Digital transformation: The key to surviving the “new normal”
The digital future is already here and the digital transformation in companies is a fact. Before the pandemic, 92% of companies thought that their business models would have to change based on digitalisation. But the crisis has accelerated the digital transformation that many companies had pending.
The speed at which the changes are happening and the depth of the changes reveal the scale of the challenge we face. One thing is already clear, and that is that despite all the uncertainty about how the future will be, it will be digital and customer-focused.
There is no other option, the only option is to embrace the digital transformation and it should happen in two dimensions: at the core of the company and through the development of new businesses. High-performance digital companies take this two-pronged approach.
Digital transformation in business: 5 key questions
1. Do you have a clear vision of where you want to go and a plan that will get you there?
Despite notable successes in adaptation in recent weeks, many leaders have been frustrated by the slowness with which they have been able to make some of the necessary changes. From serving a wave of customers migrating to digital channels to scaling back-end operations.
We believe that one of the main reasons for these difficulties is that while companies have had many digital pilots and initiatives, these were not part of a comprehensive and coherent digital transformation plan to drive the business forward.
Accelerating the digital business transformation requires that entrepreneurs take a step back and re-evaluate their plans. It is a matter of aligning the customer experience strategy with coordinated and detailed plans for digitization of what should be done, by whom and when. To do this, you must precisely identify the customer journey of your digital customer to enable a complete approach.
Similarly, have clear assumptions about the value provided and viability underlying them. These assumptions must be based on new emerging customer behaviors, supplier dynamics and regulation.
Having a plan does not, of course, mean that it will be executed. But, one of the most important tasks in putting the digital business transformation into action is to achieve alignment of the digital manager (CDO) with line and functional leaders, and to establish the resources needed to accomplish this.
2. Could the creation of a new company accelerate your entry into new markets or new customers?
Many companies can only match the pace of the crisis and the change in customer behavior by building something outside the main company.
This allows them to build a new digital business model, totally agile with microservices architecture and entrepreneurial talent. However, the problem is that less than 10% of new businesses succeed.
But when companies adopt a more structured approach, including a clear strategy, entrepreneurial talent and the right balance between corporate support and operational freedom, the success rate rises to 67%.
Corporate support is particularly important now. In addition to access to investment and relative stability, large companies provide a “safe haven” during the crisis, allowing entrepreneurship to flourish without the wider economic concerns.
3. How can a more agile operating model help in the digital transformation?
Now that IT is not new, Agile has now permeated almost all parts of the business, as a methodology present in design thinking and digital business transformation. Companies are forced to move and act at unprecedented speed, and almost exclusively remotely.
The nature of the crisis has required teams to act quickly in the midst of uncertainty, make decisions with limited oversight and react to situations that change from week to week.
Typically, no more than 50 people in a large company make 80 percent of the decisions, but, as the crisis has shown, switching to agile allows you to tap into thousands of brains.
Should new ways of working be maintained?
Some new ways of working will probably not be sustainable after the crisis. But, as you seek to accelerate your business’ metabolic rate in preparation for recovery, you will need to be strict about protecting what has worked well.
The need to solve things on the fly has highlighted another crucial ability: being able to learn and adapt.
4. How should you rethink your talent strategy so that you have the people you need when the recovery begins?
As the overall economic impact of the crisis increases, the pressure will continue to mount to reduce costs.
Employers will face difficult decisions about their staff. However, given the importance of talent in accelerating progress, it is critical to adopt a forward-looking mindset in people. Not only to keep the right talent but also to develop the skills of the people you already have.
The CEOs of several large companies are acting on this forward-looking mindset. In doing so, they seek to articulate what critical skill sets are needed for recovery.
In technology, for example, the focus should be on building their base of senior engineers, who are ten times more productive than less skilled developers. These are the people who will be quickly deployed and redeployed to do the most important work.
Adjusting the Staff and Keeping the Right People for Recovery
This exercise includes determining how many of your human resources will be needed for sufficient resilience. Develop an approach to developing your skills and identify both people who have emerged as stars during the crisis and those whose skills can be improved through training.
The training itself is likely to undergo a profound change. Before COVID-19, most companies struggled to make e-learning work. However, the new world of remote work is acclimating people to the tools and processes that are fundamental to distance education.
This represents a training opportunity to scale up programs created for the way people actually learn best: shorter, “bite-sized” learning modules tailored to the individual and delivered when needed as part of a learning journey.
5. What investments are most needed in the digital transformation that will allow your business to thrive in the new normal?
Coronavirus interruptions have underscored the crucial role of technology, from supporting remote work to expanding digital channels for customers. Despite outstanding achievements in managing the technological response to the crisis, the many setbacks have highlighted systemic weaknesses.
That should come as no great surprise, since of the organizations that have sought to digitally transform their businesses, 79 percent are still in the early stages of their technological transformation.
We haven’t seen the end of the crisis yet. Nor do we know exactly when the day of recovery will come. But it will come, and entrepreneurs and managers must prepare their businesses effectively for a digital future.
They need to implement today the strategies that will give them a better chance of a bright future.