Digital Transformation – Ask the Right Questions
Digital disruption with all its pervasiveness is infusing into all aspects of the business world. This means companies must implement far more nimble development processes and become far more comfortable making decisions amid uncertainty. Rather than using a top-down strategy driven approach, (which worked fine in the past), these companies need to innovate at speed, using build-assess-learn cycles, even when they are not entirely sure of the outcome.
They need to focus on pilot tests and prototypes that can be developed and rolled out quickly, assessed for performance, and scaled up (or shut down) accordingly. They need to embrace the concept of “fail-fast and fail-cheap,” and build up their digital capabilities through direct experience. And rather than making a single big, strategic bet, they need to manage multiple initiatives, trying out new business models with low sunken costs, killing off the losers, and scaling up the winners. This pursuit cannot be considered as trivial anymore.
Often companies initiate enterprise-wide digital transformations, but they lack focus and accountability. Many leaders of businesses and functions lack the technical skills and digital expertise to implement the digital transformation within their teams. And many of them lack an overarching vision, too.
Digital Opportunity Questions
Companies need to approach digital transformation across the digital opportunity matrix in two parallel and self-reinforcing ways:
Exploit opportunities to digitize the company’s value chain end to end in order to unlock efficiency, free up cash, and improve performance.
Explore with a comprehensive approach to disruptive digital innovation that focuses on creating new products and business models.
Charting the current and future playing fields is necessary but insufficient. It’s also essential to frame, explore, and prioritize strategic choices. Executives can ask themselves the following questions to assess and shape the digital transformation:
What are the anchoring beliefs for the future upon which we can build our forecast scenarios?
Where would we attack our business? What source of value creation is most vulnerable?
Where do we go against the grain in shaping digital strategies? Are we overestimating our abilities?
Have we comprehensively analyzed the business value chain from end to end and estimated potential gains through digitizing existing processes?
Are we in the process of creating disruptive businesses and business models to take advantage of digital trends?
What immediate steps can we take to address our pain points and enhance processes?
How would we re-imagine our products without legacy?
What opportunities demand exploration? Which ones could become transformative?
Do we have a comprehensive view of the innovation landscape in and adjacent to the industry?
Do we have a clear strategy for approaching potential partners, acquisition targets, and collaborators?
Are our leaders and people ready, willing, and able to digitally transform the organization?
Striving to sustain a competitive advantage demands a perpetual process of transformation as today’s game quickly morphs into tomorrow’s.
Information Technology (IT) Upgrade Questions
Executives aspiring to win in digital can also start by asking themselves some critical questions about their Information Technology (IT) capabilities:
Do we understand the IT implications of our digital efforts and aspirations?
Do we have an integrated roadmap in place to remove the IT constraints and enable digital success?
Do we have the funding, management commitment and accountability in place to execute the road-map over multiple years?
Getting an entire company, including its legacy IT systems, to move at the speed of digital is a multi-year journey that can require substantial investments. But it’s no longer optional. Companies ready to forthrightly address the technological, organizational and financial impediments blocking their path, stand the best chance of winning in digital.
Executives can have a better understanding of their IT systems, data and speed needs for becoming digital by focusing on what business capabilities they must have like:
Should we have omni-channel sales and distribution models?
Should we develop advanced analytics capabilities?
Should we rethink how customers will interact with the business?
Should we improve digital processes?
Depending on the answers they should modernize their technology stack including: prepare the application layer for digital; make the infrastructure and security ready for digital; make the data layer ready for digital.
Often company data is inaccessible or unusable. If addressed right, data can help in, descriptive analytics to describe and understand what has happened; predictive analytics to describe what is likely to happen; prescriptive analytics to describe what is likely to happen and what are the proposed business actions. IT could adopt agile principles to work at the speed of digital. Often IT lacks the right skills sets needed to work in a digital environment, like: mobile app developers, Agile coach, data scientist, data architect, UI/UX designer, DevOps engineer, Product manager.
Across industries, companies take a well-deﬁned path toward digital maturity by prioritizing investments in operating model changes to improve decision rights, talent management and collaboration, as well as in the core elements of an IT architecture needed to spur digital capabilities. These investments are the digital foundation that enables more advanced capabilities in customer engagement, analytics and rapid innovation. More digitally mature companies understand that, without having such investments in place, these more advanced initiatives will be limited in their potential impact. Building this foundation is the focus of a comprehensive, cross-functional digital transformation, and the elements of this transformation are highly interrelated.
Digital Transformation Journey Questions
In addition, from a transformation point-of-view, ask the following questions to assess your digital transformation journey:
Are the proposed digital solutions appealing to the organization, and will they work in your culture?
Are top leaders demonstrating alignment to the digital strategy in their communications and actions?
Is our narrative of digital success clear and inspiring enough to generate emotional buy-in and commitment with our people?
Do we have the right leaders who can work effectively in digital teams, both today and in the future state?
Are line managers at all levels actively and visibly reinforcing the adoption of change, role-modeling critical behaviors for success to shift culture?
Have we selected the credible digital team members and involved our trusted opinion leaders from the organization?
Do we know who will be most disrupted by our digital solutions, and do we have a plan to address resistance and build commitment?
Can we acquire or develop, the talent and expertise we will need for this digital transformation?
Have we identified the critical few behaviors that will drive results and the reinforcements to encourage them?
Are the initiative structure, governance, and accountabilities, designed to make and execute sound, efficient and timely decisions?
Can we deliver on digital transformation on time while protecting our business’s performance from capacity overload?
Do we have clear goals, metrics, and a system to forecast results and course-correct before it’s too late?
Are we evolving our organization (structure, roles, responsibilities, capabilities, culture, incentive systems, etc.) to sustain the digital change?
Can we enhance our systems and leverage new emerging technologies fast enough to deliver the results on time?
Are we designing and implementing fast feedback loops to assess, learn and enhance our solutions over time?
Although transformation tends to be viewed as an audacious undertaking, the most successful digital transformations start with focused initiatives that deliver on all three dimensions: speed, scale, and value. Once the earliest digital initiatives prove their value, they catalyze the next round of more ambitious follow-on projects. At the same time, a culture shift occurs within the organization, as the company adjusts to digital as a new way of doing business.