Wednesday 1 February 2023

Digital Transformation

Digital transformation is the integration of digital technology into business models and processes, resulting in changes to how an organisation operates and delivers value to employees and customers alike. It enables organisations to take advantage of new opportunities created by digital technologies, leading to improved processes, enhanced customer experiences and increased competitiveness. In essence digital transformation leverages technology to optimise and often times redefine business models to provide more value to customers as well as employees.

Some of the benefits of a successful digital transformation can include:

  • Shorter process times
  • Faster time to market
  • Cost reduction
  • Increased revenue
  • Customer loyalty 
  • Employee retention
  • Reputation gain
  • Competitor advantage

Sound's great right? If it was only that easy, Digital transformation is not a simple or straightforward process. It involves a significant shift in organisational culture, processes, and technology. It requires a deep understanding of technology, data, and customer needs, as well as the ability to adapt to changes in the market. Additionally, implementing digital solutions often involves a large investment of time, resources, and money. It also requires overcoming resistance to change from employees, stakeholders, and customers. Overall, digital transformation is a complex journey that requires careful planning, execution, and continuous improvement.

Due to its complexity, digital transformation requires expertise to successfully implement. Experienced professionals must analyse and understand the current state of the organisation, where it needs to be in the future, conduct a gap analysis between the two states, and develop a plan for bridging that gap. This includes not only implementing new technology and processes, but also managing the change to ensure adoption and buy-in from customers, stakeholders, and employees. The digital transformation team must also be able to identify and manage any potential roadblocks, risks, and challenges that may arise during the transformation process. Without this level of expertise, the digital transformation process is likely to stall or fail, resulting in missed opportunities and wasted resources. Hence, having the right expertise is crucial in ensuring the success of digital transformation.

To help guide an organisation, we can follow the digital transformation compass, a twelve step representation of an organisational digital transformation journey. These twelve steps will minimise risk and cost during a transform while maximising engagement and chances of success.

There are four main phases to a digital transformation journey, they are:
  • Framing the digital challenge: In the first leg of our Digital Transformation journey the champions: 
    • 'Build awareness' throughout their organisation that change is possible, they raise awareness of digital opportunities as well as threats to their business. A classic example of an organisation ignoring digital threats and opportunities is Blockbuster.
    • 'Know your starting point', organisation must take an honest look in the mirror, they must understand there own digital level of digital majority. Before an organisation can properly prepare and have realistic goals in mind, they must first assess where they are. This understanding is crucial in forecasting budgetary as well a time requirements for a successful digital transformation.
    • 'Craft a vision and align a top team', before an organisation can begin their journey, they need to have a clear vision of their destination and the right team to get the organisation there. The transformation team should be a cross-functional team with representatives form every impacted group within the organisation working with transformation experts who can ensure a successful journey. The transformation team along with the cross-functional representatives form the vision that will drive and guide the digital transformation.

  • Focusing investment: In the previous leg, the organisation assessed if they needed a digital transformation, where they are in their journey, where they want to go and who's going to get them there. Now it's time to plan the journey and acquire the the resources and governance needed to successfully compete the digital transformation.
    • 'Translate your vision into action': Now that you have an understanding of where your organisation is and where it wants to go it's time to build a roadmap of how to get there. 
    • 'Build your governance': Establish a clear framework for decision-making while ensuring accountability for the results. Effective governance will help to ensure the transformation aligns with the overall business strategy, stays within budget, and meets regulatory requirements. 
    • 'Fund the transformation': With a digital transformation team, goal, governance and plan ready to move forward, it's time to allocate an appropriate amount of resources to see the transformation through to a successful end.

  • Mobilising the organisation: While the the transformation team executes the transformation plan, it is up to the 'Change management team' along with the support of the initial transformation champions and the management of the organisation to clearly communicate the transformation progress and impact to the organisation to lead by example and be the early adopters of the digital change.
    • 'Signal your ambitions': Leadership should communicate early and often with the organisation, how the transformation is going, howe each individual and their role will be enhanced by the change, how their role will improve.
    • 'Earn the right to engage': Leadership along with change need to walk the talk, they need to demonstrate that they are adopting the change in their day-to-day, that it is a positive thing for the organisation as well as the individual.
    • 'Set new behaviours & evolve culture': Leadership must identify key stakeholder and support them into becoming early adopters within their organisation and support them in their transition, these early adopters will lead the charge and show their colleagues the benefits of the transformation.

  • Sustaining the digital transition: Once the transformation is implemented, it is not yet complete, the organisation, must now foster an environment of adoption, to ensure that all of the effort put into the transformation is not wasted.
    • 'Build foundation skills': The organisation, must support the individuals with the training required to leverage the new ways of working to maximise their investment.
    • 'Align incentives & rewards': Individuals as well as groups should have incentives to adopt the new ways of working, change is difficult and without value to the individual will not be adopted. Incentivise and reward change.
    • 'Measure, monitor & iterate': track KPIs to ensure that the organisation is benefiting from the transformation, and iterate when and where appropriate.