Implementing Digital Transformation In Your Business
It’s one thing to recognize the importance of DT, but making it a reality in your business is a different animal altogether.
It’s the difference between talking about running a marathon and actually doing it. It’s easy to talk about the health benefits and the sense of pride that comes with completing a goal, but actually running the race requires an intense commitment to training, eating properly, and purchasing the appropriate running gear.
So how do you move from talking about digital transformation to the actual transformation?
Step #1: Get The Full Support Of Top-Level Management
As noted earlier, DT simply can’t happen if the CEO and leadership team aren’t on board. Making the transformation a reality requires time, human capital, and financial resources. It also involves employees learning to do tasks in new ways, which can generate pushback.
Additionally, because it touches every department, it’s essential that the push toward DT come from the top down. This commitment signals to everyone in the company that digital transformation is a priority requiring commitment from all parties.
“...the CEO cannot simply sanction a digital transformation; he or she must communicate a vision of what needs to be achieved, and why, in order to demonstrate that digital is an unquestionable priority, make other leaders accountable, and make it harder to back-track.”
Step #2: Identify Strategic Change Areas
There are certain areas in your business that will benefit most from digital transformation. For example, internal research may show that shortening the time between an application being submitted and company follow up will dramatically increase customer loyalty and reduce the overall churn rate.
Once you’ve identified strategic areas for improvement, look for specific ways digital transformation can contribute to that improvement. Are there ways to automatically move submitted applications to the appropriate individuals? Can the application process itself be made simpler and easier for the customer? By implementing digital transformation in key areas, you maximize the overall effect.
Step #3: Allocate Sufficient Funding
Almost every DT project will require some portion of the budget. Whether it’s replacing legacy systems, making strategic hires, or creating partnerships with other companies, funding will be required.
To state the obvious, it’s critical to determine approximately how much the digital transformation process will cost and then set aside the appropriate resources. It’s true that DT won’t be cheap, but the cost of ignoring it will be even greater. Additionally, the benefits created will far outweigh the costs in the long run.
Step #4: Create A Launch Team
There’s a high probability that neither your executives nor your employees will have experience in engineering digital transformation. If you give them the job of bringing the DT to pass, the endeavor will probably fail.
The solution? Creating a team of experts who can lead the DT process. This usually starts with hiring someone like a Chief Digital Officer, who is then responsible for assembling a team of employees, consultants, and engineers to ensure that everything runs smoothly.
Duncan Tait, Head of Americas and EMEIA at Fujitsu, puts it this way:
“While businesses today recognize the need to adopt and adapt to technology, there remain significant issues that are contributing to substantial rates of failure and high associated costs. To realize their digital vision, it’s crucial that businesses have the right skills, processes, partnerships and technology in place. With digital disruption rapidly changing the business landscape, businesses can’t afford to fail in their transformation.”
Step #5: Start With Low-Risk Projects
This works in conjunction with Step #2. After identifying strategic change areas, start your digital transformation with relatively simple, low-risk projects in the strategic areas. Making small progress on big goals creates a sense of momentum and helps people see the overall potential.
Additionally, tackling smaller projects can give you at least a limited sense of what will be involved in the project as a whole.
Step #6: Carefully Introduce New Workflows
DT always involves creating new, more efficient workflows. However, the launch team must be careful as they introduce these workflows within the different departments. If the workflows are simply dumped on a department en masse, it can create chaos and engender resentment.
Additionally, the launch team must be aware of the office politics that often accompany new initiatives. Department executives can be territorial and may push back against anything that seems like it might make things more complicated.
The launch team must carefully (and often slowly) introduce new processes, giving employees and department heads adequate time to process and learn them.
Step #7: Continue To Build The Culture
Digital transformation isn’t a one-and-done process. Rather, it’s something that must be woven deep into the culture of your business. Technology is evolving at an incredibly rapid pace, and in order to keep up there must be a willingness within the organization to adapt, experiment, and strive for continuous improvement.
If DT is seen as simply a one-time project, your company will fall behind competitors as technology continues to evolve. A company culture must be created that recognizes these new realities and is prepared to keep pace with them. “Evolve or die,” may be a cliche by this point, but there remains some truth in it.
Step #8: Build Momentum
As you make progress on the strategic DT areas you chose at the beginning of the process, you’ll begin to pick up momentum. Those areas of your business that have been transformed should generate additional revenue, which can then be used for further DT.
Every new transformation initiative should build on the previous one, ensuring that momentum continues to build and revenue continues to come in.
As your efforts begin to snowball, continue to focus on strategic areas that will continue to enable growth. Don’t begin chasing every possible DT opportunity. Focus on the 20% that will move the needle.
Step #9: Increase Core Business Capabilities
If things go well during the initial DT rollout, there will come a time when more substantive changes are needed. Core operating platforms, as well as the people who run them, will need to be boosted in order for further transformation to be possible.
In some ways, this is the tipping point for your company. If you continue to build out your core business capabilities to enable further transformation, you can truly become a leader in your industry.
Step #10: Change Your Operating Model
A full digital transformation will eventually require you to implement a new operating model. Departments and functions that were once siloed will need to be reorganized to enable communication and collaboration. Data that was once the property of a single business entity must be easily shared across the company.
To quote McKinsey & Company again:
“...companies will have to lean away from a traditional matrix structure with rigid functional boundaries if the transformation is to succeed. They will need a network structure, organizing around sources of value, with product managers empowered to make decisions with implications that cut across functions.”