From exploration and piloting to digital transformation at scale

By now, most companies have come to acknowledge the game-changing role that digitalization has on their business. The challenge, however, that many organizations have yet to face is how to fully exploit the potential of digital technologies – in other words: how to make the step from digitalization to digital transformation. To get it straight from the beginning: technology is only one part of the equation. ???

It is hard to find an organization that has not already started their digital transformation journey. Further accelerated by the COVID pandemic, the move towards the digital world has become a necessity to keep up in today’s modern economy. Not only does a successful digital transformation have a significant impact on the bottom line, it is also key to a company's future viability and provides the necessary foundation for innovation and growth.

Still, many companies are falling short in exploiting its potential. According to recent research from Boston Consulting Group, only 35 percent of the more than 850 companies questioned worldwide achieve their digital transformation objectives. How can organizations make sure they belong to those 35 percent fully harnessing the potential that digital transformation has to offer?

Digital transformation: a technological and cultural evolution

On their digital transformation journey, companies are in peril of losing sight of the bigger picture. Quite often, digitalization efforts are taking place in a closed environment, focused on individual processes or workflows – be it automating an approval process for employees’ PTO or creating an online platform where customers can order customized products according to their needs. In contrast, digital transformation is not about digitalizing a channel or doing more things digitally, but has a much broader scope.

It denotes the technological and cultural evolution of a company, its business and its strategy across different levels and functions, enabled by fully leveraging the interplay between ever-increasing amounts of data, digital technologies and the continuous development of people’s skills and ways of working. The overarching goal: creating value both for the customer as well as for the company and its employees.

Three success criteria to move from digitalization to digital transformation

From my experience, there is no one-size-fits-all approach to achieve this. However, there are three success factors that companies need to consider when taking the step from digitalizing individual processes to digitally transforming their business. What may come as a surprise to some: it is less about technology, but rather about setting priorities, optimizing process management – and the importance of a customer- and user-centric mindset.

1.??????From exploration and pilots to scaling and execution

When it comes to reaching the goals set for digital transformation, the right mix between exploration and execution is key – with a focus on the latter. Trying to harness the potential of data and technology, companies often remain in exploration mode, mainly focused on experimenting to develop innovative pilots for the digitalization of certain workflows.

This is highly valuable and certainly needed to secure the intermediate- and long-term viability of a company. However, to reap the benefits of the digital transformation, companies need to put more emphasis on implementing the many concepts and technologies that already exist and focus on scaling them, creating tangible results for the business. The key here: prioritization.

Deciding which of the many projects to tackle is all about creating value. Companies need to zero in on those initiatives that hold major value potential – either for customers or employees – and pool resources to produce visible results quickly. The aspect of speed should not be underestimated here. Quick successes are essential for companies to build trust in their digital transformation efforts and take both customers and employees with them on the journey.

2.??????From functional process focus to end-to-end process focus

Process management is the next important factor to consider in the digital transformation journey. To take full advantage of the opportunities that data and technology create, it is imperative to take on a holistic view on the organization. Instead of digitalizing processes and workflows with a purely functional perspective, companies need to take an end-to-end approach, cross-functionally connecting steps that are focused on the same goal into a single data-driven and customer-centric process. To achieve this, an outside-in perspective is needed to identify relevant workflows and combine them to into an integrated process to truly harness the power of digital transformation.

Implementing end-to-end processes thus requires companies to break down organizational silos and replace them with cross-functional collaboration. This includes the sharing and using of data across functional boundaries which holds an enormous potential for companies to create additional value. To create the necessary interoperability both on technological and on organizational level, harmonization and standardization in terms of end-to-process, data management and ways of working are critical.

Although there are many hurdles to implementation, the evolution from a functional to an end-to-end focus has major upsides. Companies can increase speed, efficiency and productivity along the entire value chain. In addition to improving the customer experience, this also makes life easier for employees, as fully integrated processes provide a good basis for automation and the use of artificial intelligence to manage increasing complexity and to reduce workload.

3.??????From passion for tools to users and use cases first

The third factor that has a big impact on the success of digital transformation is a question of mindset. When coming up with new solutions, the user should always be in the center of digital technologies. Technology needs to serve as a lever to create true value for users. What sounds like common sense is of striking relevance. Far too often, solutions are developed without the user in mind, instead solely focusing on the possibilities that technology has to offer. I am sure that when reading this, everybody has an example on their mind when they encountered a tool, service or process where this fault was made.

To realize the full potential of digital transformation, the user – be it a customer or an employee – and the respective user experience always need to come first. Without their acceptance, digital innovations will not prevail, no matter how ingenious they are, and will thus not deliver the expected value.

The importance of driving the transformation

As mentioned above, the three success factors outlined here are not first and foremost about technology. They are rather about creating the necessary mindset and continuously working on focusing priorities and evolving processes, highlighting the need of continuous and effective change management. As George Westerman from the MIT Sloan School of Management puts it: “If you think about digital transformation as two words, we pay too much attention to the digital and not enough to transformation.”

From exploring to scaling, from functional boundaries to end-to-end processes and from tool infatuation to a passion for user centricity: for a successful digital transformation, evolving the organization and its mindset is just as important as evolving technology.

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