3 Factors for a Successful Digital Transformation
By Tricia McKinnon
Many organizations are in the process of a digital transformation. But they are also struggling to achieve the outcomes they desire despite significant investments in technology and process reengineering. It is telling that 28% of organizations have had at least one digital project fail at an average cost of $655,000. But that cost fails to highlight the missed sales opportunities when businesses are unable to keep up with heightened expectations from digital savvy customers. To achieve the desired outcomes of a digital transformation there are a few success factors that organizations should keep in mind.
A clearly defined strategy. It is hard to know what to do if you do not know where you are going. Although digital transformation is a priority many organizations struggle to define what it means. At the highest-level digital transformation refers to investments in technology that improve the customer experience. It often includes reinventing processes and the way companies do business in order to meet and exceed customer expectations in a constantly changing digital world. An example of a digital transformation initiative is investing in new technology and processes to enable customer self-service. Imagine if Amazon decided to implement the self-checkout technology from its Amazon Go stores in its Whole Foods stores. Whole Foods would have to move away from older payment technology to the self-checkout technology. It would also need to create new processes both internal and customer facing to enable a new way of shopping.
With a clearer understanding of the what it is important to start with defining a strategy or a vision that encompasses all digital transformation related initiatives across the entire organization. This will reduce the likelihood of working on a set of disparate digital initiatives such as focusing on a mobile app in the first quarter and then discovering in the second quarter that a new artificial intelligence initiative has the greatest impact but there is no more budget for digital initiatives. When organizations work on a series of one off digital initiatives they are often left with a set of components that are not integrated and create friction within the customer experience.
People. People make or break any transformation. Even with the best strategy, implementing it can come to a grinding halt if employees are not on board. In an era of fast technological change people naturally become fearful if they are unsure of how the transformation will impact their role within an organization. The culture of the organization is also important. Often when a company is established and successful it can become risk adverse and stop taking all of the risks that it took to become successful in the first place. According to tech analyst Brian Solis “organizational culture eats strategy for breakfast, lunch and dinner.” On top of that many organizations do not have the right skill sets to make the change happen. 70% of organizations believe that there is a shortage of digital skills. Focusing on retraining and hiring new people with new skills is required going forward. Also, fostering a culture where innovation can occur where the focus is on failing fast and learning from missteps gives organizations a better chance of keeping up with the pace of innovation.
Communication. Often the executives that are the most passionate about an organizational change are also the ones that know the most about it. They have seen all of the internal research reports, external consultant reports and read about a technology that is about to be implemented on a daily basis. On top of that they spend countless hours developing the transformation agenda and presenting it to their peers and the board. Employees that are involved in the change may not have even heard about a new technology and if they have they may only have a cursory knowledge. By the time an employee hears about a change agenda it might be in the form of interesting sound bites or a top ten list of initiatives. But it is hard to match the knowledge of the executive leading the charge. Organizations must find a way to provide their employees with a deep understanding of the change and why it is necessary. While technology provides many efficient ways of communicating good old face to face discussions are often best. And the high level of enthusiasm in communications must take place not only at the beginning of the transformation but throughout to ensure there is no loss in momentum.