Digital Transformation, Simplified
Abstract: As many organisations pursue strategies and transformation programmes to exploit “digital”, here is one perspective on simplifying this multi-faceted agenda. We suggest six domains of digital that strategy should cover, and five features of successful digital transformations.
Today, most organisations have “all things digital” front of mind – both at board level and in their planning and operational teams. Whilst the benefits might not always be quantifiable, most executives are relying on their intuition to make investments to respond to this mega-trend. We think they are right to do so.
Exploiting digital presents senior leaders with two immediate challenges: firstly, digital doesn’t fall under any single board member’s aegis. It crosses areas such as marketing, operations, HR, ICT, and finance; not just in its board-level considerations, but in the decisions that have to be worked through every day. Secondly, it moves so fast, that traditional managerial analysis, planning and execution cycles simply don’t work anymore.
What is evident is that most organisations accept that they need a digital strategy, intrinsic to the business strategy, and a transformation, cutting across the organisation, to deliver the fundamental changes digital demands.
Here, I offer one brief perspective to simplify both “what digital strategy and transformation are”, and “how you do it”.
What are the Six Domains of Digital you need to address?
Organisations should get to grips with digital by scoping it under six headings. Addressing each can ensure that investment is made in the things that will make a difference and that the transformation agenda can be broken down into manageable, meaningful chunks. By covering all six, leaders can ensure that digital is addressed strategically and is truly transformational, avoiding the pitfall of it being superficial or too narrowly scoped.
- Customer Experience & Digital Marketing: Accept that the customer has more control today, and develop the new capabilities required to serve them with hyper-personalised and immediate offerings.
- Digital Business Models: Whether the organisation’s current model needs to be re-invented or adapted, companies should assume that their competitors are re-inventing business to find new ways to create value. Amongst the powerful new business and technology patterns emerging across sectors and geographies are the re-invention of products into new value propositions, the re-definition of supply chains and channels, and the monetization of information itself. And many of these business designs are being delivered at near-zero marginal cost.
- Digital Organisation: It is wrong to think of digital as a simple technology term. It has a crucial human dimension. Organisations in all sectors are recognising that they need new approaches to leadership, decision-making, talent management, collaboration, operations and measurement. It represents a revolution in how we all work.
- Analytics: With information playing as important a role today as capital, labour and resources, businesses must recognise the paradigm shift in the required capabilities, and invest in hardware, software and ‘brainware’ to exploit analytics, data science and big data.
- Digital Technology Strategy: Whilst companies need to focus on the business outcomes, much of the digital opportunity is enabled through deploying the right technologies, and by adopting a new approach to provision, now widely termed “two-speed IT”.
- Information Governance, Risk & Compliance: The ultra-connected world of digital also makes businesses nervous from a security, resilience and privacy perspective. There is huge value in adopting best practices (often relying on external expertise), both from the compliance perspective, and in satisfying the company’s customers, employees and partners of its information integrity.
How should you Digitally Transform?
From the perspective of the journey itself, the people often asked to lead digital transformation initiatives are generally skilled transformation executives. They already have deep appreciation of the people, processes and technology; and they know what broad transformation approach will work within their culture.
From the perspective of the end-state organisational design and governance structure, no one size fits all. Many organisations are experimenting with digital solutions outside “business-as-usual”, but our experience suggests that to be successful, digital needs to be integrated into core business and operating models quickly.
From our experience, we suggest five success factors for digital transformation:
- Kick off a set of innovative projects within a coherent vision
- Ensure they address the six domains
- Deploy multi-disciplinary teams (and bring in trusted partners with external expertise and experience)
- Test and adapt fast and hard
- Govern with a flexible portfolio and programme approach to recognise the emergent, diffused nature of digital innovation.
At the day-to-day level, there will be occasions when proceeding in this ways can appear counter-intuitive to managers with a “top-down control, scarce budgets” mindset. In our view, it is the most likely approach to identify and realize the benefits of the fantastic digital opportunity businesses face today.