Tips on Achieving a Successful Digital Transformation

Shuttered shops and empty cafes are the likes of a future we would have never have imagined before COVID-19. Since the start of the epidemic, companies moved towards digital transformation to recover the loss of business, offline events and movies went to live-streaming, meanwhile, demand for online services increased with e-commerce opening up new customer segments that saw a shift from luxury goods to necessities. While this leap into digital may seem like an easy win, few companies make a successful transition. Tracking the progress and measuring its success while scaling it is a difficult task for many CEOs and entrepreneurs alike. So how does one go about their digital transformation? Using studies from McKinsey and BMC, here are some tips on achieving digital success.

Often times, we make seemingly logical connections to what we think we can do instead of what we should do. An idea may generate a thoughtful project, but it may not necessarily contribute to the company’s future output. Only when there are clear guidelines that highlight the main parts of the transformation, can we start to measure our success. According to McKinsey, there are 5 metrics for tracking digital transformation: Return on digital investments, budget spent on bold digital initiatives, time-to-market of digital apps, leader incentives linked to value creation, and talent management.

Digital Investment for Growth and Efficiency

When looking at digital investment, the best returns are made when the investment can help further strategic goals. Keeping in mind the roadmap of digital priorities mentioned earlier, businesses should start to look at how the investment itself will impact their growth and efficiency. This could refer to transformation through automation, improving user experiences, simplifying any key business functions, or implementing digital tools that increase productivity. Although growing the business will be the priority, investment in efficiency could be a benefit when scaling up. 

One comprehensive example case would be Starbuck’s investment into their mobile app which allows the company to directly assign loyalty points to its consumers. It is also used to market, up-sell, and collect valuable data on its users while at the same time, providing the convenience of pre-ordering their coffee. Smaller businesses will need to think about which areas they should prioritize to maximize return.

Does Tech Budgeting Create or Preserve Value?

Rapidly moving markets and frequent disruptions are becoming more common as every day passes by. Technological investments have therefore become a top priority even for businesses like banks which have, for a long time, kept outdated technology. However, it is important to note that increased budgeting on technological advancement may lead to the risk of disruptions in workflow patterns and incur more costs than growth. Depending on the industry business owners will have to balance the portion of the budget assigned to bold digital initiatives that are sufficient enough for their competitive landscape. 

Companies like Kodak and Polaroid are prime examples of companies that failed in this aspect. The Eastman Kodak Company’s main source of revenue was through sales of film and cameras, but digital innovation brought it to bankruptcy as its offerings became obsolete. Interestingly, Kodak had already developed digital cameras by the 1970s but never offered them to the public possibly due to the fear that it may cannibalize its film sales.

Time-to-Market within 6 Months

With digital transformation, the building of market-ready solutions or applications in a timely manner is important. Experts recommend that a functional application should be built and in the market within 4-6 months. Ideally, companies with the best digital capabilities will be able to accomplish this, but not all businesses may live up to that standard. Despite this, smaller companies can achieve this. Speed and quality is a key part competing in this industry. 

One thing that really hinders the timeline of app development is not in the platform or how many screen sizes it will fit but rather the number of functions the app will include. Understanding the main function of the app will help save time and money on extraneous features that could be provided in later updates. Budgets and team expertise are also key factors to meeting this deadline. Building a feasible timeline and cost sheet for your app will help to determine how many features you can include within the development period. Meanwhile understanding the expertise of the development team will bring about better efficiency and speed. Business owners should make sure to focus on these elements and the timeline as the app ecosystem changes rapidly. Too many new ideas and features will slow down development and you will miss valuable market feedback used to improve your product.

Define Clear Incentives and Accountability for Leaders

When a company goes through a transformation, the structuring of the organization will largely affect its success. While functional governance can be used to simplify and prevent duplication of tasks, it is slow to react to disruptions and can also bring about a sense of risk avoidance among employees. In this case, the failure of a project is passed onto the team leader or ambiguous accountable parties. Furthermore, incentives do not lead to value creation if the development priorities are unclear. 

It is the role of the CEO to drive value creation by fostering a work culture that is more mission-oriented. Businesses can consider agile governance and the implementation of value-creating incentives while allowing for employees to be free to voice out the issues they face first-hand. This way, companies can fully understand the challenges and business cycles which not only help to measure their output but also help them to swiftly react to newer disruptions.

Understand Your Most Needed Personnel

Large companies like Google and Facebook are probably the most known when thinking about tech talent recruitment. Lavish salaries, free meals, and other incentive packages have been used to attract top-tier talent. For smaller firms, the type of talent recruited will largely depend on which part of the digital transformation it is in. Finding the best talent at the rate that you can is challenging but it is also important to know that fostering potential talent that is experienced is also a key investment area that will drive digital success. Talent management is something that must be monitored closely– Understanding metrics such as talent mix, quality, retention rates, promotion cycles, up-skilling, and integration will allow businesses to improve talent satisfaction and build the foundation to long-term success.

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Sources: Savvy, Forbes, McKinsey, BMC