In 2018, $1.3 trillion was invested in digital transformation (DT).
Of that money invested, $900 billion of it was completely wasted because 70 percent of DT efforts never achieved their goals, according to a recent Harvard Business Review story.
Most companies have a fundamental misunderstanding of what DT means and how it needs to be orchestrated. These same companies need to execute DT successfully in order to avoid irrelevancy and getting left behind. To avoid disruption and become the innovative disruptor, realizing the promise inherent in DT and making the necessary organizational change to implement DT is an absolute imperative.
SalesForce defines DT as “...the process of using digital technologies to create new — or modify existing — business processes, culture, and customer experiences to meet changing business and market requirements. This reimagining of business in the digital age is digital transformation.”
The key to SalesForce’s definition is the phrase, “reimagining of business.” DT empowers companies with the possibility to reimagine all aspects of their enterprise from communication and operations to sales, marketing, and the customer experience. Every aspect of a business can be elevated and reimagined when DT matched with organizational change is orchestrated correctly.
However, many companies fail to understand that DT only opens the door to new ways of doing and innovating. It does not, by itself, guarantee that what’s possible becomes reality on the ground.
CMS Wire explores why organizational change is crucial to the success of DT for any company: “While infrastructure and technology are clearly important considerations, digital transformation is as much about the people and changing the way they approach business problems and where they look to find solutions. In fact...many organizations forget to address the necessary cultural shift needed to change the mindset of workers, without which no digital transformation project is going to succeed.”
In the end, DT is as much about people embracing a philosophy and cultural mindset as it is the adoption and integration of digital tools and processes within an organization. DT is about people, namely your staff and the people it serves, finding new, more meaningful and efficient ways to connect.
To execute DT and realize its potential in real-world scenarios, companies need to first understand that DT is a mindset within an organization, not a set-it-and-forget-it technology solution; next, they need to take fundamental steps to build the right culture and implement the type of organizational change that ensures the DT initiative meets its goals.
Tip #1: Create or Refine a Broader Business Strategy
Before embarking on a DT journey, companies need to have a strong, well-developed business strategy in place. In essence, companies need to understand their “form” or strategy before they go about trying to execute it in a new way. This sounds simple, but far too many businesses jump into DT thinking that software and digital tools are a panacea, failing to realize DT can’t help if a business doesn’t know where it wants to go.
A recent Quora answer by Andy Noronha, Director of Strategy & Thought Leadership at Cisco, summed up the importance of knowing where a business is headed before executing a DT strategy: “This is why we believe that transformation leaders must orchestrate transformation. The DBT Center’s definition of ‘orchestrate’ is ‘to mobilize and enable so as to achieve a desired effect.’ Orchestration involves mobilizing and enabling different resources in an organization using the power of networks to achieve transformation goals.”
Two key aspects of Noronha’s take are relevant here. First, DT, when effective, applies to the entire enterprise, i.e. “mobilize and enable different resources in an organization.” Second, it seeks to achieve “a desired effect” and “transformation goals.”
If your business hasn’t established its desired affect or transformation goals, DT just can’t work.
Tip #2: Look Inside
There’s a tendency for companies seeking transformation through technology to focus too much on external elements and resources like investing in software and technology or hiring an army of consultants.
Purchasing the right tools and leveraging outside experts has its place, but not at the expense of your staff. Your staff’s intimate knowledge of your business is essential to DT; and your staff’s embrace of the DT culture and mindset is the only way DT efforts can succeed.
DT is about building a digital culture. This culture is driven by your people at all levels of the organization. If people feel alienated or threatened by DT, they’re less likely to champion it and might even directly undermine it. When waves of consultants crash through the door and new gadgets and technologies are being tested out, employees can’t help but feel threatened by a role change or even job loss.
According to The Business of IT Blog, “Achieving buy-in from executives is only part of the process, however, as it is vital that all employees are also on board. The most successful initiatives experienced a complete culture shift in the company environment and ensured that all employees felt like they were part of the change. This can be done by redefining individuals’ roles and responsibilities so they align with a transformation’s goals. This not only helps clarify the skills and roles the organization needs, but it also helps ensure employees are included in the process from the very beginning.”
Businesses that want to transform need to look inside for expertise. When staff are asked to contribute or participate, they feel a sense of control and ownership over parts of the process. And if leadership clearly communicates the benefits of DT — flexibility, increased productivity, enhanced professional development, and financial health — teams will generally buy in to the DT culture that’s necessary for success.
Tip #3: Be Audience-Focused
When executing a DT initiative, businesses must keep their eyes on the prize. It’s easy to lose sight of DT’s main goal when engaging such a large and complex project.
What’s the main, overarching goal of DT? To better understand and more efficiently serve the needs of your customers and/or clients.
A business must always keep the customer and his or her experience top-of-mind when developing the business strategy that will be amplified by DT. Failure to understand what your audience needs and how they want to fill these needs renders DT moot.
As the Harvard Business Review post, “Digital Transformation is Not About Technology,” eloquently puts it: “...if people lack the right mindset to change and the current organizational practices are flawed, DT will simply magnify those flaws.”
It’s critical for businesses engaging digital transformation to think from the outside in. Companies that engage DT but fall prey to narcissistic tendencies and myopic approaches forget that “The most important thing for customers is their own experience. So that experience should be the most important thing for your business....Customers continue to put enormous value on organizations to provide the right experience at the right time and have increasingly little patience for anything else,” according to the Enginess Team.
Effective DT empowers a company to consistently deliver what a customer needs, when they need it, and in a way that’s convenient and painless for them. What’s more, DT and the culture that makes it possible can adjust quickly when these needs and their delivery requirements suddenly change.
Tip #4: Embrace Collaboration, Agility, and Flat Teams
As noted earlier, DT touches every aspect of a business. It is, by nature, a cross-functional and multidisciplinary endeavor that requires broad expertise and agility. A culture that fosters collaboration and agility also requires a flat team structure that enables idea sharing, experimentation, and the ability to change tack quickly.
Traditional top-down hierarchies simply can’t keep up with the pace of DT. If a flat team structure cannot be deployed company-wide, then creating a DT core team that’s flat and agile is a great alternative.
In an interview with Inc. Brandview, Harvard’s Chief Digital Officer, Perry Hewitt, stated, “Organizations often think there is a holy grail-one right answer for how to do digital...Identify small initiatives for experimentation and quick feedback. Planning is important, but organizations need to work in shorter cycles with quick iterations.”
The digital world moves fast and your DT core team and organization need an environment that empowers them to keep pace.
Digital Transformation requires a mindset and a culture that creates a whole that’s greater than the sum of its parts. DT is the nexus where people and technology meet to amplify meaningful connectivity via an integrated, enterprise-wide effort to meet the customer where they live on the terms of their choosing.
Amazon’s Jeff Bezos once said, “In today’s era of volatility, there is no other way but to reinvent. The only sustainable advantage you can have over others is agility, that’s it. Because nothing else is sustainable, everything else you create, somebody else will replicate.”
DT is the key to unlocking the possibilities of perpetual reinvention. However, businesses need to understand that DT is as much about people, culture, and business strategy as it is about digital tools and technology.
“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change,” so said the great naturalist Charles Darwin.
Though these words were spoken a long time ago, they should ring true for any business seeking to thrive in the Age of Disruption.