Transforming your business doesn’t have to be intimidating – start with these three steps

Digital transformation spending is estimated to reach US$1.7 trillion worldwide in 2019, according to the International Data Corporation. That’s a 42% increase from today, indicating that leaders know – or are beginning to realize – what’s at stake if they don’t bring meaningful change to their business. Once at risk of losing customers and market share to start-ups and other tech-savvy companies, businesses now fear for the loss of something even greater – their relevance.

To successfully address this transformation businesses should be asking in-depth and action-oriented questions, such as: Will my operational structure position my company for future growth? Which digital enterprise technologies will enable my company to best adapt to change? Can my company offer the best experiences, a meaningful purpose and a culture of innovation that retains a new generation of talent?

When you consider the far-reaching extent of these issues, the increasing scope of digital transformation and the resources allocated to facilitate it are hardly surprising. But how do businesses move from a customer-experience focus, which seeks to improve a particular function with a technology solution, to holistic digitization?

In other words, how do businesses transform the organization so that the customer experience, the employee experience and firm operations are aligned and positioned for success in the Transformative Age? In my view, the process begins with three steps:

1. Increase connectivity. Real transformation must go beyond the customer experience, and this means being connected in every manner possible, whether it’s to data, interfaces, people or experiences. Successful businesses are aggressively addressing their customers’ needs for an enhanced digital experience, but they’re only beginning to catch on that they need to do the same for employees and their operations. If employees and operations cannot deliver on the new customer promise, the result is ultimately lower customer satisfaction. And, to deliver innovation at speed, the culture of an organization must support the pace of the digital economy. The business world is moving forward with accelerated speed; standing still is not an option.

2. Adopt an organizational approach. Businesses today are truly doing top-down digital transformation, and they’re calling it that. Instead of focusing on a list of problems and the proposed solutions, as we saw in recent years with technologies like RPA, they’re looking at the business model, discussing and dissecting how it needs to change and acquiring the capabilities, skillsets and people needed to create that change sooner rather than later.

While EY teams may recommend this top-down approach to businesses that are ready to implement it, we recognize that some organizations simply aren’t ready. I’m often asked if that means they should put a hold on transformation initiatives. I don’t think it does. A bottom-up approach – or leading from the trenches – does have some benefits, in that approaching one problem at a time allows an organization to prioritize and deliver tangible results more quickly. The reason I prefer a top-down to a bottom-up approach is that, in the long run, real transformation isn’t guaranteed because the customer experience, the employee experience and operations may never be fully aligned. What’s more, the bottom-up approach puts an emphasis on quick wins rather than sustainable results, potentially harming a healthy transformative culture and missing the exponential benefit of connecting digital technologies.

3. Transition from legacy to future state. Because moving from a legacy to a new world organization requires a clear path, eliminating any obstacles to transformation is a critical and ongoing step. Legacy organizations often have outdated policies and procedures that slow down or prevent transformation altogether. These processes need to be simplified or eliminated to increase efficiency and adaptability in the business model. Now is a time when borderless is a reality, funding can be done with a few “clicks” and 140 characters can stop the world in its tracks; now is a time when corporate agility has deeper merit.

A successful transition also requires board-level attention to people, strategy, cybersecurity and analytics, as much as emerging technologies and digital. We see these six functions as the core components of the new organization. Aligning these pillars takes time, but will ultimately enable an organization to move faster so that instead of playing catch up with consumer needs, it’s setting the pace. Transformation is not about keeping up, it is about cultivating and capturing opportunities.

Vision and discipline are critical to a successful transformation strategy. Increased connectivity, a clear organizational approach and a reimagined C-suite will result in an organization that’s not only in sync with customer expectations, but ready to continuously transform as those needs evolve and the latest trends emerge. If your company is contributing to the 42% spike in transformation spending, I have to ask – are you ready to make that investment count? And equally important – are you willing to make that investment and not have it count to the fullest?