Top 10 most important actions to ensure successful digital transformation
Mateusz Kasprzak
European Energy Transition Business Leader with a Passion for Innovation, Sustainability and Business Development
Digital Transformation is, nowadays, a buzzing world in industry, which everybody wants to utilize and apply in their business. Nevertheless, it is also starting to be a major cause of confusion, empty promises and big words with no real impact on business performance. Why is there such an extreme dichotomy in the most important?enabler?for our?Future Digital Energy Systems ?
According to McKinsey, Deloitte and many more consulting companies, over 70% of digital transformation initiatives have failed. These are not optimistic numbers concerning such a crucial part of the journey ahead. So, what should exemplary digital transformation look like? There is no silver bullet to answer this question, but three main universal guidelines are:
Out of those guidelines, I have synthesized the?ten?most significant actions which need to be taken by an enterprise and its leaders to ensure successful digital transformation. Based on my experience, it would be extremely difficult to be successful if any of the points below are not addressed properly.
1. Vision — Make a plan for the plant of the future.
Vision without action is merely a dream. Action without vision just passes the time. Vision with action can change the world.
Joel A. Baker
I will not be original in mentioning?vision?in the first place. As?Joel A. Baker?said in a quote above — lack of vision is the first step to creating great plans with no impact on reality. Vision does not have to be another corporate and general?"blah, blah, blah"?but can be amalgamated with business model and strategy. Like, i.e. Value Disciplines Model1, where the company is created around three different backbones:
Source: Yokogawa. Digital Transformation in Process Industries.?2
Being a?product-oriented company?sets your focus on creating great products. The whole strategy is designed around?what?you deliver. Apple and Tesla are the best examples of companies, which bet on product differentiation.
Shifting focus from what to?how?or from product to experience defines enterprises focused more on customer intimacy. Well known examples of such companies are Amazon and Lexus.
Ultimately, operational excellence is built around the best-in-price principle. Increasing efficiency and decreasing costs to provide affordable products. IKEA and Toyota are proud advocates of this strategy.
These are principle business decisions that do not have to be part of the digital transformation journey, but they always set the path for strategy and expected results -?plant of the future. Concerning The?Future Digital Energy Systems , no matter what business model a company will choose, it has to be built on sustainability principles and incorporate and support all possible routes to a fair and consistent energy transition.
2. Sponsors - get C-level buy in.
Digital Transformation is not an out-of-the-box product with a clear path of implementation, it is not tweaking the business. It is about completely new narratives and transforming the whole company: rewriting business processes, reassigning people and re-equipping with new technology. Without strong support and commitment from digital-savvy executives, the digital journey can be very daunting, if possible at all.
Here we get to the bottom of it - it is difficult to have real buy-in from executives if they do not understand why, what and how things will change. Digital awareness at the c-level is one of the key enablers for a successful journey. As MIT analysis3?shows, there is a big divergence in digital savviness between the members of the c-level crew. One of the ideas to collectively enhance awareness of the entire team is to assign a Chief Digital Officer, who as a member of executives will not only take leadership of Digital Transformation but also build a solid digital foundation amongst all c-level members.
3. Change - The main focus should be on change management.
DX is not a typical Management of Change process. Digital Transformation, as explained above, is rewriting all enterprise principles, and it has to start with senior management leadership.
Four simple steps, get knotty while confronting reality and can lead to the federalization of the enterprise, which is contradictory to a major KPI of every corporation - unification. Change Management, especially when we talk about digital transformation, has to be led by a program manager, who keeps focus and discipline amongst different teams and ensures that everybody is aiming in the same direction.
O Captain! My Captain!?like Whitman's admiration of Lincoln's leadership or more actual Keating's mentorship, should be in intercompany newsletter and intranets' showing consistent program manager's guidance in every department, discipline or aspect of the enterprise.
4. Team — cross-department task force.
What would be the change management and leadership of a program manager without his teams? 4???flavour of successful Digital Transformation is dedicated teams. This is something different to what we got used to having in the past. Business transformation, as explained earlier, does not know siloes and departments, so the teams which should lead the digitalization. Finance, Maintenance, HR, Safety, Production and IT working on transformation opportunities.
Cross-departmental, multidisciplinary, inclusive and oriented on the outcome (your customer, right?) should be engraved just under the name of each group. But that is not all. Each team has to be accountable, responsible and decisive within their scope of work. Providing enough freedom to make a decision is by far the most difficult and unacceptable aspect of?modern?taskforces. Management (of the teams and company) should ensure collaboration between the team and appropriate technology leaders (external or internal) have to be engaged as subject-matter experts for each group. This will release technological pressure on very often non-technological team members and increase focus on the results (not the tools).
5. Partnership - learn from the best to beat the best.
Focus on your core business and build expertise where your customer is expecting it from you. Digital Transformation is a multidisciplinary journey and, with the world and technology changing rapidly, it does not make any sense to build in-house expertise in all domains. Learn to outsource large parts of your journey to partners. Learn as a person but also as an organization to trust external parties and gain experience from their knowledge and mistakes.
The crucial point is how we understand partnership. It is not a third-party supplier which delivers the exact scope defined in battery limits. The elementary explanation which defines the foremost partnership is?1+1=10. Real partners in business are not filling the gaps, real partners are multiplying the outcome by filling the gaps and providing expertise and experience to the whole process.
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6. Priorities - set priorities and do it right.
What I have learned in my professional life is that one of the key ingredients of any successful project is?focus. Contrary, the focus is relatively difficult in such a holistic project as digital transformation. To achieve adequate clarity while maintaining a wide picture of the whole transformation, it is mandatory to set certain priorities.
Guidelines, roadmaps and strategies are not the same as priorities. Where should you start changing? How do you communicate with customers and suppliers, how do you exchange information within your company or maybe first work out security or intelligence issues in Operation Technology (OT) domain or even maybe first focus on digital tools for collaboration, training or any other organizational changes?
Where are the low-hanging fruits?
These are the very first questions that came up in deductive reasoning of digital transformation. If you choose wrong and lose time and patience on projects which do not bring expected results within the expected timeframe, you can easily lose momentum and support. Setting the right priorities is crucial, but thankfully we have great tools on the market to support this process. More on one of the best -?Smart Industry Readiness Index ?- you can find in the video below.
7. Technology - always as a backbone.
All points above consider either processes or people in an organization. We cannot forget about technology, as it is the main enabler of digital transformation. Technology is crucial, not as a dedicated solution and possible use cases but as a foundation of whole transformation and fundaments for company-wide information lake. The main goal for technology supporting digital transformation is to?enable access to the right information at the right time, i.e.:
In McKinsey survey??we can find that the top three technologies which contribute most to digital transformation are in reality digital infrastructure (fundaments which defines a way of integrating data and information).
Source: McKinsey & Company. Unlocking success in digital transformation.
8. Innovation - become a lab for new tech in 3 steps.
Once we have a strategy, appropriate people and a technology backbone, we can start to challenge old ways of working, generating ideas, testing them and, in most cases, failing. That is OK. Trying, failing and learning combined with stable financing is one of the best ways to generate organic progress for organizations on the digitalization journey?. Giving enough space to experiment with new ideas allows for a quick learning curve and more accurate and faster decisions. After successful siloed tests of the projects, try to embed them in your organization. Again, try, fail and learn. Once successful, you are ready to scale up.
9 . New workforce culture.
Changing company culture is by far the most time-consuming and challenging point. Having an appetite, mandate or will to change the culture is not enough. You need to create a movement that organically will redefine the workforce ecosystem.
Taking into account what we have learned during the COVID-19 pandemic, the very first steps of?a new opening?in workforce culture should be:
10. Budget - reserve a budget … or two.
We could not skip the cost of the digital transformation. All those changes are a significant financial burden for the company, but the most challenging aspect is not the value but the business case. The majority of digital projects are not typical CAPEX projects with clear ROI calculations, scope definition and responsibilities. With digital transformation, we need to introduce agile methodology not only to project management but also to nvestment planning and controlling. And this has to apply to both internal and external projects.
Nevertheless, taking a perspective of what is happening in the market, energy transition and the increased variability of the world, the money spent on digital transformation may decide on your licence to operate.
Digital Transformation is a parallel journey to?Energy Transition ?with a significant number of crossings and the same target -?The Future Digital Energy Systems . We cannot have digitalization with decarbonization, same as there is no decarbonization without digitalization.
With The Future Digital Energy Systems articles series, I'd like to address the main drivers and enablers of our future energy landscape. Analysing available technology, required changes in organizations, legislation, and society, I want to disenchant and simplify all actions needed to fulfil net-zero commitments and limit global warming.
Thank you again for taking the time to read this article. If you enjoyed this post, please click?LIKE, to share it with your network, click?SHARE, and if you have any more thoughts drop them in?COMMENTS.
About the author:
Mateusz Kasprzak?is an enthusiast of sustainability with the aim of understanding and describing?how the industry is changing our planet and how our planet is changing the industry.
Professionally, for more than 10 years, he has been helping the industry to translate management goals into real actions and projects with respect to energy efficiency, digitalization, and operational efficiency. One of the first?Official SIRI (Smart Industry Readiness Index ) Assessor?in Poland.
References:
1. Treacy M. and Wiersema F. (1995). The Discipline of Market Leaders
2. Yokogawa. Digital Transformation in Process Industries. A Journey Towards Autonomous Operations.?https://cp.yokogawa.com/Digital_Transformation.html
3. Weill P., Woerner L.S. and Shah A. (2021). Companies with a digital savvy top management team perform better?https://cisr.mit.edu/publication/2020_0301_TMTDigitalSavvy_WeillWoernerShah
4. McKinsey & Company. (2018). Unlocking success in digital transformation.
5. Simon Jacobs. (2018). Fostering Digital Transformation within Corporations - Business Incubation or Acceleration?