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Digital Transformation — What’s Your Strategy?

Digital Transformation — What’s Your Strategy?

 

To achieve full adoption, maintain continuity, and be scalable over time, an organization’s digital transformation must begin with a sound, realistic strategy.

For the past five years, research and business consulting firms have been touting the value of digital transformation (DX) for good reason. Commonly defined as “the changes associated with applying and integrating digital technology into all aspects of human life and society,” DX focuses on the move from physical to digital at every stage and level of business and personal activity.

Now business leaders are singing the praises of DX, as well. A 2019 survey of executives found that DX improves operational efficiency (40 percent), speeds time to market (36 percent), and helps firms meet evolving customer expectations (35 percent). Furthermore, 60 percent of those surveyed indicated they were better able to create or evolve business models as a result.

A separate survey found that 70 percent of companies (all size categories) either have a DX strategy in place or are working on one. Yet, many business owners may wonder whether DX is beyond their capability or not relevant to their business models. In my opinion, nothing could be further from the truth.

Digital transformation has become an imperative for firms that want to succeed and remain relevant to their customers.

 The challenge is to define a program that is realistic, execute it in a manner that works for the company, its people and its processes, and be willing to adapt and adjust the plan as unforeseen issues — and opportunities — arise. In order to achieve these goals, every digital initiative must start with a strategy.

Strategy 101: Be Realistic

To succeed with DX, management must embrace the reality that radical improvement often requires substantial investments in both time and money. In my time working with companies seeking DX, I and my team have identified two fundamental “truths” in this regard.

  1. Everything costs more than you expect. When you develop your strategy, define a realistic budget and then perform a reality check to determine how much your firm can handle. You may need to establish phases to keep the outlay manageable.
  2. DX is not a race. No matter how substantial your challenges might be, proper execution of your plan is crucial to success. Taking a measured approach offers the added benefits of allowing you to spread costs over time and giving reluctant personnel (more about that in a future blog) time to become accustomed to the new approaches.

 Strategy 102: Don’t Let the Tail Wag the Dog

Beyond financial considerations, finding time to formulate a strategy is a challenge for many firms. As a result, tech-savvy personnel often strike out on their own. Per a recent survey, nearly 40 percent of companies report that a single business unit or product line is leading a DX for their organization or vertical. When that happens, leadership often gets pulled into the transformation effort quickly and without necessary preparation, including a cohesive, holistic strategy.

How can you avoid this problem? If you learn that one department is working on a “rogue” DX, don’t try to play catch-up. Invite the leaders to present their plan and progress to you and other department heads. Then, require them to pause their efforts until you have an opportunity to develop a companywide DX strategy. Then, you can evaluate their goals against your strategy and see whether it can run as is or needs tweaking.

On a positive note, DX, once achieved, is proven to increase competitiveness that translates into a stronger bottom line. As with all sound investments, the payback will be not be instantaneous, but the outcome will be worth the wait.