Digital Transformation Is Not JUST About Technology

We’re in a new world, facing macroeconomic headwinds like labor shortages, supply chain disruption, global inflation, and an energy crisis. And whatever comes next that we can’t foresee.

I meet with dozens of customers every quarter. Last year, they were focused on growth and emerging from the pandemic stronger. Today, they’re still focused on growth, but there’s a sense of urgency around efficiency, productivity, and resiliency..

As we navigate a new world together, there are several urgent challenges that we all have to face together this year to move forward. In surveying executives across industries this year, these six key priorities bubbled to the surface.? Meeting customer expectations, improving hybrid work, enabling digital transformation, adapting operating models, reducing costs, and upgrading IT & data security.

Digital Transformation was a common theme pre and post covid. Digital transformation is still a priority. It’s not going away. In fact, it’s necessary to achieve growth in a more efficient way. Yet?70% of all DT initiatives do not reach their goals. Of the $1.3 trillion that was spent on DT last year, it was estimated that $900 billion went to waste. Why do some DT efforts succeed and others fail?

One thing is clear: we need a new mentality when it comes to business. Long-term plans are necessary, but the future is harder to predict when there are so many vectors of change. The organizations that thrive in the digital economy are the ones that adapt to these changes the fastest.

Fundamentally, it’s because most digital technologies provide?possibilities?for efficiency gains and customer intimacy. But if people lack the right mindset to change and the current organizational practices are flawed, DT will simply magnify those flaws.

Five key lessons have helped us lead our customers through digital transformations that succeeded.

Lesson 1: Figure out your business strategy before you invest in anything.?Leaders who aim to enhance organizational performance through the use of digital technologies often have a specific tool in mind. “Our organization needs a machine learning strategy,” perhaps. But digital transformation should be guided by the broader business strategy.

There is no single technology that will deliver “speed” or “innovation” as such. The best combination of tools for a given organization will vary from one vision to another.

Lesson 2: Leverage insiders [People].?Organizations that seek transformations (digital and otherwise) frequently bring in an army of outside consultants who tend to apply one-size-fits-all solutions in the name of “best practices.”?Alternatively, we encourage our customers transforming their respective organizations to rely instead on insiders?— staff who have intimate knowledge about what works and what doesn’t in their daily operations.

Lesson 3: Design customer experience from the outside in. If the goal of DT is to improve customer satisfaction and intimacy, then any effort must be preceded by a diagnostic phase with in-depth input from customers.

Leaders often expect that the implementation of one single tool or app will enhance customer satisfaction on its own. However, our experience shows that the best way to?maximize?customer satisfaction is often to make smaller-scale changes to different tools at different points of the service cycle. The only way to know where to alter and how to alter is through obtaining extensive and in-depth input from the customers.

Lesson 4: Recognize employees’ fear of being replaced. [Side effects of Challenging Status Quo]?When employees perceive that digital transformation could threaten their jobs, they may consciously or unconsciously resist the changes. If the digital transformation then turns out to be ineffective, management will eventually abandon the effort and their jobs will be saved (or so the thinking goes).?It is critical for leaders to recognize those fears and to emphasize that the digital transformation process is an opportunity for employees to upgrade their expertise to suit the marketplace of the future.

?Lesson 5: Bring the right culture inside.?Expertise and proven operating model based on enablement and collaboration that drives self-service, reuse & innovation across business & IT. Depending upon where you are headed you might have to experiment with the organization structuring too. I categorize them in three Operations, Transformational and Disruptive. More on it in my next blog.

Digital transformation worked for these organizations because their leaders went back to the fundamentals: they focused on changing the mindset of its members as well as the organizational culture and processes?before?they decide what digital tools to use and how to use them. What the members envision to be the future of the organization?drove?the technology, not the other way around.