Let’s be honest, all of us have been hearing about and thinking about Digital Transformation for years now. After surviving 2020 with its cataclysmic events, i.e., the pandemic, political turbulence, natural disasters…this already hot topic has been put on overdrive. Now more than ever business leaders feel the pressure to tackle and conquer this Big Hairy Monster “aka Digital Transformation.” If you’re ready to start but are still not sure how to dive into this journey and be successful. Look no further, here we explore Digital Transformation and guide you through the first steps you can take to not only survive but thrive in your quest.
What is Digital Transformation?
First, let us name the big hairy monster.
Digital Transformation is the process of using digital technologies to create new or modify existing business processes. In other words, it is a reimagining of how a business currently works and moves it not only into the digital age but also into a new era in which customers are the center of the business.
You have heard terms like digitization and digitalization used as synonyms of Digital Transformation, and although they might be part of it, they are not the same. Digitization refers to the process by which companies convert information from analog to digital; think about older companies that still have paper files of information they might use every now and then, by converting those files into digital, we say they have digitized their information.
Now, if that same company uses that digitized information and simplifies the way you access it, which in consequence makes its operation more efficient, we are now talking about digitalization. Digitalization is the process of using digitalized information to make established ways of working simpler and more efficient but not interrupting the way the company does business. Digitalization is about making what companies already do faster, easier, and optimized.
But at the core, digital transformation has the potential to go beyond that. In plain sight companies who accept the challenge of conquering this monster reap direct rewards but hidden are the indirect rewards. One indirect reward is allowing them to introduce a change mindset. By the sheer act of showing they have a willingness to change allows them to revisit everything they do, how they do it, and seek better ways of doing it. Igniting a change revolution within the company. Initiating a change in mindset, hope, and new possibilities. Oh! and they do all this keeping the customer as the center of the whole transformation.
What drives Digital Transformation?
Second, let’s ask why? What is the big deal?
You might be asking yourself why on Earth will someone, anyone, wants to go through all that work? Well, it is a lot of work, but it also brings so many benefits to the organizations that it is all worth it.
Before the pandemic hit, companies used to embark on Digital Transformation journeys to be cutting-edge, to innovate, to be early adopters. They tip-toed into the process to keep being relevant or to solve a specific need like manage a supply chain or logistics- but for most companies, it was a plus, a wish list item, a nice to have. Efforts were planned to happen within a five-to-seven-year gap. They were not rushing but recognized they were going to do it; the pandemic changed that.
In 2020, organizations and IT leaders were forced to rethink and prioritize their digitalization and digital transformation strategies. Companies had to adapt, and they needed to do it fast, software to operate remotely, POS systems, eCommerce capabilities, digitization suddenly moved from a plus to a need. For starters, cloud software for collaboration was implemented across the globe in companies of all sizes and industries. But also, many companies were forced to move their core operation to the cloud or even change the way they provided services or sell their products. If you ask IT leaders, the main champion for digital transformation within their companies was the pandemic.
We are charting unfamiliar territory in Digital Transformation and can move it to new heights with big data and machine learning. We can aspire to not only simplify and optimize but to revolutionize by taking that data, analyzing it, tracking trends, creating behavior models that would accurately predict behaviors allowing companies to be proactive, not reactive.
Whether it is to stay on top of the market, remain relevant to their customers, or just survive a pandemic, digital transformation is already underway in companies around the world. The question will be how deep will they dive in?
Business transformations are hard, digital ones are harder
Third, let’s give it the respect it deserves, and let’s be honest about the numbers.
The reports of the success of digital transformation are not encouraging. According to consulting firm McKinsey, year and years of research have shown that less than 30 percent of companies that embark on digital transformation succeed.
Even digital-savvy industries such as high tech, media, and telecom struggle to succeed, with a success rate of 26 percent. In more traditional industries, such as oil and gas, automotive, infrastructure, and pharmaceuticals, digital transformations are even more challenging, with success rates falling between 4 and 11 percent.
These success rates also vary by company size. According to McKinsey, organizations with fewer than 100 employees are 2.7 times more likely to report a successful digital transformation than those with more than 50,000 employees. So there seems to be a correlation between the size and complexity of the organization and the success of the efforts towards a digital change.
But even with these numbers, the challenge is difficult but not impossible. There is hope, there is a method or a system to madness. Here are some things you can take into consideration to increase the chance of your company’s success. Do not fear.
Steps toward a successful transformation
Fourth, action plan full speed ahead.
Before you start researching and purchasing innovative technologies, keep an eye on these first steps to begin – or even continue- your digital transformation.
Think about your customer’s experience
Yes, you want to implement the latest technology, but before rushing, go through how your customers approach you, buy your service or product, and how you could make their lives easier. This will not only give you more clarity about your business but also will guide you to prioritize the processes that need to undergo the digital transformation first.
Align your objective with business goals
Once you have your business goals, ask yourself what business outcomes you want to achieve? Remember that this type of transformation does not only mean bringing technology to your business but using it in ways that benefit your customers.
IT has a new role; they will be co-creators
The IT department is often seen as those guys who come and fix things in our systems, but in a digital transformation environment, they are much more. They are now working with the business areas to find new and creative solutions and deliver value for customers. They must be co-creators, not only problem solvers.
Be ready to overcome failure
During a digital switch-over, risk-taking is encouraged, enabling all level employees to make decisions. This means that there will be a lot of failures, but do not be afraid of it: embrace it. Fail fast, learn from it, lean into it and move on to the next thing.
One secret to a successful digital business transformation
Fifth, we have an insider tip… it’s not all about the tech it’s also about the people.
We want you to succeed in your business’s digital transformation, so we are going to give you a secret: stop thinking about the entire process as a technology implementation and start thinking in the human aspect.
Really, even with the best technology and latest software, your transformation is more likely to fail if you do not have the right people in the right seats. This is because change takes place in all levels of the organization during a digital transformation, so the more digital-savvy or even just openness towards innovative technologies that your talent is, the easier it will be to push the changes that need to take place.
Develop talent and skills throughout your organization, redefine roles and responsibilities if needed and be sure to place people in leadership positions that are willing to align with the transformation goals. Incorporate integration and technology innovation roles, they will be the bridge between traditional and digital parts of the business. Also, take lower-level employees into consideration, listen to their concerns, and encourage them to generate their own ideas and challenge the ways in which they were told to do their tasks.
Reports have shown that transformation success is more than three times likelier when organizations invest the right amount in talent, specifically, digital talent. So, you should look into scaling up your workforce and talent.
Digital Transformation is not only about doing what you already do faster but doing it in a new way to make the most out of the technology to improve how you think and engage with your customer. Thinking, planning and building digitally sets any company to be agile, flexible, and scalable, but only organizations that make sure to have the right talent, by developing new skills or bringing in new people, are differentiating in the path towards success.
If you are willing to start your journey towards a changeover in your business, consider the services offered by consulting firms. We can help you out, contact us for a free consultation.