Digital transformation is a hot topic, but it has a dirty secret: Most initiatives are failing — or are likely to fail.
In a 2017 survey of 400 US senior executives by Wipro Digital, half of the respondents said they think their companies are not successfully executing 50 percent of their strategies. Even more alarming is the fact that about 20 percent of the respondents said their companies’ digital transformation efforts are a waste of time.
“Digital transformation efforts are coming up short on intended ROI, in part because digital transformation is as much a leadership issue as it is a strategy, technology, culture and talent issue,” said Rajan Kohli, senior vice president and global head of Wipro Digital.
So if digital transformation is on your company’s radar, how do you make sure it’s on the path to success? You can start by answering a few simple questions.
Related Article: A Multifaceted Approach to Digital Transformation
Why Are You Changing?
First, identify a solid reason for pursuing digital transformation by asking this question: What is driving our digital transformation? It’s a seemingly simple question, but surprisingly, it’s one that many organizations overlook.
If your answer is “We’re changing to take advantage of [technology du jour],” stop. Technology shouldn’t be at the heart of digital transformation, your customer should. That’s because digital transformation is successful when it’s focused on the customer experience. Technology is an enabler of that experience, not the end state.
When it comes to your customer experience, think about what needs to be transformed by asking these questions:
- Do customers have an exceptional experience at every point of engagement? Are you providing a consistent experience during every interaction, whether it be via social media, on your support portal, during a phone call, etc.?
- Is your marketing team driven by metrics? Can marketers easily identify customer points of contact for your sales team?
- Are sales processes smooth, efficient and easy to navigate? Are you using technology to enable your sales team to work smarter, to respond more quickly and solve problems in more innovative ways?
- Do you measure annual or lifetime customer value or satisfaction? Can all of your organization’s employees see the impact that their roles have in improving the customer experience?
- Does your support team solve problems quickly? Do customer support representatives have a full view of the customer that goes beyond what they may see on support tickets? Do they understand customers’ sentiments and the nature of their engagement with the company across all channels?
What Does Digital Mean for Your Company?
Once you know why you need to change, you must determine how digital transformation will affect your business processes so you can begin planning how you will carry out the initiative.
Maybe you want to move from making “gut” decisions to data-based decisions, and therefore you need to build a data strategy to enable that change. Or maybe you have decided that it is time to rethink how customers engage with your business, and therefore you need to change how you market, sell and support your products or services. And maybe you do need technology and processes to enable a digital transformation.
In a recent MIT Sloan Management Review survey conducted in collaboration with Deloitte, 64 percent of 3,700 business executives, managers and analysts polled said they strongly agree that a key objective of digital transformation is improving customer experience and engagement, but only 41 percent said they believe that digital transformation requires fundamentally transforming business processes.
Some obstacles that organizations face when embarking on transformation include lack of funds, a lack of people with the right skills, the need to replace legacy systems and cultural challenges, such as resistance to change. While technology isn’t the solution, it can enable digital transformation. Business process management addresses the processes that enable digital transformation, providing a constant method of improving and innovating the way work gets done.
In order for your digital transformation initiative to succeed, it is imperative for your organization to change the way it does business. This can include getting your team’s skills up to par, critically looking at processes and investing in infrastructure to clean up legacy IT systems.
Related Article: Digital Transformation Efforts Still Falling Short
Who Is Leading the Change?
Organizations need planning, discipline and top-down leadership to drive successful transformation. CEOs must build the vision for transformation, shift ingrained behaviors to reshape the organizational culture and set tangible goals for digital transformation initiatives. But that doesn’t mean that change always has to start in the C-suite.
Change can originate from anywhere within an organization, and lasting innovation can emerge from grassroots efforts. These initiatives should be encouraged because ideas that originate from the bottom tend to gain more traction and receive stronger buy-in. However, successful organizational change requires support from leadership, regardless of who is leading the charge.
In a McKinsey podcast about how business executives can drive growth at their companies, McKinsey partner Kabir Ahuja said, “We talked to a large number of executives to learn how they think about growth, how they approach growth, and how historically their companies had created and delivered growth. What we found out was, first of all, one of the key markers of a successful growth agenda is having a senior leadership team that has the intent to grow. They actively think about growth as a top management item and invest behind it.”
For a digital transformation initiative to succeed, the organization as a whole needs a strong set of priorities and a clearly communicated path on how it will pursue those priorities. So set your vision and strategy, engage outside help where necessary, and make sure senior leadership and management teams understand your digital transformation strategy.
What’s Stopping You From Changing?
A lack of organizational agility may not be the only thing that prevents organizations from taking advantage of digital transformation — an overflowing list of priorities can be problematic as well.
In a survey of executives from 91 companies with revenue greater than $1 billion, Innosight asked this question: “What is your organization’s biggest obstacle to transform in response to market change and disruption?” Forty percent of the respondents cited “day-to-day decisions that undermine our stated strategy to change.” The next most popular answer, from 24 percent of those polled, was “lack of a coherent vision for the future.”
If day-to-day decisions are undermining your digital transformation strategy, consider this: Digital transformation alone won’t save you. Behavior has to change, too. Lead by example. If you are leading digital transformation, you cannot rely on paper forms and email. Use new technology, mobile devices (including smartphones and tablets) and social media to build credibility within your organization.
Transformation requires more than technology, which means that you must have a clear vision of where you’re headed, and why. Get organizational buy-in by building a vision that all employees can get behind. That will not only help you reshape the organization’s culture; it will also get employees excited for the future.
Empower team members to make decisions. By empowering front-line employees with the information they need to make good and fast decisions, your organization will move faster and leaders will be equipped with the numbers to understand what’s working.
By definition, transformation is fluid. That can be hard for executive teams to come to terms with, especially if they are used to rigidly defined change management programs.
Organizations that have made the most progress in digital transformation are the ones that have responded aggressively to changes in their competitive landscapes and see them as opportunities to seize advantages. By addressing fundamentals like why you need to engage in digital transformation and how it will affect your company, you’ll understand the specifics of your operations and you will be prepared to leverage digital transformation to differentiate your business from the competition.