Digital transformation influences internal and external business operations by changing customer interactions, decision-making, and adding value through optimization.
A successful digital transformation¹ strategy depends on collaboration across the board from the CEO, to executives and staff members. Achieving meaningful change starts with measuring the implications of digital transformation on performance indicators including revenues, customer engagement and the business model.
Digital transformation requires both business and technical changes to occur and businesses lose track of digital transformation during the implementation phase. The trick is looking at the metrics and deriving insights from them.
Yahoo’s failure resulted from poor digital innovation and offers lessons on lack of expertise to deploy digital solutions.
The accelerating pace of digital disruptions means that businesses should innovate and adopt digital solutions to stay ahead of the curve. Fortune 500 companies are becoming extinct every year and with digital disruptions² everywhere, businesses have no choice but to embrace digital transformation.
The big industry players are under pressure in the current digital economy as competition heats up from small players using technology to their advantage.
The current disruption from the Coronavirus pandemic is a wakeup call for companies to strategize on digital initiatives³ and find ways to harness value from technology. Zoom¹¹ is facilitating business operations with most companies working remotely with teams as the pandemic continues.
Digital transformation fosters the operational efficiency of an organization and encourages the adoption of new business models, data-driven decisions, and dealing with failure. Fidelity¹², the asset management company is adopting digital transformation where the company leverages technology to engage with customers directly without going through advisers.
Culture and leadership remain essential for a successful digital transformation strategy with most organizations adopting new technologies without considering these variables.
A holistic approach⁴ to digital transformation pays off and requires exploring the culture of an organization to understand how it fits with the new technology. The success story of Knotel¹³ where the company integrated culture with technology should remind us about the importance of culture during digital transformation.
The fast-changing industry means that companies should leverage technology to keep serving customers and forecasting future trends. Unfortunately, most businesses lack strategies for implementing digital transformation and with poor leadership, the situation becomes complicated.
Achieving full-scale digital transformation poses challenges to most enterprises according to a Gartner Report with 60% of the companies struggling to make sense of technology in their operations.
Accelerating Digital Transformation
The biggest challenge in the adoption of digital transformation⁵ is aligning business strategies with technology. Organizational executives lack strategies when adopting a digital transformation initiative that serves the interests of stakeholders including customers, suppliers, and government.
The top management should collaborate with Chief Digital Officers, Chief Information Officers, and employees for the #digitaltransformation to influence the business positively. This collaboration drives growth as digital transformation takes shape and enables the business to take stock of current loopholes that need solutions.
Let us explore the main areas that need attention during digital transformation:
1. Data-Driven Decision-Making
The siloed data systems in most organizations is a major hurdle that holds them back from achieving collaboration and cross-functional processes during digital transformation. Adopting a centralized data approach⁶ in the organization enables information sharing and understanding of trends about operations.
An integrated organization values data sharing and by developing a central database, which employees and management can use for decision-making. The technology works best when everybody can access information and make decisions in real-time. #Artificialintelligence and #datascience investments are supporting a central information database, which allows coordination at all levels of the organization.
2. The Culture Factor
The culture of an organization should work closely with technology for the digital transformation process to succeed. Regardless of the state of the art technology adopted by a company, nothing will matter without instilling a culture in the transformation. Management executives get the wrong idea about the culture by focusing on technology solutions alone and this creates a gap.
Achieving benefits from technology means using culture as a tool to drive change within the company. An organization can iterate on digital initiatives adopted, innovate new solutions, and understand the influence of its operations in the market. A cultural approach⁷in digital transformation not only reorganizes the organization but also motivates management to experiment with new ideas as the company undergoes change.
3. Employee Experience
The success of digital transformation in an organization depends on support from employees since they use new digital solutions⁸more often. Companies should dedicate resources for employee training during digital transformation to equip them with the right skills. Most companies fail in this respect and undermine the importance of employee training as digital transformation occurs.
Developing engagements with employees raises their awareness about digital transformation and this accelerates the process faster. Management alone cannot handle digital changes in the organization and this is where employees come in. Enterprises should empower employees by offering training and educating them on their roles.
4. The Customer Experience
Customer experience is critical for digital transformation and organizations should explore customer trends and behaviors to understand their needs. Pushing digital transformation without customer needs in mind leads to bad results as seen in the case of WeWork¹⁴ where the company failed to understand the interaction between customers and technology. Management should understand these gaps and find balance with technology to succeed in digital transformation.
Feedback about customer experience enables organizations to integrate customer needs in the digital transformation process and find ways to add value. Customer preferences are changing and with the #digitaleconomy, organizations should conduct research on the best ways to fit customers in the equation.
5. Strategic Management and Digital Transformation
Embracing digital transformation is a continuous process but most organizations lack integration between technology and strategic goals leading to costly mistakes. For most organizations, digital transformation initiatives come with additional costs that most companies avoid by dropping digital investments⁹.
The top leadership should lead by communicating objectives as digital transformation takes place. Amazon exemplifies this as the company communicates to different teams about new technologies adopted to improve retail operations. Amazon employees perform better as they understand how to use technology and build cultures in the process.
Implementation of digital transformation requires evaluations to map progress and assist management to make decisions moving forward. Hello Fresh¹⁵, a grocery delivery company achieved productivity from conducting audits of technologies adopted at the company. According to the management of Hello Fresh, conducting these audits opened new ideas about addressing constraints such as cultural barriers, and this made digital transformation work for them.
Secondly, organizational audits on digital transformation will allow your organization to align goals with technology. Spotify¹⁶, the music streaming service from Sweden had trouble mapping digital projects as the company started and by conducting audits, this supported in accelerating the transformation. There is a notion among most companies that they have achieved success in digital transformation and this is not always the case.
COVID-19 accelerating Digital Transformation
The COVID-19 pandemic is teaching us that the future of work is remote and distributed meaning that digital transformation will accelerate in 2020.
Before the pandemic, business adoption of digital transformation continued to rise but with the new normal, companies are shifting to remote working technologies to support operations. A report from the consulting firm McKinsey claims that digital investments have spiked with the Coronavirus pandemic¹⁰.
These investments shed light on the current digital transformation-taking place across all industries. According to the BCG report, companies are moving to digital transformation in response to change created by the coronavirus pandemic.
The education sector is among the biggest industry affected by the pandemic according to a Deloitte survey with schools shifting to technology in line with social distancing rules.
Galvanize¹⁷ is supporting #remotelearning for students and using digital tools to engage learners with instructors.
Post COVID-19, digital transformation will top the priority list of most companies as they respond to the changes created by the pandemic. The health sector is another industry undergoing digital transformation with hospitals such as St. John Hopkins adopting digital technologies to handle patient needs. Monitoring patient care is critical during the COVID-19 pandemic and hospitals are fast embracing digital transformation.
Who is responsible for Digital Transformation in the Organization?
Many ask this question as companies struggle to make sense of digital transformation in their operations. Depending on the management approach of a company, digital transformation takes place differently and all comes down to creating synergy. Some companies have their CEO directly handling digital transformation with others having the CIO or the COO.
The role of the Chief Digital Officer is emerging as companies delegate digital tasks to the CDO who works directly with management. The Chief Digital Officer understands key areas of digital transformation in an organization and makes them the right fit for this role. Unlike the COO or CIO, the CDO does not have other roles and invests time and resources on the deployment of digital solutions in the organizational structure.
The Chief Technology Officer can also handle the role of digital transformation in the organization. The CTO can implement digital transformation by reporting to the CEO and supporting in cultural integration of the organization. Big Tech companies such as Facebook and Google use CTOs to handle digital solutions and transformation across the operations.
Leadership for successful Digital Transformation
The pace of digital acceleration is increasing with artificial intelligence, machine learning, and data science adoption spiking. More than ever, companies are realizing the benefits of digital transformation and the time is ripe for embracing digital initiatives. The success of big tech companies including Facebook and Apple lies in #digitalinnovation and this should offer lessons to other organizations.
Management should lead the way in digital transformation by coordinating efforts across all channels of the enterprise. The dominance of Apple in the mobile devices market comes from the culture of innovation supported by the leadership of the company.
The CEO and board members should rally behind the CTO, CDO, or CIO as they implement digital transformation. This support influences employees to understand the technology solutions adopted and aligning them with the company mission.
¹Digital Transformation, ²Digital Disruptions, ³Digital Initiatives, ⁴Holistic Approach, ⁵Adoption of Digital Transformation, ⁶Centralized Data Approach, ⁷Cultural Approach, ⁸Digital Solutions, ⁹Digital Investments, ¹⁰Coronavirus Pandemic