There is a common misconception that digital transformation involves nothing more than installing a new technology platform: Roll out the software, and everything in your business miraculously transforms around it.
But digital transformation requires more than just a software implementation — it requires a fundamental change in the way you do business.
The beginning of a digital transformation initiative is the perfect time to take a critical look at every aspect of your operations — how you recruit talent, how you’re organized, how you make decisions, even your dress code — to determine whether you need to make changes.
As you embark on your digital transformation, consider these five aspects of the undertaking: what needs to be transformed, how your organization views technology, why you want to transform your culture, the importance of delegating authority to managers, and what KPIs need to be measured.
By following the five steps outlined here, you’ll identify the areas of your business that will benefit from digital transformation and determine how to move forward with the support of key stakeholders.
Related Article: A Roadmap to Grassroots Digital Transformation
1. Understand What Needs to Be Transformed
Not everything in your business may need to be transformed. Transformation for the sake of transformation is not healthy.
First, understand why transformation is necessary and what the goal is. From there, it’s important to align your management team around your vision.
Since digital transformation affects every area of a business, it requires teams to coordinate and collaborate like never before. You must put the right people in the right places to drive change. Not only do you need inspiring visionaries in your leadership group; you also need managers who understand the technologies and strategies surrounding current operations.
2. Rethink How the Organization Views Technology
Digital transformation is more than just adding an app to your current business model. Changing to a digital phone system, choosing an analytics application or upgrading your customer relationship management system aren’t digital transformations — they’re technology deployments that enhance current services.
Digital transformation penetrates to the heart of your organization by helping you make information available, accessible and usable — from any location, at any time and with any device. It gives your organization an opportunity to reinvent products, processes and technologies — all to drive the efficiency and agility you need to create customer experiences that improve performance and generate revenue.
CompTIA research shows that while businesses have an appreciation for strategic IT, they are not necessarily prepared to execute on that vision. The IT trade association reports that 78 percent of organizations surveyed said they are using technology to drive business outcomes, but only 28 percent said they are extremely confident in their ability to apply technology to business goals.
In this case, it’s not about a specific technology platform, but about an organizational view of technology. You can’t convincingly talk to the organization about digital transformation if you’re still doing everything on paper. Start by openly embracing technology to engage the organization.
Related Article: Think Digital Renovation, Not Digital Transformation
3. When It Comes to Culture, Ask ‘Why?’
Shortcomings in organizational culture are one of the main barriers to company success in the digital age. Leaders must be intentional in building a digital culture, including changing legacy technology and structures that hinder transformation.
“In my experience, culture is the hardest part of the organization to change,” says serial digital entrepreneur and McKinsey advisor James Bilefield. “Shifting technology, finding the right talent, finding the right product set and strategy — that’s all doable, not easy, but doable. Hardest is the cultural transformation in businesses that have very deep legacy and cultural roots.”
As a part of any digital transformation initiative, an important question to ask is “why?” Here are some specific questions that will help you find an answer:
- Why do we have our desks organized this way? Do we need to investigate different arrangements, like desk-sharing, flex space or co-working spaces?
- Why do we have this specific dress code?
- Do we need to all be in the office? Would we be more effective, or would we be able to recruit the right type of talent, if we had more flexible working arrangements?
- How do senior managers interact with the rest of the organization? Does it need to change?
- Why do we have standing meetings? Are they still necessary?
Asking “Why?” helps us understand the impact of remaining in stasis, what we can achieve if we head in a new direction, and how moving away from legacy aspects of culture can support a transformation initiative.
Related Article: Your Digital Transformation Won't Succeed Without Cultural Change
4. Delegate Authority to Managers
One reason so many change efforts fail is because they lack enterprisewide support, so big ideas don’t take hold or have the desired impact.
To support digital transformation, the role of managers must evolve. Managers must learn to make decisions quickly, empower their teams to develop new skills and help employees understand their role in promoting the new digital culture. Like the executive team, managers must convey the organization’s strategic vision, but they must also provide their teams with ways to understand and adapt their day-to-day work to new realities.
How do you empower managers? First, recognize their role in creating a culture of digital transformation. Focus on empowering managers by eliminating bureaucratic decision-making, shifting your focus to innovation (rather than strictly emphasizing efficiency), and celebrating the iterative nature of progress. Yes, failure may happen, but trust your managers to make decisions that matter.
Effective teams need more than just responsibility — they need the authority to break across silos and work collaboratively. Distributed authority and bottom-up innovation only work if teams have the skills and information to make smart decisions, and that’s where metrics come into play.
5. Measure What Matters
While most organizations are embracing digital transformation, less than 15 percent of companies can quantify the impact of their digital initiatives, according to McKinsey’s Digital Quotient analysis.
Traditional key performance indicators (KPI) are designed to measure long-term impact, and those metrics aren’t well suited-for digital initiatives. But you must have an idea of indicators that will show that your investments are paying off.
Think about how you’re judging your success:
- What KPIs and metrics are you using for individuals, for teams and for the organization?
- Do you have KPIs focused on digitizing your current business model by measuring goals in sales, marketing, operations and customer service?
- Do you have KPIs focused on new digital business models, i.e. growth, revenue, market share, etc?
- When was the last time you reviewed and adjusted the metrics you’re tracking?
- How will metrics be visible to the organization? On a dashboard? On the company intranet? Emailed out each morning?
“The biggest limitation [of digital KPIs] is the lack of a clearly defined digital ambition,” Gartner analyst Paul Proctor told CIO.com. “Having a clear idea of your digital ambition will give you some ideas of what you should be measuring to measure your progress. You can’t measure something you don’t have a measuring stick for.”
Measuring challenges and successes with these strategies can fuel excitement about your initiative, encourage cross-departmental collaboration and connect employees to your strategic vision. If you regularly share findings across the organization, innovation will become embedded in your company culture.
Changing the culture within organizations is much more complex than simply installing technology. It’s vital for leaders to nurture an organizational culture that is collaborative and agile, keeps the customer’s experience front and center, and remains focused on results.
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