Digital Transformation: Are you Predator or Prey?
Digital Transformation. These two words are enough to strike fear and trepidation into the hearts of even the most seasoned CEO. And it’s no small wonder why. Forrester’s Nigel Fenwick asserts that by 2020 all companies will be either digital predator or digital prey, and as of now it looks like most companies are becoming the latter. Digital transformation at its core is an exercise in transforming the customer experience and, as a result, the very enterprise itself. Technology is a means to an end and not an organizing principle. Where companies fall is in believing that ‘digital’ comes before ‘transformation’ in practice as well as name. Consequently, up to 84 percent of digital transformation initiatives fail and approximately $100 billion is wasted every year on digital and analytic business transformations that simply do not deliver.
The good news is that digital transformation is neither a frightening concept nor even necessarily a foreign one. The key is to clearly align the customer impact and strategy driving the transformation. Here are three things that you need to consider when undertaking a digital transformation initiative — before you begin focusing on digital technology.
1. A Clear Vision of the Customer Experience you want to achieve
Digital transformation means something different for every company, so you must have a clear vision of what it means for your business. While this may seem overly simplistic, only 25% of companies have a clear understanding of digital transformation even though 88% are currently undergoing digital transformation initiatives.
By not establishing clarity at the outset, many business unwittingly limit their definition of digital transformation to the ‘adoption of digital technologies to transform their business’. Digital leaders, or ‘predators’, adopt far broader definitions than do their ‘prey’ — reaching beyond technology into the experience that it delivers. It’s the experience that surrounds the technology that is the ultimate goal of all digital investments. According to Forbes, “Many businesses become so blinded by the constant overload of new technologies that they fail to correctly assess the value that each new technology provides and tie it back to the customer’s journey. They let technology lead them, rather than being led from the outside-in and by customer insights, experiences and expectations.” Beyond what digital technology you are using, and which aspect of the business you are trying to improve with these technologies — what is the customer experience that you are trying to achieve? Arming yourself with a clear vision of what digital transformation means for your business sets you on the path for success from the outset.
2. Executive support of wide scale business transformation
Once your vision has been defined, the C-suite and board must be aligned and willing to invest significantly. 51% of executives cited support from leadership as the top reason for the success of digital transformation initiative. And it’s no small wonder why. Digital transformation is not a digital or even technological problem, but rather a business transformation problem. The proper goal of digital transformation is not to swap out technologies or adopt new models of engagement, but rather the reinvention of the enterprise itself.
In other words, it’s not enough to force digital technology onto existing processes, especially when technology is continually evolving and adapting. Digital is a moving target, and enterprises failing to keep up with constantly accelerating standards as technologies combine and advance seemingly overnight. To achieve full digital transformation, clearly define a vision of the customer experience that you want to achieve, and transform the business to meet it with the full (monetary and senior) support of the organization.
A study by McKinsey found that digital ‘predators’ respond to digitization by changing their corporate strategies significantly. They exceed their ‘prey’ in both the magnitude and the scope of their digital investments. In short, they’re all in. Digital disruptions that fundamentally change a business’ scope and structure yield a projected growth of +4.3% annual revenues. True transformation requires changes in your business processes, your employee and leadership behavior, and ultimately, your corporate culture
3. Organizational buy-in and understanding across silos
Once you have a clear customer experience vision that senior leadership has rallied behind, it must be communicated clearly and consistently from the top down, across all silos. It’s critical to engage and inspire staff around the vision that you’re setting out to achieve. Many digital transformation initiatives fail because companies focus too much attention on the technology itself, and not enough on the people and process required to lift it off the ground. Executive leadership is ultimately responsible for integrating the transformation across the silos, and will need to rethink traditional roles and responsibilities do so. This includes talking to stakeholders, listening to their opinions, and garnering grassroots support and buy-in across the various teams and departments that will be executing this vision. It also means a more flexible approach to resourcing with cross-functional teams using agile methodologies. An abstract vision will need to be crystallized into concrete goals tailor made for a digital world. Employees must be held accountable for their specific role in the larger vision, just as the business must track their customer experience and engagement as fervently as they track their return on investment.
Changing technology may be easy, but changing people, processes and culture is hard. The creation a ‘center of excellence’ or ‘task force’ comprised of subject matter experts, outside consultants, and members of leadership can work to ensure that everyone is moving in lock step towards the common vision while adhering to industry best practices and simultaneously innovating and evolving. Digital transformation is not a project, it doesn’t have a beginning, middle and an end. It’s an evolution. Dedicating a team to digital transformation that is held accountable for its success helps you to build the proper foundation, get the most out of the staff and systems that you have today, make the right decisions when it comes to implementing technology, and ensure that your vision and your company is innovating and growing at the speed of your customers. Enterprises are realizing that going digital requires end-to-end-transformation — with all teams on board.
No one wants to be prey, and certainly in a digital age no one can afford to be. By focusing on the end experience that you want to create as opposed to the technology that enables you to do so, you are setting yourself up to fundamentally transform your business in ways that both your customers — and stakeholders — will appreciate.
