resources and still struggled to achieve success with their transformation, a lack of a defined ultimate vision is at the heart of their failure.
Back in 2014, the automotive giant Ford announced plans to transform and place innovation at the center of their business model. However, chief executive Mark Fields didn’t bring digital into the heart of the business. Instead, Ford created a new digital section of the company called Ford Smart Mobility, setting up a base for the new department thousands of miles away from the main Ford headquarters.
This disparate innovation department approach failed to drive the digital transformation of the company forward, and Ford suffered a considerable drop in the share price. Mark Fields stepped down in 2017, with executive chairman Bill Ford Jr stating the importance of applying digital innovation at every level of the organization. At the press conference following chief executive Fields departure, Ford Jr told reporters, “To be able to sharpen your message, you need to have clarity of strategy and a clear sense of alignment behind that message.”
This statement is true of all digital transformation initiatives. Without a clear vision for the future to achieve buy-in from stakeholders, it’s impossible to match the speed of digital innovation and drive your business forward in the digital age. Ensuring the organization is unified behind transformational initiates is imperative.
4. Define the Strategies to Achieve Your Objectives
After you have defined what you want to achieve with your digital transformation, you need to establish a strategy that will help you accomplish your strategic business objectives.
From my experience working on clients’ digital transformation initiatives, I’ve seen first-hand how the companies that transform successfully do so for a specific purpose. That purpose is unique to your company but is always focused on the needs of your customers, the benchmark set by your competitors, and the processes at your company that can be made more efficient.
When your digital transformation moves into the execution phase, it’s vital that you set target outcomes to work towards and to judge the success of your initiatives. Customer experience often dominates the C-Suite discussion of transformation, but digital initiatives often overlap and contribute to the following strategic business objectives:
- Improving customer experience to drive revenue, increase customer retention, and increase customer lifetime value.
- Streamline business processes to be more cost-effective and increase productivity.
- Empower people within the organization with a culture that fosters agility and innovation.
- Become data-driven to improve decision making and gain a competitive edge.
The above objectives are common goals for the majority of companies embarking on digital transformation initiates, but the unique objectives for your company will define the strategy that will deliver business value and determine the road map for your digital transformation.
5. Learn to Be Agile: Test & Experiment
From my experience of digital transformation, I’ve learned that embracing an agile approach is the only way to quickly capitalize on changes to consumer behavior and deliver the products and experiences that consumers demand. Research from PwC reinforces the benefit of an agile approach, revealing that agile projects are on average 28% more successful than traditional projects.
Once you start to execute strategies and deploy new processes and technologies, it’s important to conduct structured, ongoing evaluations to judge the effectiveness of new initiatives. This can be in the form of pilot trials, testing, and experimentation.
This continual evaluation enables you to see how effective new technologies and processes are at improving the efficiency and effectiveness of workflows. Testing reveals whether adjustments and changes can help you to leverage the technology further to drive performance.
By conducting testing, you will find that stakeholders are more receptive when pilot initiatives prove concepts. In every digital transformation I’ve led, stakeholders are required to change the way that they work. This almost always involves a break away from traditional processes that were once successful and productive, but are now outdated and cumbersome. People are at the heart of every successful digital transformation. With the testing of concepts, stakeholders can see for themselves how technologies can improve their workflows and drive the business forward.
Whenever you integrate new technologies or systems, it’s always tricky to predict precisely how effective the change will be. By structuring the rollout and making the process as transparent as possible, you can ensure that stakeholders buy-in to the process and learn how to utilize new capabilities successfully.
From my experience as a leader of digital transformation, the above steps help companies to bridge the digital gap and embrace change to drive the business forward. Digital transformation is a pivotal moment for every organization. It can make a huge impact and catalyze growth, but it can also cause confusion and wastage if the company leaders do not take steps to steer the transformation. By assessing your current capabilities and identifying the technologies that can make the most impact, you can harness the power of disruptive technologies and position your company to take advantage of the opportunity, rather than become a victim of disruptive change.