By Arthur Mansourian and Dr. Harry Moore MBE.
The digital transformation market size is expected to grow from $521.5 billion as of this year to $1.25 trillion by 2026.
Corporations need to create bionic capabilities so that they can harness the potential of disruptive technologies and integrate them into new processes, business models, and ways of working. Evidence shows that a successful digital transformation strategy drives performance and competitive advantage and directs companies towards becoming bionic. In the short term, digital technology improves productivity and customer experiences. Longer term, it opens up new growth opportunities and sets up companies for sustained success.
However, the problem for management is that a digital transformation strategy can be difficult to execute. Delivering such an important change in large organizations is challenging, especially with pressure to succeed short-term. Leaders need to decide whether it’s worth their career to compete against these odds or risk falling behind. And while technology is important, the human aspect is usually the determining aspect. Failure should not ever be an option, yet about 70% of companies fail to succeed in their objectives. This failure means companies will fall behind in terms of customer engagement, process efficiency, and innovation.
When leaders try to get everyone on board with their plan to transform, it can be easy to lose focus on the goal and end up compromising. However, there are critical success factors that exist, and if companies can apply them to their business, they drastically increase their odds of succeeding in their digital transformation. When approaching these factors, management needs to ensure that each of these are addressed in their planning, preparation, and execution.
A Clear Digital Transformation Strategy
Every company has some format for setting their strategies. However, only a few have a clear vision backed by a set of quantified business outcomes, which is necessary to link digital to the overall business strategy and create a sustainable competitive advantage. That strong vision can not only energize and align an organization, but it needs to be translated into actions embedded in a roadmap that addresses technology, people, and organizational capabilities.
Cultural Commitment from Top to Bottom
While on their digital journey, many companies want to execute on a digital transformation strategy, but often times companies get stuck. Of course, commitment by a CEO and other top executives is important when creating large-scale change. However, commitment alone is not enough. Companies need to include relevant middle managers in the planning and execution of the transformation program in order for them to buy into the goals and strategy; otherwise, they can become resistant. Additionally, companies need to recognize that transformation can represent threats to people’s careers. With automation, bionic processes, and other ways of working becoming more normalized, job losses become more and more frequent, especially if companies cannot retrain employees. When new digital skills must be brought in, middle managers can feel vulnerable. Therefore, organizations must make adjustments to their operating model. By providing a motivating purpose, as well as transparency, companies will have a powerful weapon for bringing people on board and creating behavioral change.
Talent, Experience, and Agility
Many times, organizations do not have the mix of skills needed, and they underestimate the skills and expertise of the people who are needed to execute a successful digital transformation. Successful companies pay attention to transformation leadership positions, and they address both digital experience as well as broader skills. Not only do companies need several digital experts, but they also need people who are strong in persistence, resilience, collaboration, critical thinking, creativity, emotional intelligence, and learning agility.
Business-Led Modular Technology and Data Platform
Successful leaders reinforce the idea that their technology and data platforms must be designed around business priorities. Then, they implement them using a variety of best practices, carrying them out in release cycles so that they can adapt to changing business needs and deliver value incrementally.
As companies move toward becoming bionic, these six success factors reduce the risks of getting there and directly address building the necessary capabilities. The impact of the factors is consistent across all kinds of digital transformation, geographies, and industries. Since delivering a digital transformation effectively is a highly complex undertaking, ensuring that leadership understands the difference between configuring for success and delivering specific action helps simplify the task.
It is not practical or desirable to wait until each of the above topics have been addressed effectively. The main issue is that leadership is aware of the shortcomings for each factor, and that they have a plan to address them. Leaders need to identify where they are not configured for success and create solutions to improve the process as they move forward. Furthermore, the success of a digital transformation is the start of a new chapter for the company, as it learns how to leverage the new capabilities and to drive continuous innovation in new digital transformations. Organizations that succeed in industrializing continuous innovation are the ones that are considered bionic. They will never have to do another transformation because the digital capabilities and mindset have become part of their new way of working.
While the costs of failure are great, so too are the rewards of success. In every industry, the pandemic has accelerated the need for companies to transform their digital capabilities. Outcomes cannot be incremental, and ensuring the right people and processes are put into place makes all the difference. Hiring the right advisors and consultants for digital transformation is paramount.
The importance of transformation and a clear digital transformation strategy.
Change in any organization can be overwhelming, whether strategic, organizational or performance related. Through our Transformation process, we guide you on identifying and implementing the changes needed to enable your organization to achieve its goals. Organizations large and small must continually evolve to maintain a competitive advantage, and senior leaders must provide the leadership and vision that will result in enhanced efficiency and performance.
About the Authors
Harry Moore is the Head of Europe, Global Head of Turnaround and Transformation. His experience and expertise include international strategy, corporate turnaround, transformation, market penetration, and increasing profitability.
Arthur Mansourian has a 12-year track record as both a management consultant and investment banker, advising clients on valuation, capital markets, structured financing, mergers, acquisitions and divestitures and general corporate strategy.
