We’re all in the midst of digital transformation or should be. The pressures of the pandemic have accelerated those efforts in most organizations. 93% of companies are working on digital transformation initiatives of some kind. The goal of these efforts is usually either a desire to cut costs or improve customer experience. Unfortunately, nearly half of these initiatives are falling behind or not achieving what they were set out to do.
Abandoning digital transformation is not really an option. So how do you maximize your digital transformation efforts and deliver on those innovation promises? Through our work doing exactly that, we’ve identified a few approaches we’ve found to be impactful.
Abandoning digital transformation is not really an option. So how do you maximize your digital transformation efforts and deliver on those innovation promises?
Through our work doing exactly this, we’ve identified a few approaches we’ve found to be impactful.
Is leadership aligned on what a successful digital transformation for the company will look like? Often transformation strategies are articulated in vague terms like “improve operational efficiencies” or “deliver exceptional customer experiences.” Unfortunately, these umbrellas do little to inspire the rest of the company or meaningfully help to determine priorities.
For a manufacturing company, a goal may be alignment of sales and operations through product configuration and price optimization tools. For construction, the vision may include equipment and safety tracking. Speaking in the terms of the people on the front lines of your business helps harness buy-in and involvement. And fosters the ability to stay on track.
Without having a digital transformation scorecard, knowing if initiatives are working is difficult. Define transformation-specific metrics and keep them front and center. Working with a transformation of scorecard of less than 10 KPIs (5 is better) helps focus discussions and decisions.
For example, order error reduction may be an important goal. With that as 1 of only a handful of KPIs, leadership and teams can drill into root cause and determine the best processes and tools. The issue may be customers not understanding the implications of a feature. These KPIs might also illuminate a new product or service – maybe the ordering issues demonstrate the market opportunity for onsite service offerings to help customers with solution definition.
Department and division leaders are a good place to start to determine what will impact the way that the company does business and serves customers. But it’s critical to talk to the people on the frontlines. What do your high performing salespeople think would accelerate new business? What do engineers and technicians believe will improve products and services? What do customer service personnel see as opportunities to elevate the customer experience?
What projects can be completed quickly? Is there something that can be improved meaningfully within a quarter? Sometimes this is a lightweight integration between technology systems that improves data and communication, or automates a frustrating task.
Completion builds confidence and credibility in the company, and contributes to momentum. Leadership drives vision, but the people closest to customers are delivering on it.
Leadership recognizes that digital transformation is an ongoing exercise, taking quarters and sometimes years to achieve. One of the greatest obstacles to success is digital transformation fatigue and the zombie initiatives that sap the energy of the organization.
Recognize and reward the teams that are executing transformation projects. Communicate the impact of those efforts and ensure that people see them as critical to the business. It is also important to avoid undermining managers and team members by talking about what didn’t get done.
Companies that prioritize investment in digital transformation see the biggest value. Those that spend 33% more than competitors in “technology, processes, operational models, and the ways of working” get the most value on their investments.
We’ve seen any number of organizations bootstrap transformation and fail to get the results needed. After underspending on infrastructure and tools, those leaders blame strategy or personnel or the market. The best outcome is that change is slow. What is more common is that companies lose their most talented people, miss revenue and profit goals, and squander market opportunities.
Organizations are often constrained by legacy thinking and internal production velocities. IT has months and sometimes years of backlog and are unable to focus on high impact projects. Sales and marketing leaders are focused on the current quarter. Those who have the experience and expertise to manage transformation efforts are often sitting in multiple seats and pulled into a new opportunities or crises.
Months then quarters then years go by without achieving meaningful transformation. Apathy and fatigue set in, and the belief that transformation is actually possible diminishes. Those leadership discussions about digital transformation feel like an exhausting Groundhog’s Day.
What can be difficult to accept is that digital transformation is now a constant state.
Leaders are continually evaluating and prioritizing what will drive the business, and what is necessary to just remain competitive. Now that customers are able to configure products on e-commerce, it’s important to integrate that with manufacturing. And once those orders are going directly to the factories, it’s important to look at implementing artificial intelligence. Data is necessary to feed the AI, which means creating a data lake.
The pace of change can feel unrelenting. Companies that keep moving toward the North Star (and refining it according to company and market changes) are the most successful in realizing the promises of digital transformation.