We’re half of the way through 2020. Fifty percent of this way, we’ve spent social distancing and quarantining. If your company is still in business — good going — because too many firms aren’t.
The COVID-19 crisis made it easier for us to discern the organizations that had gone to great lengths building their digital infrastructures. We’ve purchased groceries and home goods from them, ordered contact-free takeouts, videoconferenced with physicians, or applied for loans online during the pandemic. And what about those that haven’t focused on their digital transformation opportunities? In essence, they’ve been either driven out of business or continued to operate, while rushing to digitally transform and stay relevant.
Over the years in business, TEAM International consulted on, participated in, and analyzed hundreds of digital transformations. In doing so, we’ve gained a fuller picture of what works and what doesn’t, how complicated a successful digital transformation is, and what it takes to thrive. Even though there is no one-size-fits-all approach and too much depends on the industry, existing processes, business leaders, and other aspects, there’re still vital elements that make it all work.
What Is Digital Transformation and What It’s Not?
First of all, let’s admit that digital transformation terminology may be approached from various perspectives, and people may read their own thoughts in the terms. To make sure that we’re on the same page, let’s start with a digital transformation definition and how it differs from other similar concepts.
At its core, digital transformation (DT or DX) is a company-wide customer-driven modernization of business models and processes supported by IT. It’s a long-term and deep-rooted approach aimed at delivering better value to clients, partners, and employees. The areas of digital transformation may include customer service, supply chain, enterprise resource planning (ERP), and other units, depending on the industry and existing operations.
As the hype around digital transformation services continues to gain momentum, new terms spring up like mushrooms and add confusion. Consequently, it comes as no wonder that most people get mixed up about DT, digitization, and digitalization. To prevent misunderstandings, let’s proceed with analyzing the differences.
- Digitization is the process of changing information from manual or analog to digital form. One of the most common examples refers to converting handwritten documents into computerized copies.
- Unlike digitization, digitalization is a roomy term, and it essentially means the use of digital capabilities to transform a business model and unleash new value-generating opportunities.
Since we define digital transformation as a renewal of business processes and models supported by information technologies, you may suggest that digitalization is a synonymous term, and they can be used interchangeably, but it’s not quite so. Digitalization lies at the root of DT. However, it’s DT that makes it possible to reconsider how you leverage technologies, processes, and human resources to fast-forward your business in new ways. In simple terms, digitalization is about IT, and it’s mainly performed as a well-defined and time-limited project. Meanwhile, DT is an organization-wide and long-term modernization centered around business operations, people, and technological capacity. So, what are the essentials of a digital transformation framework?
5 Pillars of Digital Transformation to Get It Right the First Time
A digital transformation roadmap may vary, depending on the current situation at the organization. Some companies opt for a holistic and agile modernization to swiftly and efficiently reimagine their business processes and thus address a competitive threat. Meanwhile, others prefer to launch an isolated digital project to see how digital firms operate, and so generate new revenue sources. Regardless of the selected approach, TEAM International helps enterprises change their obsolete mechanisms at scale, without disturbing normal business activities. How? — Working closely with clients, we’ve distilled their effective methods into five digital transformation key components that pave the way for success.
#1 A transparent mission
Too often, DT goals and objectives are communicated so superficially that it can be challenging for teams to translate them into actual initiatives and actions. Consequently, your employees just pretend to be very busy, and they don’t focus on tangible outcomes. At worst, they resist changes and strongly inhibit them.
Considering the above, it becomes apparent that well-defined missions that are aligned with the business strategy are crucial for a successful digital transformation process. Before you start, make sure that your mission is:
- measurable and valid. Every mission should be centered around impactful outcomes with a quantifiable value, not an activity;
- strategically viable and clear. People tend to support those things they understand well. So, articulating a mission, feel free to elaborate and explain how your mission will contribute to the overall corporate strategy;
- comprehensive. When it comes to an enterprise digital transformation, any mission should be inclusive enough to make a solid impact. Meanwhile, teams should possess the necessary authority and liability to scale changes across corporate siloes.
#2 Collaborative talent
Despite all the fear-inducing stories about robots taking on jobs and provoking mass dismissals, human employees are still at the very heart of any value chain and will remain there. It’s worth mentioning that technologies work under two conditions:
- they’re aligned with human requirements (people first);
- they’re properly deployed, which requires expertise and skills.
The times — when information technologies had been implemented because they could be and not because they should be — have already passed. Today companies need to articulate clear missions and explain how changes support the overall business strategy to motivate their employees for more and shift from mere ‘keeping the lights on’ to dynamic actions.
In most cases, when business leaders elaborate on a digital transformation strategy, they first think about investing in technology, and then people. However, it should be exactly the other way round. DT, and especially its creative aspect, is highly reliant on people, and if you invest in upskilling and reskilling of your teams, you’ll lay a solid foundation for success.
#3 Impactful data
Initially, the goals of any digital transformation journey were quite straightforward: convert paper records into digital copies for easy and quick storage, management, and search. However, with the rise of advanced technologies, such as artificial intelligence, robotic process automation, machine learning, natural language processing, and IoT ecosystems, transformations have become much broader. However, all these advancements alone won’t evolve into a robust differentiator to future-proof your business in the long run.
Data may be easily called the new fuel for business success. However, unless the fuel isn’t ‘refined,’ the engine won’t run. Providing digital transformation consulting, we know that at most companies, data is like Lego bricks and figures mixed and scattered all over the house. Consequently, it doesn’t look like something that can be used immediately to produce tangible outcomes. Nevertheless, combined with the necessary skills and knowledge, as well as AI, intelligent automation, and other efficient technologies, data may be structured, processed, and translated into insights to generate business value at scale.
Have you ever analyzed the difference between Apple and other industry players? Amazon and the rest? — In fact, all these and other giants have built and continuously nurture internal data-driven cultures. They not only collect and crunch figures, but they live, innovate, and act in alignment with the data. And it’s where leadership plays a pivotal role.
4# A top-driven process
Whether we want to admit it or not, any leadership “cascades” down, influencing every aspect of an organization. Consequently, you can hardly expect any significant changes or improvements unless you select top talent on every level and develop them in the desired direction. So, should we elaborate on the reasons why digital transformation is now on the CEO’s shoulders?
Of course, processes, culture, legacy, industry, market environment, and modern technologies are all important, just as real assets do. However, we need to admit that most of these things in business tend to be pretty similar among immediate competitors or can be easily copied. Whereas, your top managers’ mindset, integrity, and competence will shine out and be a solid competitive advantage.
When it comes to areas of responsibility, the role of CFO in digital transformation is rather broad. It may lie in determining the commercial viability of digital enterprise models, helping CIO identify the most appropriate operating model for IT functions in the cloud, and accelerating the shift of the finance function from inefficient manual work to smart data-driven automation. Meanwhile, CIOs are not only liable for driving the technological change and bringing in digital transformation solutions to make the entire corporate process agile and efficient. They also manage software engineers and encourage them to work as a team, outperforming the competition.
In essence, senior leaders should be proactive and on a sharp lookout for new opportunities.
#5 Change capabilities
The last but not the least component of any human-centered digital transformation is change management. The term is rather broad and comprises leadership, emotional intelligence, teamwork, open communication, courage, lifelong training, and more. Nevertheless, it’s a vital element of any company-wide modernization. Otherwise, it’s like going to sea without knowing how to sail through turbulent waves.
From our experience in digital transformation consulting services, we’ve set out three change imperatives:
- Introduce a comprehensive approach to change management. Combine material facts (technologies, processes, tools & systems, digital strategy, skills & roles, products & services) with immaterial social interactions (culture, team, communication, leadership, training) throughout the whole digital transformation program — from intention to deployment;
- Adapt and leverage traditional change management components to the context of DT. Don’t reinvent the wheel, but take advantage of proven methods to achieve your goals. Leadership, communication, teamwork, training, role transitioning, and change story are the foundation for an effective modernization, and they’ll help you create a culture of continual improvement;
- Keep your change management tactics agile to compensate for social and technology challenges without sacrificing the vision. In today’s dynamic environment, advance planning is difficult and risky, so your digital business transformation strategy must anticipate and align with the changing circumstances to remain valid.
So, we’ve analyzed 5 steps to digital transformation as if they were all-sufficient, which is not the case. All they’re interdependent parts of a larger whole, and you need them all running well together. In a nutshell, people are the reason and the core of any modernization, the mission is the guidance, data is the fuel, leaders are the driving force, and change capability is the landing gear.
Finally, any modernization should be focused on solving real employees’ or customers’ problems. Otherwise, what’s the point? Don’t initiate any changes just because you’ve read about digital transformation technologies and approaches. Spend time unleashing, analyzing, and prioritizing issues that must be solved for your clients and business. Amid the COVID-19 crisis, avoid becoming too audacious and don’t overcomplicate.
Currently, people just want to get their things done and spend as little time on that as possible. So, elaborating your own digital transformation playbook, prioritize tasks that will streamline and facilitate users’ or employees’ journeys. Don’t expect them to re-learn, and if you can choose between unfamiliar experiences and long-expected features — go for the latter. TEAM International is one of the leading digital transformation consulting firms and service providers globally. We help industry leaders succeed not only today but become agile and responsive to a myriad of changes and advancements dipping below the horizon. If you need more information about our capabilities, just email us, and let’s talk.