Two words you will have likely heard in relation to the use of how technology will improve your business or help you manage through disruption. Head to any business conference and you will hear someone talking about their digital transformation journey, often citing significant benefits they will see once the journey is complete. Visit the show booths and consultants will quickly tell you how they can lead you on your digital transformation and the benefits you will see.
But what neither of these groups tell you is research shows that 70% of all digital transformation initiatives do not reach their goals (1).
While digital technologies provide possibilities for efficiency gains and customer experience, if the organisation lacks the right mindset for change or current practices are flawed then adding technology will simply magnify those flaws.
Just as you do not make a butterfly by sticking wings on a caterpillar, so you are not a digital company just because you use technology.
To understand why this is true, lets look at what is meant by Digital Transformation
Digital Transformation is the cultural, organisational, and operational change of business ecosystem through the smart integration of People, Information, People, and Technology across all levels and functions in a staged way.
Add to this the fact that a true transformation is not a singular project but a range of smaller deliverables achieving clear goals and we have a much better picture of what a Digital Transformation is.
If we consider the metaphor that a transformation is a journey, we can use the 4 points previously mentioned as our compass to guide us on the journey:
1. People – This covers two categories: The staff in your business and the customers you serve. The staff are essential to consider as they are ones who will who are going to be impacted, either positively or negatively. On the other side of the fence the customer is critical as they purchase your service or product and should be the focus of the benefits delivered from your transformation activity.
Your customers will tell you what they want, and your staff will tell you what is going to work. Not only should you be keeping them in mind, but you need to work with them to understand where your transformation goals must be
2. Information– Information is the biggest asset for any business and is collected in every transaction. This is everything from customer and product data through to company metrics and information on your staff. Good transformation requires you to understand the information you hold and how it will benefit you. Bad information can seriously hinder your business.
Before you start on a transformation journey you need to understand the information held by your business, what it is used for, and how you capture it. If you do not have a good information strategy in place, then you should not start the journey.
3. Process – Whether it is sales or fulfilment, service or delivery, chances are your business has processes in place for every activity. It is these processes that will benefit through the changes you will implement. In many cases the processes will be executed faster, and often you may even find that processes are unnecessary.
Effective process management is essential for successful transformation. You need to know what processes you have, whether they are adding value or waste, and how you want to see them transformed.
4. Technology – Once you have pieced together everything else then you can start to look at the solutions which will deliver the outcomes you need. This does not mean you need to go out and buy new solutions – you may find you already have the solutions in place to deliver what you need.
Digital Transformation is not about introducing technology into your business, it is about making sure you are using technology effectively. There is no single technology that will deliver “speed” or “innovation” as such.
A collective focus on all these areas will ensure that your transformation has the best chance possible of being successful.
Here are 5 things to include in your digital transformation activity
1. Figure out your business strategy before you invest in anything
Leaders who aim to enhance organizational performance using digital technologies often have a specific tool in mind. “Our organization needs a machine learning strategy,” perhaps. The best combination of tools for a given organization will vary from one vision to another, which is why digital transformation should be guided by the broader business strategy and not the solutions
2. Go your own way.
Organizations that seek transformations (digital and otherwise) frequently bring in an army of outside consultants who tend to apply one-size-fits-all solutions in the name of “best practices.” A better approach is to rely instead on insiders — staff who have intimate knowledge about what works and what does not in their daily operations.
This has an added benefit as it can help remove unfounded fears that digital transformation will lead to job losses – a common concern amongst organisations which can lead to change resistance.
3. Consolidate sources of the truth.
Substantial time is lost in the frustrating “shadow work” of trying to navigate the seams within and across silos of information while doing cross-team work. This is can be caused because information is not shared or is stored in multiple systems. It is time to start consolidating (or at least pointing) these data sources into a single place where people can access the information they need to do their jobs in a self-service, real-time fashion.
4. Design customer experience from the outside in.
If the goal of DT is to improve customer satisfaction and intimacy, then any effort must be preceded by a diagnostic phase with in-depth input from customers. The only way to know where to alter and how to alter is through obtaining extensive and in-depth input from the customers. Let them prioritise what changes they want to see in your organisation.
5. Get the right leader involved.
To oversee the execution of each “workstream” (or area of activity), ensure decisions are made quickly, and keep the transformation on course, businesses must create a governance structure and appoint someone to be responsible for the transformation, with regular progress reports to the CEO and board. The ideal leader should have extensive experience in orchestrating transformations and guiding companies through the process, and should bring a perspective focused on what is possible, combining an objective view of best-in-class performance and the company’s current capabilities with a realistic plan for spurring disparate groups to act in a coordinated manner.
There is no argument that digital transformation involves the addition of new technology, but it is not what makes the transformation a success. Technology is an enabler of digital transformation by ensuring that people, process, and information will work efficiently and effectively.
If you focus on equipping your business with the knowledge, training, and leader support required then lasting digital transformation will become a reality.
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