Digital Transformation: 3 Critical Success Factors

Digital Transformation: 3 Critical Success Factors

If you are an executive and are not talking about some type of digital initiative, I’d be genuinely surprised! Reason: Digital Transformation is not just a buzzword or a trending hashtag!

Digital is the new competitive reality.Click To Tweet

While ‘digital transformation’ is quite the common topic of discussion these days, my experience would suggest that it both simplifies and overcomplexifies (not sure if that’s even a word?) the concept it is trying to capture. Digital transformation is not an event that can be contained and written in a single scope of work and delivered as a project (over simplified), nor is it a revolution that requires a complete overhaul of all systems in one massive organization-wide undertaking (overly complex and impossible to action). Our strategies for digital transformation success typically include identifying initial areas of high-opportunity and developing a dynamic roadmap to follow as a guide, and the roadmap and priorities are updated in a fluid way as new information and opportunities present themselves.

From our perspective, technology is just a tool, and the technology stack will continue to change. NoSQL, React, Angular, Hadoop, PowerBI, Azure, Blockchain, Machine Learning, Artificial Intelligence, HBase, etc, are all servants in the service of a desired business result. Further, this list will change faster than you can say ‘PHP’. Lasting change in your organization will not be based on technology, it will be based on other, more fundamental, adjustments to the way you view your relationships and business. Below are a few thoughts (far from comprehensive) as you consider your own digital roadmap.

Digital Transformation Success is About People – Not Just the Technology Team, or the Executive Team – ALL the People

Most people agree that the rate of change in every industry has increased as a result of digital initiatives.

Competitiveness is dependent on a company's ability to innovate and embrace new technology and business models.Click To Tweet

For any company that may not have started down the digital path yet, the place to begin is with the identification of a few high-impact technology initiatives. However, the success of those initiatives, and the sustainability of digital competitiveness lies not in the technology, it lies in the people that are in the business every day.

I had a fantastic meeting recently with a mid-market company. We were holding a series of meetings about digital strategy and technology initiatives. We had met with several people and had the standard architectural discussion – e.g. this database feeds this TPS report, and the TPS report is delivered to these very important people on a monthly basis, etc. (FYI – certain details have been fictionalized and combined to protect the awesome!). Those meetings were important to set the proper context. After several similar meetings, a breath of fresh air entered the room. I would like to point out that this person may not fit the typical image of a digital innovator. This person was non-technical, was working at the individual contributor level in the organization, and had been there for 25+ years. Yet, the message was ‘that would be great if you could automate and expedite the TPS report process, however, if we could find a way to use technology to solve THIS problem, the TPS report would be obsolete, and it would allow Joe in Accounting to improve AR by 4-6 days and Mary in Logistics to better predict shipping needs which would likely lower our freight costs by 12%’. How awesome is that!?! Not one of the execs that we had met with had come up with that solution.

Transformation, though seemingly formidable, needs to happen from the ground up – starting with the mindset of the employees on the front lines. While the example above presents one team member with a very innovative mindset, that is not going to broadly be the case with all of your team members. Change is hard to accept – be it at a personal level or at an organizational level. But change is also inevitable to make way for bigger and better things. Ideas and change can and should come from every level in the organization. However, these initiatives can also be also be heavily handicapped if the key stakeholders in any process are not fully supportive.

In our larger transformation projects, we work with partners and clients (and their clients) to think through the internal messaging and marketing of the initiative as a critical part of the overall success. Educate the organization about the benefits of the initiative, and don’t overlook a discussion on what it means to the employees by focusing too much on the benefits to the business. If you start off by influencing employees’ opinions in a positive direction and continue that conversation, your team will be more accepting when the bigger steps and actions are taken, and will likely come forward with ideas of their own.

Customer Centricity is Fundamental to Digital Transformation Success

Customer centricity has gained a lot of traction of late – rightfully so. After all, a radical shift from being product centric to customer centric is at the heart of any digital transformation exercise. In fact, it risks inappropriately becoming cliched – everybody is talking about it, but are you really doing it?

One aspect of being customer centric is to align your internal and external processes and actions to make it simpler and easier for the customer to do business with you. If you are an eCommerce venture or your core business model relies heavily on mobile app users, customer centricity is almost mandatory. Here’s where ‘Customer Journey Mapping’ will come to your rescue. Yes, it’s not just a buzzword – Mapping your customers’ buying journey provides you with a key opportunity to look at everything from a customer’s perspective, understand their needs, motivations, frustrations and build strong engagement and stronger relationships than ever. Forging these relationships goes a long way in creating brand loyalists. This doesn’t always mean making huge, sweeping changes in the way you interact with your customers, sometimes it means removing micro-frictions or micro frustrations that give you a leg up. Take Panera for instance. I often get a cup of coffee on my way to work in the morning. Usually it doesn’t usually take more than a few minutes to stand in line to order my coffee and pay for it, whether I go to Starbucks, Panera, or any other. However, Panera introduced the ‘Rapid Pick-Up’ option – Now, at Panera, I don’t have to talk to anyone, I don’t have to wait in line, and I don’t even have to take my earbuds out or interrupt whatever podcast I am listening to. I just order on the app, walk in, grab my cup, fill it up, and go. This is an example of how a digital experience removed a micro-friction and created a loyal customer in a competitive market.

Research by Deloitte and Touche indicates that customer-centric companies were
60% more profitable compared to companies that were not focused on the customer. In today’s fiercely competitive world, it pays to be proactive and anticipate needs rather than react to them.

Agility is Paramount to Digital Transformation Success

As a digital partner to many, we never advocate for a monolithic, multi-year ‘digital transformation’ project. With the speed of innovation and change, organizations need to remain much more nimble in their digital investments. If you have been in the space for very long, you have probably seen a chart like the below:

3 Key Elements for Digital Transformation Success

Not intended to be repetitive, but this is informative as to why remaining nimble with short project life cycles and adaptable strategies is so critical. While your competitor has engaged with a Big 4 (or it is Big 5, or is it Big 8, I can’t keep track anymore…) on a 3 year digital transformation initiative, they might have missed out on opportunities in Facebook, Instagram, Twitter, YouTube, or whatever is the NEXT massive technology shift.

As businesses focus towards newer technologies and enablers like IoT, AI and the Cloud, the ability to adapt and incorporate new technologies into an existing strategy is critical.Click To Tweet

At CoStrategix, we believe that much of the success of a cohesive digital transformation rests on organizations’ willingness and ability to experiment and quickly adapt to new information, new technologies, and new market opportunities, with the winner being a business that is lean and smart enough to make bold decisions and implement them rapidly.

This post is the first one in a series of Thought Leadership Posts from our Management Team. Written by John Hutchinson, President at CoStrategix.

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