Digital Maturity – How are we doing?
Unless your company has been hibernating through the past decade, you must know that digital transformation is an inevitable journey all companies must take, where they must create, deliver and capture value through digital engagement. Assuming that most companies have already started out on the journey, they must often check how they are doing to ensure that they are on the right track; and if they are not, then how should they course correct going forward. Digital transformation, including all the accelerated changes that are related to it, is not expected to be a one-off initiative that a company taken on with a definitive end; expect it to continue for years to come, with a moving target-state that depends on how several drivers that will themselves morph with time. It is these drivers that the companies must evaluate and continue to re-evaluate, and course correct, to make sure they are on the right trajectory going forward.
So what areas must be evaluated across the transformation journey?
If you have not realized yet, digital is pervasive and impacts the entire enterprise, including every business unit and function, whether it’s HR, finance, marketing, distribution, product development, or technology. Companies also are accepting the reality that every lever will continue to transform while they harness the potential of digital in the current state. As they depart on the digital transformation journey and craft the long-term digital direction, they must lay out clear, practical and high-impact initiatives, with phased approach with clear roadmap and milestones that moves the needle further along the digital maturity continuum.
Are you moving the needle with innovation and speed?
Digital innovations that effect the transformation are not like a wave that resolves to a new normal once it passes. It is often like a tide that is in constant and powerful flux as time passes. We are seeing hyper-connectivity, with massive, cloud-based computing power, streams of data tamed by predictive analytics— that are all colliding with trillions in investment capital to produce a new era for business, characterized by constant innovation, the prevalence of predictive analytics and dramatically accelerating cycle times.
Another characteristic of digital transformation is the speed of changes, that is no longer a nice-to-have, but an essential capability that will separate winners from losers. It is not just a matter of smart thinking and anticipation. Companies also need to accelerate the deployment of digitally powered processes, customer experiences and ways of working across global organizations and teams. And, speed will be as much or more important than scale, and every company needs to build the capabilities that will let it adapt to changing circumstances much more quickly and flexibly. Digital innovation will leave a company behind if it can’t speed up its metabolism. To take advantage of the momentum, companies need to move beyond experiments with digital and transform themselves into digital businesses. Yet many companies are stumbling as they try to turn their digital agendas into new business and operating models.
Do you have a sound, overarching and current digital strategy for the long term?
Every company must have a strategic view of where they want to go from a digital perspective – and how they must adapt their business strategy and competitive advantage accordingly. Give how dynamic the environment is, this perspective will evolve and need to be flexible. The overarching digital strategy is critical to motivating and aligning the organization, and even more, to ensure that the digital efforts deliver real and sustainable value for the enterprise. Since the landscape of your business is constantly changing, be prepared to frequently update this strategy accordingly. Even better, to get ahead of external disruption, you must preemptively transform to self-disrupt on your own terms, with bold digital strategies.
Are you customer-centered in everything you do?
Rising customer expectations continue to push businesses to improve the customer experience across all channels. Excellence in one channel is no longer sufficient; customers expect the same frictionless experience in a retail store as they do when shopping online, or when they are mobile. Moreover, they are less accepting of bad experiences, while they are willing to pay more for a better customer experience. No enterprise is perfect, but leadership teams should aspire to fix every error or bad experience. Processes that enable companies to capture and learn from every customer interaction—positive or negative—help them to regularly test assumptions about how customers are using digital and constantly fine-tune the experience. Thus having healthy obsession with improving the customer experience is the foundation of any digital transformation. This is where being customer-centric in everything is critical.
You must evaluate where you are on the radically enhanced customer engagement model. Evaluate if your customer engagement model is evolving to keep pace with customer behavior. Is your company developing the right digital channels, consistent with the physical channels? Does your company understand customer journeys, their points of pain and friction, and then rapidly evolve and enhance the customer engagement model. Is it using relevant data and analytics to understand customer behaviors and inform better business decisions?
Are your decisions quick and data-driven?
Rapid decision making is critical in a dynamic digital environment. Twelve-month product-release cycles are a relic. Organizations need to move to a cycle of continuous delivery and improvement, adopting methods such as agile development and “live beta,” supported by big data analytics, to increase the pace of innovation. Continuous improvement requires continuous experimentation, along with a process for quickly responding to bits of information. Integrating data sources into a single system that is accessible to everyone in the organization will improve the “clock speed” for innovation. To support you enhanced customer engagement model, you must have the data and analytics capabilities that allow for much deeper customer insights and new mobile and digital engagement.
Data is the essential commodity in a digital world. The ability to collect, process, and gain business insights from all kinds of data from myriad sources will separate winners from losers. Your company needs to pilot and scale up lighthouse use cases that demonstrate tangible business value, and then build a data and technology stack that will enable the organization to capture value more broadly from data and analytics. To ensure that your company is data-driven, you should also ensure that the data governance effort is coordinated centrally. This increases the likelihood that data formats will be consistent and puts a single entity in charge of specifying criteria for the technology landscape of the future. At the same time, it allows the data owner to determine which data will be shared and how it will be used. Comprehensive master data management can handle all the data and technology assets provided by various divisions, making the goal of shared governance easier to achieve. Do you have such capabilities in place? If not, evaluate where you are on the journey to getting there.
Have you re-imagined your offerings?
The digital opportunity includes offerings, value-chains and offerings. Look at how everything is done, including the products and services you offer and the market segments you address, and ask “Why?” Challenge the status-quo and the traditional ways of creating, delivering and capturing value. Assume there is an unknown start-up asking the exact same question as it plots to disrupt your business. Leaders on the digital journey are launching a portfolio of digital product and service innovations. The goal, of course, is to meet market needs. Digital leaders are thinking expansively about partnerships to deliver new value-added experiences and services. Are the product people learning fully from tight customer feedback loops and funneling that knowledge into meaningful product improvements?
Have you rethought your operations?
Becoming digital often requires deconstructing value-chains and reinventing the entire business process to cut out steps altogether to reduce bureaucracy, redundancies, waste and the complexities. Automated processes and digital tools can make all areas of a company faster, stronger, and more flexible. Companies need to learn how to build and operate interactive people–machine processes, especially as AI and IoT enter the mainstream. These are fundamentally different models than traditional shared services or outsourcing. Digital supply chain management has matured and is generating substantial value. Organizations need to move quickly to apply the highest priority opportunities to their business and industry context. They must find the right mix of fixing performance gaps, innovating business processes, and disrupting the supply chain. Have we harnessed digital to drive greater value in the operations of the company? Is production using predictive analysis to model demand so it can optimize the supply chain and asset utilization? Developing a clear point of view on the opportunities or threats in each area will suggest which capabilities need the most attention and where to concentrate investment.
Have you considered business-model innovation?
The upshot of digital is that it will change industry landscapes as it will give life to new sets of competitors. Some players may consider your capabilities a threat even before you have identified them as competitors. Indeed, the forces at work today will bring immediate challenges, opportunities—or both—to literally all digitally connected businesses. Companies get their digital strategy right by answering three important questions. First, where will the most interesting digital opportunities and threats open up? Second, how quickly and on what scale is the digital disruption likely to occur? Third, what are the best responses to embrace these opportunities proactively and to reallocate resources away from the biggest threats? Further, are you considering a smaller-scale disruption of your own business model to enter a new space or redefine an existing one? Are you fast-following to ride the wave and capture some of the value created by an industry’s evolution? Are you boosting the effectiveness of your existing business model through digital approaches and tools? In an era of disruption everywhere, it might even be worthwhile thinking in new boxes for new business models, given your customers, assets and capabilities.
Is your organization adept enough for digital?
Digital organizations are built around speed, agility, adaptation, and testing and learning. Digital requires new capabilities, and most change projects will need multifunctional teams with a broader range of skill sets (including analytics, user design, and technical expertise) than companies are used to. Leading digital companies adopt some aspects of the agile methodology at scale, which can lead to impressive gains in productivity, employee engagement, quality, and, most significantly, speed. Is your organization now digitally capable and able to adapt at the speed required for the coming years of further change? Fast-changing priorities, shifting resource investments and the need to develop new ways of working understandably shake confidence and enthusiasm. A successful digital transition rests on overcoming this organizational resistance. Leadership teams need to prioritize efforts aimed at generating buy-in. This means defining the change clearly and creating alignment behind it by translating what it means for each part of the organization.
People need to understand that as cycle times accelerate, decisions need to be swifter and wired differently than in the past. Staff may need intensive training to learn new skills and behaviors. And everyone needs to have a clear understanding of how their role in the transition affects and depends on others. Leadership teams must be realistic about the collective ability of their existing workforce. The skills required for digital transformation probably can’t be groomed entirely from within. Look to other industries to attract digital talent, because they understand that emphasizing skills over experience when hiring new talent is vital to success, at least in the early stages of transformation. Digital talent must be nurtured differently, with its own working patterns, sandbox, and tools. Underlying the effectiveness of your people is the culture of your organization. Are you aligning the culture with the critical few behaviors that makes the most impact in your current situation and how it evolves into the future?
Do you have the right technology and the IT organization for digital?
For digital success, certain capabilities—especially those that build foundations for other key processes and activities—are more important than others. Foremost among them are the modular IT platforms and agile technology-delivery skills needed to keep pace with customers in a fast-moving, mobile world. Today’s costumer expectations put a new set of pressures on the IT organization as legacy IT architectures struggle with the rapid testing, failing, learning, adapting, and iterating that digital product innovations require. The priority here is high-quality data management and built-in security to keep core business services reliable. Ultimately, meeting the digital challenge comes down to innovation, speed and agility. Technology is important, but winning depends on how quickly the enterprise can diagnose customer needs and assemble the right technologies into the right solutions. This becomes a distinctive asset. Technology can be replicated, but the ability to read weak signals, anticipate change and swiftly move to action provides a lasting advantage. For leadership, the challenge is to reorient the company’s talent to an operating model that is primed for agile adaptability.
Company leaders must address digital transformation as a profound business transformation that impacts everything. It will be a mistake, to think of it as a technology refresh or even new channel. The emergent nature of digital forces means that harnessing them is a journey, not a destination. So the journey to digital maturity requires a whole-hearted commitment from a company’s leadership and a sustained investment in people, capabilities, technology, and cultural change. It encompasses innovation of business model, re-imagination of offerings, rethinking of operations and culture shift. To get started with it evaluation, an organization must be honest about its digital maturity, clear about its long-term strategic opportunity, and open to iterating and refining solutions along the way.