The Idea in Brief
The Idea in Detail
‘Digital Disruption’ has resulted in the most significant business and industry transformation during the 21st century. Digital innovations such as the smartphone have completely transformed the way consumers interact with business, globally, over the past ten years. The extent of the change that has occurred is broad, wide ranging and continuing. The corporate buzzword ‘digital transformation’ is now ubiquitous and is really an overused short hand way of referring to the embedding of latest digital technology into the way that a business operates to yield efficiency gains, strategic advantage over competitors or customer experience improvement. It is an end-to-end cross-functional organisational change which involves the tight integration of digital technology, people and processes to re-imagine the delivery of products or services.
Despite the prevalence of commentary and understanding of the importance of catching the digital wave before being left behind and trying to play catch-up, research conducted by the International Data Corporation (IDC) in their Worldwide Digital Transformation Predictions 2018 has found that a sizeable number of organisations continue to remain as ‘digital laggards’, which are defined as organisations that lack a razor-sharp vision for a Digital Strategy.
Is your organisation a ‘digital leader’ or a ‘digital laggard’?
Digital laggards focus too much on a technology solution in isolation and without grasping a sound understanding of how digital technology can transform the business operating model. This results in a failure to realise the strategic advantages, operational efficiencies and new business opportunities that an integrated digital operating model can deliver to a business. There are two types of digital laggard organisations:
- Those who have not yet tried to implement digital transformation (Non-Starters).
- Those who have tried but failed to achieve the full benefits from digital transformation (the Failed Starters).
Any digital transformation approach needs to be tailored to meet the type of digital laggard organisation.
For the Non- Starters, it is critical to increase awareness of the business case for digital to drive cultural change and strategic prioritisation of making and investing in that change. For Failed Starters, it is critical to remedy the reasons for failure, which may be due to insufficient leadership, poor cultural change or too much focus on the technology and neglect of other organisational domains. For both Non- Starters and Failed Starters, they must consciously address each of the organisational domains discussed in this article to succeed in their digital transformation effort.
Organisations with a traditional and long-standing product or service delivery model have the greatest challenge when transitioning their operations to a digitally leveraged one and tend to fill the Non-Starters list.
Board and executive leaders must now reflect on whether they have developed a complete business strategy which tightly integrates optimum digital technology into their product or service delivery operating model. If not, they are a digital laggard and must focus now on the organisational domains of strategy, culture and talent as set out below, to devise an appropriate and effective transformation strategy (tied to corporate strategy), otherwise they are likely to fail to achieve the desired benefits new digital technology provides in any change effort or fail to start at all, watching their competitors outperform them in years to come.
This article unlocks insights into successfully leading digital transformations for board, executive and operational leaders.
Done well, digital transformation will fundamentally improve your business’ performance, and relationship with your customers. Benefits are wide ranging, encompassing more effective customer service/experience, increased customer loyalty and retention, better asset utilisation, improved productivity and lower labour costs, decreased inventory, streamlined time to market, new innovations in product/services, or shorter order to cash. The business case list is a long one. Your competitors are achieving these digital transformation benefits, and your customers are demanding the changes. Ignore the shifting landscape at your peril!
Insights on making ‘digital transformation’ happen, and a success.
Successful digital transformation requires a significant shift in three organisational domains:
- Strategy
- Culture
- Talent Development and Management
We outline each below and share insights into how you can ensure your focus on each are is appropriate, dramatically improving your traction and prospects of success with any ‘digital transformation’ effort.
1. Strategy
Transformative Leadership and Vision
A strategy for understanding how digital technology can transform any operating model through the creation of a transformative vision is fundamental to digital transformation success. Digital transformation requires strategic leadership skills (not technology skills) held by executive leaders who can:
- Create a transformative, forward-looking, sharp vision and strategy.
- Understand how digital technology can transform their business model.
- Lead change effectively with a focus on innovation.
- Remain pragmatic, focused, decisive, collaborative, and able to build effective teams.
The structure of the operating model must be reimagined to successfully integrate appropriate digital technology into the core of the organisation. There is a tendency for organisations to believe they have mastered digital technology because they have already large investments in this technology. However, on closer examination, digital technology investments that failed to deliver business benefits were often implemented in isolation from the overall operating business model or the business had ‘gone digital’ for reasons other than improving the experience for the customer or client. Organisations who do not drive digital investments with a focus on improved customer experience/benefit from the exercise have failed to realise the true potential for ‘being digital’.
Organisations that integrate digital innovation successfully into their operations focus on:
- Examining the magnitude of organisational realignment based on the current operational structure and type of product or services delivered.
- Transitioning processes from a functional to integrated structure which is focused on the customer journey.
- Flattening the hierarchical structure and creating cross-functional, agile and empowered teams focused on customer benefit.
- The planning of organisational realignment of structures, processes, existing digital elements, culture and people as the first step in the design process of a successful digital transformation implementation.
A strategy for realignment of an operating model to achieve a successful digital transformation must address:
It will be important to have a change champion who can ignite the transformation agenda. Ideally, this would be the board chair and Chief Executive Officer, supported by a role on the executive team to facilitate the transformation change-management effort. For example, this could be a Chief Information Officer (CIO), Chief Digital Officer (CDO) or Chief/Client Experience Officer (CXO) function or role on the executive team.
The board and executive team must become digitally literate with a competent balance of transformational leadership capability, capacity and creativity to oversee the digital transformation of the operating model.
The below diagram provides a model for the operational design changes required to achieve a comprehensive digital transformation (click to open PDF).
2. Culture
Cultural change is central to successful digital transformation.
Successful organisations intentionally execute change management programmes designed to shift the cultural mindset from “doing digital” to “being digital”. As a general rule, every dollar invested in digital must have three to four times more spent on an associated cultural change management effort, otherwise the digital investment is likely to be wasted with poor take-up and adoption in the business either neglecting the technology or failing to use it to its potential.
Leaders must sponsor the transformation by creating a vision of how ‘being digital’ will transform the product or service and business model for the benefit of the business’ customers and stakeholders.
The application of the latest digital technology must not be executed in isolation to the overall customer journey. The attainment of a seamless journey for customers between physical and digital touch points is the hallmark of an organisation that has executed a digital transformation successfully.
3. Talent Development and Management
The talent-development competency objective must centre on uplifting the workforce’s digital literacy and must be balanced between existing and new talent within the organisation. Digital literacy is the ability of the workforce to effectively utilise digital to improve processes for the benefit of the consumer. A digitally competent workforce will have a balance of interpersonal skills and mastery of the use of digital concepts and tools within an operational context.
An entire workforce which is digitally literate and competent will provide the foundation for a dynamic organisation focused on the customer experience and capable of getting the most out of a digital transformation effort.
Are you ready to properly tackle digital transformation?
We help our clients guide the strategy development and execution/integration of digital elements into the heart of business operations for competitive advantage and customer experience improvement.
Strategy, culture and talent management are fundamental to successful digital transformation. Our team works hand-in-hand with senior executives to help design a digital transformation strategy appropriate for our clients’ businesses.
Our multi-disciplinary digital transformation team, each with decades of experience, is like no other in the market, and can assist you to:
- Assess your current operating model readiness for digital transformation.
- Develop and implement your digital transformation strategy, focused on transitioning your business to a digitally integrated business operation that improves customer experience and which creates an essential competitive advantage.
We work closely with technology experts to ensure the change implementation is tied to sensible corporate strategy, guided and well-adopted.