“Blockchain will disrupt your industry. Companies investing in artificial intelligence outperform their competitors with double digits. Robots revolutionise your business…” We have heard it before and, indeed, emerging technology will impact your company, but strong statements are no substitute for smart decisions.
When business leaders describe their main challenges with respect to digital transformation, we often hear about organisational resistance to change, inflexible technology stacks and difficulties attracting digital profiles. All that combined makes it extremely difficult to break with the legacy business model. Indeed, many organisations struggle with digital transformation because it requires resources, a steep learning curve and the willingness to change. Despite what some might claim, there never is a silver bullet to make all of these challenges disappear.
So, why does digital transformation work in one company and fail in the other? Based on our experience it boils down to one vital aspect – focus. Organisations that can maintain focus throughout the complete transformation achieve faster impact with less resources. Maintaining focus sounds all too easy, but it really isn’t as everyday life is bombarded by tons of distractions.
We bundled our findings on how to keep focus throughout the transformation lifecycle in our “digital prioritization framework”. We identify four subsequent areas of focus, namely prioritizing on corporate value, digital potential, business success and realisation. A fifth and central area of focus is the prioritization on people. Let’s have a look on how this plays out…
Focus starts at the top. Far too often we see companies mistake a long wish list for a corporate strategy. In the bestseller “Good strategy, bad strategy” Richard Rumelt describes the main reason why there are so many bad strategies: senior management just can’t choose. If the top layer of the organisation is not digital savvy – and it doesn’t have to be – an aversion towards clear digital decisions is even more likely.
So, should top management just provide a big bag of money and let the digital experts do what they do best? The short answer is no. Each investment must benefit the company.
First, the company must decide how digital can strengthen their organisation. Based on your market context and the line you set out, you can prioritize your digital efforts to support corporate value.
Typical focus areas are strengthening your offering, organisation or business model. Digital capabilities come into play when you define your tactics. For your offering, for example, this could mean harvesting data to improve your products or digitalizing your client touch points to improve the overall service. The key word is ‘decide’, to avoid shooting from the hip.
The leadership team outlines corporate value. Often it is a good idea to have a digital advice team to follow-up on emerging trends and to translate these into potential opportunities for the company. Don’t be afraid to assemble a diverse advice board, including young potential, technology experts and independent advisors.
Once transparent and ambitious goals are set, the senior team should demonstrate commitment and secure a relevant budget.
The following step is to experiment. Don’t sprint towards full-fledged implementation, but eat the elephant one piece at the time.
Select a team to design the solution and build small-scale experiments to discover the digital potential. During this phase you must give ownership to the team to test alternative technologies, features and use cases. You want to prioritize the digital capabilities based on how well they enable your corporate value.
By bringing together business people and technical profiles and let them collaborate on a laboratory scale, you avoid large-scale roll-out that serves no one. They should test implementation feasibility and overall maturity of technology. Is the solution user-friendly and does it cover the key features?
Running experiments is not a free lunch. The people involved should be incentivised to deliver. An overall budget and ambitious target for experimentation should be set.
When an experiment is ready to deliver, it should be tested in a real-life environment to demonstrate its business success. Here, user representatives are able to test the functionality. When your experiment is internally focussed you can have it tested by the business users; external experiments can be evaluated by (potential) clients or partners.
The outcome can be threefold. You either kill the experiment, continue to experiment on additional features, or bring it to the next stage. The latter case should be substantiated with a positive business case, and a balanced implementation plan.
At this point we should be convinced that the initiatives will enable corporate value. However, we have not yet decided how to implement them. Now we need to answer questions such as ‘Which solution should come first?’; ‘Do we go alone or partner up?’; and, ‘How do we assemble a winning team?’.
Prioritize on initiatives with a quick return. Early success will keep people motivated and keep the overall drive high.
Your transformation roadmap should not include more than two or three lighthouse projects at a time. An experiment that is ready to scale up can be put on hold if needed, because once you scale up, you have to free up resources. Far too often, initiatives fail because people were not fully dedicated to the project, and had to balance multiple priorities at the same time.
We experience the highest success rates with hands-on agile project styles. Dedicated resources and frequent feedback loops between users and builders tend to create the strongest solutions.
Furhtermore, you can demonstrate commitment by appointing a high-calibre launch team. This will empower the people involved in the project and keep it high on the agenda.
So far, we have made our case from a corporate perspective, while at the centre of each transformation is your workforce. A strategic vision is but as strong as the people behind it.
To convince employees and avoid resistance, transparency is key. Start with framing the digital challenge and build awareness of both opportunities and threats. This includes unambiguous signals about the ambitions and the changes the project requires. Communicate a compelling vision and align with key people. This will help to retain talent and to attract new potentials.
Promoting new, agile ways of working is not easy and will require efforts from all layers of the organisation. You can start small and demonstrate success. A small but dynamic digital team with a high level of autonomy will also help to attract high skilled digital experts. Don’t forget to reward people that pioneer the change.
Part of the digital transformation will include a plan to allow people to build their future skills. For some profiles this will be limited to digital foundations, while for others it can include a redirection towards digital expertise.
Human resources and senior management have a key role to play: to motivate people in changing their behaviours, and to find suitable roles for employees in the renewed organisation.
As a final take-away, don’t let yourself be overwhelmed by the speed of (and media attention for) emerging technologies. Do you want to reap the benefits of digital transformation? Then start with a persistent focus on value creation and apply an agile mindset in the implementation.