Senior management (and board members) are undoubtedly keeping a close eye on the global drive towards digital transformation. Many of our readers are in the middle of executing a promising digital transformation strategy. Yet some companies are struggling with transformation success, while others have not even started on that road.
While digital transformation carries big benefits, it isn’t easy. This is why many organisations have not yet embarked on programs to lead this. Projects often fail. The reasons for failure are complex, but it can come down to getting the basic approach wrong.
That’s why, in this article, we go back to the basics. What exactly is digital transformation? And how can companies kick-start a digital transformation strategy – and achieve success?
Transformation vs. Change
Change is a constant – it happens every day, it is relatively easy to achieve, and it is usually incremental. Companies experience change year-in, year-out. New technology goes to market, companies adopt the benefits and subsequently experience some degree of positive change.
Transformation, on the other hand, is far more disruptive. Digital transformation creates a new future and moves past previous constraints. It does so through a comprehensive change in working practices and processes.
The very first step is understanding just how deep, disruptive and far-reaching real and effective it is. Your digital transformation strategy must involve a root-and-branch review of your business and its operations.
Take a lighter touch and chances are that your strategy will have limited impact – leaving the benefits of success to your competitors.
The broad influence of digital transformation
Digital transformation affects almost every aspect of a business so it’s important to have a measure of focus when starting out on your strategy.
In other words, which aspects of your organisation will the transformation affect the most? Or, where should you focus when developing your strategy? We think there are three key areas of impact:
- The business model. Digital transformation runs deep, impacting entire business models – and indeed the reason why a business exists. Countless companies will face obsoletion if they don’t take a transformative approach that accounts for the power of digital. So, start by thinking how technology improves, transforms and indeed affects your business model.
- Operational transformation. Not dissimilar to the effects of change, but greater in impact is the effect that technology has on everyday business operations. From smoother collaboration between employees to industrial transformation based on IoT and 5G. Operations are rendered more agile, more cost-effective, and safer thanks to new technology.
- Customer (and client) experience. Finally, readers will identify with the way B2C interactions have changed significantly thanks to technology. It holds true across the board, whether B2C, B2B or government and non-profit. Digital transformation permanently modifies how customers, clients and stakeholders interact with your organisation.
So digital transformation reaches wide and deep and will change your organisation at all levels. Why would any organisation willingly go through that much change?
Digital transformation benefits
Companies are in the pursuit of profit – not technological and social experiments. That said, digital transformation delivers real benefits, which is why organisations are keen to implement it. Here’s why:
- Lower cost base. Less paperwork, more efficient operations and lower staffing costs are all up for grabs. Digital cuts out manual processes, lifting your company to a higher level of efficiency. For example, switching to digital meeting solutions significantly reduces paper cost and human effort required to manage meetings.
- Revenue growth. While digital reduces your costs, it also grows your revenue. Digital tools can power your marketing activities with data-driven insights to grow sales. Transformation can also deliver new products and new markets.
- Greater customer retention. Customers prefer the smooth, fuss-free processes that digital brings. Digital also delivers more customised products and services, contributing to greater customer satisfaction in the long-run.
- Disruption. Digital has the potential to deliver a positive course change for your organisation. In fact, it could even be an entirely new business model. You can rely on digital transformation to deliver faster speed to market with higher innovation.
- Increased business resilience. Digital transformation is changing markets around the globe. Companies must embrace digital to keep their competitive position and to ward off challengers. Furthermore, digital delivers a more agile, more adaptable organisation.
While going digital has its costs, the benefits are clear. But what is the best way to get started? How can companies get a degree of momentum, given the scale and complexities involved?
Kick-starting transformation, and building momentum
Digital transformation is a long-run project – more a marathon, than a sprint. Yet starting transformation with a sprint can help build momentum for the long haul. We suggest three stages to a digital transformation strategy:
- Quick wins. See how and where your company can use technology to secure dramatic, effective changes. A new product, or a dramatically improved process. Quick wins can power and motivate bigger, deeper changes and provide stamina when the digital transformation going gets tough.
- Scale and deepen initial projects. Identified successful wins? It’s time to start building a digital transformation team – and a framework. Broaden transformation efforts to go beyond specific projects, encompassing entire business functions.
- Sustain change. Technology is always changing and, for better or worse, this means that transformation never stops. Develop a sustainable process that ensures ongoing transformation so that your organisation’s digital path never stalls.
Steady and considered progress is the best approach. It will put your transformation program on a sustainable course.
A best practice wrap-up
We said at the outset that digital transformation often fails despite the best of intentions. However, it’s a well-beaten path taken by many others. Here are some top tips:
- Lead from the front. Digital transformation will never fully succeed if C-level leadership and boards do not take the lead. It’s not a job for the IT team – it is a root and branch organisational overhaul. Senior staff must actively lead and provide the vision for success.
- Staff engagement is key. You must motivate staff by outlining positive outcomes with re-assurances around roles and retention. Ongoing staff communication is a must alongside the appointment of transformation champions.
- Consider the customer. Digital may deliver cost benefits, but what does it mean for your customers? Factor in the entire customer journey and make sure it is wrinkle-free.
- Deploy cutting edge tech. There’s little point kicking off a digital strategy based on technology that is in its sunset days. Ensure your IT partner is ready with technology solutions that reflect the future, not the past.
- Synchronise between IT and everyone else. Technical features are what powers your digital transformation, but at the end of the day usability is what really matters. Test during the roll-out of new technology and incorporate feedback to keep the usability aspects of your strategy on track.
We can go on but in truth successful digital transformation is as much about taking the right actions and avoiding missteps – as it is about maintaining a mindset.
Culture is critical for transformation success
At the start of this article we pointed to the difference between transformation and change. Leaders must understand the difference when embarking on transformation – or all they’ll end up with is change.
Transformation, therefore, is a mindset. This transformational mindset must permeate your organisation, from the top right down to staff level. We argue that successful transformation depends in large part on the right mindset – and a culture change.
Because digital transformation is a long-run process companies must instill a culture that is accommodating and supportive of digital change. This runs alongside our previous point of staff engagement: digital transformation runs so deep that, quite frankly, everyone must be on board – all the time.
Here, boards play an important role. The powerful oversight and orchestration capabilities of boards can drive the culture that makes digital transformation a success. A board that is pro-active about the project will act as a cheerleader – driving the culture that transformation success requires.
And there’s no doubt that such long-haul projects will require cheerleading to sustain momentum and motivation – and success.
PS: don’t miss our article on digital transformation in the boardroom – it’s a powerful illustration of how digital has the capability to deliver empowering change.