In the last article, we defined what digital transformation is and why companies across the globe need to make the transition. In this article, we’ll discuss how they do it, what they need for a successful transition, and how long it may take.
Businesses need to understand that a digital transformation is an ongoing process. It isn’t just about moving everything to the cloud and calling it good. It’s about companies being willing to change and adjust how they work as they world around them continues to change (Forbes). It’s imperative to understand that a successful digital transformation is an investment. Two key culprits in a digital transformation failure are an obsession with ‘big bang’ change and a focus on cost cutting as a business driver (CIO).
Knowing that digital transformation is an ongoing process is the first step, but a structure needs to be in place to support that process. Leapfrop suggests making sure that a company has the proper structure already in place before attempting a digital transformation. For some businesses, that might mean bringing on new talent to lead and maintain the changes. Other businesses may simply need to reorganize and create a team that can lead the transition. However, once that structure is in place, the next steps are crucial for success.
In a recent survey, McKinsey identified five important steps to take when starting a digital transformation:
- Set clear expectations – Successful digital transformations focus on a few digital themes rather than pursuing many different agendas.
- Be bold in magnitude and scope – Digital transformations are 1.5 times more likely than other transformations to be enterprise-wide in scope. This helps the company receive the full benefit from their digital transformation investment.
- Create an adaptive design – Only 8 percent of companies surveyed said their current business model would remain economically viable if their industry keeps digitizing at its current course and speed. The digital world evolves quickly, and businesses need to have a model that can adapt at the same fast pace.
- Adopt agile mindsets – During a transformation, you need to encourage risk-taking, innovation, and collaboration across different parts of the business. Respondents at successful organizations are twice as likely as their peers to strongly agree that employees are rewarded for taking appropriate risks, and 2.6 times more likely to say their organizations reward employees for generating new ideas.
- Make leadership crystal clear – Digital transformation leadership should be clearly defined, and that leadership should be consistent in communicating the transformation’s progress with the team and the company as a whole.
From McKinsey’s surveys, realistic expectations, clear leadership roles, and a healthy dose of risk-taking are all necessary for a successful digital transformation. The question remains – Is it worth it? Is it worth the cost, the effort, and the long-term commitment? In our next article, we will tackle the details around how digital transformation can positively impact productivity, value, and company culture.