As the world emerges from lockdown and prepares to recover from the economic and humanitarian crises caused by COVID-19 pandemic, more and more companies are going to embark on the digital transformation journey. How to increase their chances of success at the end of the journey?
Is your company planning to initiate digital transformation and you do not know where to begin? Or, perhaps, digital transformation is already happening but you feel it’s not going according to plan? You are not alone. While many companies have already undergone digital transformations, their success rate is not particularly high.
So, how can a company kick off and/or continue digital transformation and increase its chance of success?
However, no company exists in vacuum – it is embedded in a complex environment where many elements interact with each other and their interactions are often defined by non-linear dynamics. Therefore, a company should first apply the systemic approach to digital transformation, whereby all elements of the digital transformation system (both internal and external to the company) and their relationships can be considered (Figure 1).
Better still, to support your company efforts in achieving New Digital Growth while addressing some of the pitfalls of digital transformation the systemic approach needs to be complemented with the Agile Digital Transformation Process.
The Agile Digital Transformation Process comprises 7 steps. While it appears similar to the change management process, the main underlying principle of the process here is agility to cope with fast changing environment.
Step 1 – Conduct market research to learn about market state, requirements and ecosystem
“Know the enemy, know yourself; your victory will never be endangered.
Know the ground, know the weather; your victory will then be total.”
(Sun Tzu, “The art of war”)
Step 2 – Define vision and overall strategy to drive digital transformation
“Alice: ‘Would you tell me, please, which way I ought to go from here?’
‘That depends a good deal on where you want to get to’ said the Cat”
(L. Carroll, “Alice’s adventures in wonderland”)
This step helps to avoid wondering at random. Clear communication of a company’s vision and overall strategy is the key here, as it enables aligning all stakeholders in the organisation and beyond (suppliers, customers etc.).
Step 3 – Diagnose current organisational capabilities to identify digital drivers
Now you know the market, your ecosystem and you have defined the vision and strategy. But what about current organisational capabilities of your company in capitalising on digital technologies? How well are they aligned with the vision? What are the opportunities in the current operations and gaps? To answer these questions, the next logical step would be to diagnose current organisational capabilities and identify digital levers needed for achieving the vision.
If your organisation is cash-rich, you may choose to conduct further assessment with the help of a consultancy company (and there are many companies that provide an excellent service here). If you plan to do that on your own, make sure that all key stakeholders are involved in the process.
In some cases the assessment will provide unexpected results which, in turn, may encourage the organisation to revisit its vision and strategy.
Step 4 – Prioritise digital levers to allocate resources effectively
Companies have limited resources, and so the prioritisation step helps you to avoid the ‘peanut-butter’ approach, when resources are spread too thinly across several potential digital levers yielding no significant progress in any given area. It also helps to identify quick wins to demonstrate value of digital transformation.
Prioritisation is typically performed considering a number of factors such as potential impact, risk, cost, time and ease of implementation.
Step 5 – Build the roadmap to develop tactical plan
With this step your company develops a detailed roadmap for its digital transformation journey. It enables the organisation to specify explicitly the required actions and resources, deliverables, success criteria, etc., as well as to define the timeline and approach for scale-up and rollout of successful projects across the organisation.
Step 6 – Conduct pilot project(s) to prove viability of the project idea
Conducting pilot projects (which act as digital “lighthouses” within an organisation) is one of the key components of agile approach to digital transformation. However, the existing internal processes and culture of the company may not be suited particularly well for such an approach. Hence, it is important for the company to recognise that alternative project delivery approaches may need to be adopted.
One such alternative is Intelligent Fast Failure approach described by Jack Matson (1992, pg.35) as follows:
The approach to scale up and rollout of successful projects should have been already defined at the “build roadmap” step. It was shaped by internal factors, such as the company’s current state (available resources, culture, structure etc.), history of successes and failures in transformations, and by external factors, such as industry state, practices etc. At this stage the approach can be revised to take into account learnings from pilot project(s).
Step 7 – Scale up successful project(s) across organisation to realise new digital growth potential
What are your biggest challenges and/or achievements on the journey to digital transformation? Do you find the proposed process helpful? Have we missed any important steps?
Share with us your thoughts on digital transformation. We look forward to your comments below.