How to Drive Digital Transformation
The fact that the world is going digital should be apparent to everyone, particularly in the wake of widespread lockdowns in response to COVID-19. With the option of walking into town to go shopping, go to the bank, send and receive money from overseas or dozens of other small but essential day-to-day tasks removed, digital approaches became virtually the only option. In spite of the fact that you could never ask for a more vivid and extreme example of this fact, a surprising number of businesses are reluctant to let go of analogue methodologies.
It’s not too difficult to see the obstructions that are causing this reluctance. A digital transformation is a major overhaul of processes right across any given business. It might mean the need for new equipment and personnel. Old habits die hard and training current staff out of their old processes will inevitably take a considerable amount of time and effort. All of this inevitably means complications and potentially some red stains on the balance sheet in the short term. However, the long-term benefits are worth a bit of short-term struggle, as you’ll see in other stories on this blog. So, how do you make it happen?
Guidance from above
Believe it or not, it is entirely possible to drive digital transformation in a company without the need for outside specialists or, despite the subheading, divine intervention. Instead, “guidance from above” means that the direction needs to be set by those at the top of the hierarchy - the CEO and senior managers. Just as they set the overall business goals and define the tone of the organisation, so too should they create a culture of innovation and opportunity; a digital culture.
What does a digital culture look like? It’s one that encourages boldness and experimentation over caution. It allows people to take measured risks, fail fast and learn from the failure, rather than sticking to established approaches because they are known to be safe and stable.
Similarly, a digital culture should involve less planning and more action. That doesn’t mean acting without thought, but instead puts the emphasis on speed and continuous iteration. It is better to put out something that is imperfect but adaptable quickly than to spend years developing something that has been workshopped from every angle but has never received a trial by fire. Again, it comes down to failing fast and failing forward, helping to prepare people for the inevitable challenges of making the digital transformation while also helping to develop systems and products that actually help those using them, since iterations can incorporate genuine feedback from customers and users.
Action from below
While setting the tone is essential, it clearly won’t achieve anything on its own. Actions need to be taken in order to turn an intention into a reality. This means empowering every level of employee with the freedom to make decisions.
An important part of a digital culture is innovation, and some of the greatest successes have come from employees seeking a solution to their own individual problem, rather than an instruction from a manager. Prime examples of such intrapreneurshipled to the creation of Gmail, Post-It notes, the Sony Playstation and even Facebook’s Like button.
Remember that this is a culture that is being created, not an autocracy. A few individuals having all of the control and knowledge will create bottlenecks in processes and does not encourage a whole organisation to embrace new ideas. Instead, delegation and diffused decision making should be greatly prized, along with collaborative efforts and increased interaction.
Clarity of vision
A common error made by those seeking to drive digital transformation is not knowing exactly what they are trying to achieve. As we’ve said, while the vision must be shared and guided from the top down, the action of taking the company through that transformation will inevitably come from the bottom up. However, if the vision is unclear, action will either never materialise or will head off in the wrong direction, wasting time and money. An example of this comes from GE, whose effort at digital transformation in 2011 ended with the CEO being forced out.
The lesson learnt from this failure is that knowing exactly what you are aiming for is essential. A focus on quality over quantity - on targeting specific areas of your business that can be improved with digitisation rather than a broad, non-specific intention of ‘making things better’ - will have a far greater impact.
Furthermore, this vision of digital transformation should remain integrated with your overall business goals. If they are separate, then why are you pouring so much time and money into it? What will it achieve for your company? By making the two goals integrated, with the digital vision serving the business goals, the transformation will achieve useful and measurable results.
Open to suggestions
Digital transformation is not an entirely new phenomenon. Companies currently going through the process are certainly not blazing a new trail into the unknown - it’s been done before, as shown above. So, while we have been emphasising the need to allow and accept small failures as part of the learning process, you don’t have to make all of the mistakes yourself.
A perfect example of this is the technology you are using to update your old processes. You do not need to reinvent the wheel - you just need a simple yet effective technological solution to an analogue problem. Many of these already exist in the marketplace, having been developed by similar companies facing similar challenges.
You will need to choose what technology you adopt from the many options available since an error at this stage could potentially be very expensive. That means looking at what has worked for other firms in your industry and seeing what errors they made. If you remain blinkered to the world outside your corporate umbrella, the likelihood is that the process of digital transformation will go off-track, harming your return on investment and making the whole effort costly and functionally fruitless.
Pace yourself
Inevitably, small startup companies will find digital transformations very easy. There’s less of a legacy of ‘how things have always been done’ to work from and replace, as well as fewer staff to train and fewer processes to modernise. Large companies have all of those disadvantages to work through and transformation will naturally take longer to complete. This is to be expected and must even be factored into planning. If you try to rush things, people and processes may get left behind and the rate of avoidable errors will dramatically increase.
Larger companies sometimes suggest creating a separate division to work on the digital transformation, on the basis that enacting it within such a substantial organisation will be slow and challenging. However, transforming the subsidiary organisation will not result in the main organisation being transformed. At best, it’ll generate some ideas of what works and what does not, but these may not be applicable when scaled up.
The companies best placed to drive digital transformation are actually the medium-sized ones. They have the right balance of smaller teams with less of a legacy, but also a larger, more established user base than a startup. This enables them to get the immediate feedback needed to iterate and adapt quicker.
Think big
Digital transformation does not necessarily have to be limited to just improving a few internal processes. Done right, it can completely transform the nature of your business. This will obviously require a bit of ambition and abstract, big-picture thinking.
A great example is Amazon. They brought digital transformation to retail, pioneering the development of online shopping and completely changing how we go about making purchases. But they didn’t stop there - they went on to develop the Kindle, changing how we think about bookstores, too. They continue to innovate, adding audiobooks, on-demand TV, web services and more to their repertoire. They didn’t limit themselves by setting arbitrary boundaries around what their business is and is not about.
Think about your customers
What we described in the previous paragraph is perhaps an unfair example. Amazon started out as a digital company - they didn’t really need much of a transformation. So, let’s look at a company at the other end of that spectrum.
Tractor manufacturer John Deere has traditionally been as far from a digital company as you can get, yet they have used the process of digital transformation to reinvent themselves. Rather than just trying to build a better tractor, they asked what exactly their customers were hoping to achieve when they bought one. The answer is obvious: their goal is to improve their farm’s productivity. So John Deere asked how they could achieve that goal other than just providing a first-rate tractor.
The result is that “tractor manufacturer John Deere” is now “farm management solutions provider John Deere”. As well as their first-rate machines, they offer customers weather expertise, algorithms to calculate the optimum time to plant seeds, what kind of soil will produce the best yields for which crops and so on - in other words, all the other details beyond just a vehicle with big tires that will help a farmer to maximise their productivity.
Ultimately, digital transformation is intended to serve your business goals and your business goal will generally be serving your customer. Therefore, indirectly, the goal of integrating digital solutions into your business is to make the lives of your customers better. In some cases, that could mean radically changing the nature of well-established industries and companies.
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