Digital Transformation: How to Plan for Success
Years ago, I remember reading an interview where Jeff Bezos described his plan for Amazon. He talked about using an AI algorithm to predict what you would want to order before you knew you wanted it. It sounded insane at the time. And here we are today, with local fulfillment centers delivering goods you order often within a couple of hours (depending on where you live). Bezos is one of the wealthiest people in the world because he understood the power of digital transformation before anyone else.
Over the next few years, companies large and small will make the transition to digital, and not all of them will succeed. McKinsey reports that less than 30% of companies enjoy true digital transformation success, and only 16% realize improved performance and sustainable changes.
Why Digital Transformations Fail
Tony Saldanha is president of Transformant, former vice president for IT and global business services at Procter & Gamble, and author of Why Digital Transformations Fail: The Surprising Disciplines of How to Take Off and Stay Ahead. In an interviewwith the Wharton School of the University of Pennsylvania, Saldanha explained that most digital transformations fail due to the lack of clear goals and a disciplined process to achieve them: "Digital transformation is an ongoing journey, and you get there only by changing the DNA of the organization.”
Successful digital transformation relies on a clear plan with top-down adoption and support. Here’s how you can set your company up for a successful transition to digital operations:
1. Hire Visionary Leadership
Bezos succeeded precisely because he is a visionary. He saw what would be possible and invested in the right ways to make it happen. Your company (every company) needs people who understand and embrace new directions. They should be tech-savvy leaders capable of understanding where the company can go and how digital technology fits into your vision of the future. This level of creativity is not necessarily limited to young people or new hires; you may have hidden gems within your existing staff just waiting for some encouragement.
To hire or develop the right talent, you need to understand where you’re headed and what’s possible in your industry and be ready to adapt to emerging technologies as rapidly as they are developed.
You’ll need to identify talent and develop skills on every level of your organization to make it work. This may require reorganization to define the new roles and responsibilities across the board. You’ll need people in key roles to help with training, transition, and creating new workflows and procedures.
2. Communicate Your Vision To Employees
From top to bottom, you need buy-in, which means you need to communicate the value of the change, where your business is headed and why the change is necessary. When your people understand why things are happening and what it means to them, they are more willing to cooperate and adapt.
3. Adopt Digital Tools To Share Information Across The Organization
Gallup research shows that employees at most organizations don’t, or can’t, share knowledge with co-workers in other departments. In the U.S., less than 20% believe they are "satisfied with cooperation between my department and other departments."
And yet agility — and digital disruption — depends on open communication, information gathering and sharing, and collaboration between departments. Open communications will help your organization fix misaligned goals across departments and determine the optimal balance between, for example, adequate stock to keep your sales staff happy without the exorbitant cost — and associated risk — of overstock.
4. Modify Procedures To Include New Technologies
New technology calls for new procedures. Having the technology is only the beginning of the transition. Your workers will be using new systems and procedures every day. You’ll need a comprehensive plan to address how that is to happen. For every affected process, new protocols, procedures and leadership style need to be launched. Permissions will need to be set to enable communication while preserving data integrity.
5. Empower Your Employees
Encourage your employees to invent new strategies and suggest new automated workflows. Front-line employees who understand daily operations are best positioned to suggest improvements — as long as those suggestions are encouraged and welcomed.
Today’s digital systems are capable of processing massive amounts of data to deliver insights in real time. With the right infrastructure in place, agile companies are positioned to use those insights to adjust in response to changing circumstances as they happen.
Your plan for digital transformation should include open communications within your organization and top-down buy-in, with leadership support and encouragement in place for new ideas and experimental procedures.
The stakes are high. In Kong’s 2020 Digital Innovation Benchmark Report, nearly 40% of technology leaders said digital transformation failure means company failure. By 2023, they expect companies to innovate or die.
Author: Michael Higgins