How to succeed at Digital Transformation
In a previous article, I addressed how digital companies are seen from a customer’s perspective. Today’s post addresses the complexities of transformations that occur within an organization. To make a successful digital transformation, McKinsey Quarterlyaddresses several key points.
What direction is best?
The choice of where a business will go needs to be based on the future instead of on the present. Digital innovations are constantly evolving to transform how customers interact with brands and businesses. Being stuck in the present will limit the imagination and creativity an organization can tap into, which will in turn limit its future growth. Fifteen years ago, many of today’s internet stocks didn’t even exist. The same will be true fifteen years from now. By looking to the future, you’ll have an easier time choosing the best possible direction.
Who will lead?
Transformation is not a project to delegate. The CEO and the supporting executive team need to take it up directly. CEOs are responsible for their organization’s vision and direction. The executive team is responsible for implementing that vision and direction. Sometimes team members may resist this leadership. That is why putting the right team of people in place to drive the change beforehand is critical to a successful transformation. Teams don’t need to be large to drive great success. For instance, Starbucks has adopted numerous digital initiatives since 2005 with a team of three executives leading the way.
How will you sell the vision to stakeholders?
Communication is critical to success, but it’s not the only element you need to address. Deciding who receives the communication and who offers it will also affect how your stakeholders accept the information.
You need crisp, clear messages in all relevant channels and formats. The goal of communication is often to inform, but what you should really be accomplishing with your communication is creating allies. By bringing your stakeholders on board with the transformation, you’ll begin to form a culture of change.
Where will you position the organization?
It’s easy to say something like, “I want to be the best social media integration company in the world.” Unfortunately, having the desire is often seen as the equivalent to having already accomplished the goal, and that encourages digital to fail. You need to be completely honest about the skills, capabilities and technologies that are available to your organization and how these fit within the industry. Honest information will help you reach realistic decisions. Being overconfident will lead to poorly structured decisions. Remember that being aggressive is not the same as being overconfident. If you consider your brand’s and business’s full scope of strengths and weaknesses in terms of resources for every decision, you can transform quickly and successfully.
Who makes decisions?
Somebody needs to take responsibility for a final decision. Businesses are not generally democracies. When push comes to shove, the CEO, president, or designated decision-maker must be willing to make the tough calls. To ensure that the choices being made are positive and encourage transformation, you must collect information through analytics and create meaningful metrics. The executive team should be filtering this need down to their direct reports. Then, you can summarize the information, put it into a meaningful format, and communicate it to the CEO or designated decision-maker.
How are you going to allocate funds?
Business leaders already allocate funds to make sure resources get to where they’re needed every day. In a digital transformation, however, these allocations need to happen faster. Instead of operating as a standard business, it may be useful to operate more like a venture capitalist. This helps you stop immediately if they don’t promote the mission or vision that you’re creating through the transformation process. Shifting to a VC-style of operations also means speeding up the budgeting cycle. Many organizations operate on an annual cycle. With a digital transformation, it can be beneficial to shift to a monthly cycle so that funds are available when needed.
When should you take action?
You need to take action now. Even though up to 70% of digital transformation programs fail, many businesses will also fail if they have not sought out digital. This doesn’t mean you shouldn’t consider the risk vs reward calculations shouldn’t before going all-in. You want to be able to take advantage of what digital can provide so that you can increase revenues and reduce costs. Then the gains that you make can be reinvested into the transformation process so that the business continues to grow. “Going digital” is often treated as a catchphrase. But digital is more than having a website or being able to accept online orders. The Digital Revolution requires brands and businesses to look at what they do in a very different way so that they can meet their customers’ needs right now.