Rethinking digital transformation in 2021: Four lessons learned from COVID-19

There are lessons to be learned from any challenge, but the COVID-19 crisis has been more than instructive. To learn how organizations around the world are affected by the crisis, we surveyed business leaders on how they are responding and how their digital transformations are evolving. Here are four takeaways from those surveys.

1.    The pace of digital transformation needs to accelerate

Since January 2020, the COVID-19 crisis made it painfully clear that every business – even the ones that are far into their digital transformation programs – needs to accelerate its rate of transformation to be agile enough to adapt to the unexpected. Our May 2020 survey of more than 1,200 leaders across industries found 74% of business leaders say COVID-19 exposed more gaps than expected in their enterprise systems and operations. And surprisingly, more than 25% of the businesses who self-identified as further along in their digital transformation did not feel they were “very well prepared” to handle a similar crisis in the next two years.

Digital transformation projects, historically, were roadmaps for enterprise-wide changes to adopt new technologies, digitize manual work, improve operational processes, better market to or service customers, and adapt more easily to future tech innovations. But COVID-19 is forcing businesses to react faster and modernize immediately.

2.    We need to rethink our strategies for digital transformation.

To survive in the short term and thrive in years to come, business leaders will need to adopt digital transformation strategies that enable both immediate and pervasive transformation.

If you’re thinking, “Our roadmap already addresses phased change,” you might need to reconsider your digital transformation approach. Businesses with very linear, multi-year, phased projects will not realize results fast enough to solve for increasingly distributed ecosystems or be nimble enough to thrive in a disruptive economy. If 2020 taught us anything, it’s that we can’t anticipate everything, and unforeseen challenges can disrupt even the most well-though-out plans.

In the short-term, approaching digital transformation projects by focusing on implementing an off-the-shelf solution or spinning up an app or chatbot for a quick win is ultimately a band-aid approach – not a transformational strategy – and can create significant problems: trapping data within channels, creating functional siloes, increasing operational complexity, and limiting scalability.

On the other end of the spectrum, businesses that have a phased, long-term strategy for pervasive change are typically so fixated on rationalizing back-end systems that they often completely neglect to factor in changing customer needs. Many times, these long-term, phased plans are abandoned because enterprise systems become too unwieldy and complex, or the technology around them has evolved so rapidly that plans swiftly become obsolete. In all circumstances, the ability to build a flexible enterprise architecture and, ultimately, valuable customer relationships, is lost.

3.    Digital transformation should start with the customer at the center.

Digital transformation is not a one-and-done project. But the goal line shouldn’t be so far in the future that you never succeed. We need a new approach to digital transformation that will rapidly modify systems for immediate needs without sabotaging long-term flexibility – a bifurcated, yet customer-centric approach.

Start by focusing on the customer or, to be specific, on the customer’s journey. Transformation begins by thinking about a small piece of that journey; something as simple as using a self-service website to check an account balance, for example. Each of these small parts – or microjourneys – have a desired outcome. And they require input from a number of systems to complete.

Microjourneys are mission-critical business processes and so improvements to the systems and technology that empower one microjourney have a ripple effect of improvement on other, related, mission-critical processes. By working collaboratively across teams to identify the elements essential to a successful outcome for each microjourney, such as business rules, data, process intelligence, APIs, and critical system components, you’ll not only be able to more accurately plan your transformation project, but you’ll be in a better position to actually complete it and be ready for future updates.

This approach of starting small in the center of your operations also enables a more agile approach to longer-term transformations. Once you identify the customer intelligence at the center of your operations – rules, process intelligence, and AI – any modifications you make to those central components become the foundational and reusable components for the next project and future projects after that. I call this building from the center out, and it is a more flexible, iterative approach that favors digital transformation at speed and scale.

4.    The more employee participation in digital transformation, the better.

In restructuring an approach to digital transformation, we should also reconsider who is involved. In another survey of more than 500 organizations across North America and Europe in the first two quarters of 2020, Futurum Research recently found that 94% of respondents want to be more involved in their business’ digital transformation initiatives. That involvement ranges from helping train co-workers on new tech to simply learning more about new technologies and why they are important for the business.

The most successful digital transformation projects have buy-in and adoption throughout the organization. Just as you should approach your transformation around the journeys and outcomes at the center of your customers’ needs, your digital transformation approach should empower participation from the heart of your business – your employees. This means seeking out their knowledge and opinion on how current and future tech will affect their work and having these conversations at all levels.

Over the next three years we expect business operations to become even more distributed, more cloud-based, and more hyper-automated. Accept that change is constant and your digital transformation projects will need to adapt.

In 2021 and onward, businesses will be compelled to transform in many different and unforeseen ways to survive – a critical capability, given the ongoing disruptions to markets. Those businesses that restructure their foundation to be centrally focused on their customer’s needs, the intelligent systems that inform those needs, and the employees who help service them, will lead digital transformation projects that fare better no matter the pace of disruption.