6 key ingredients for a successful digital strategy
McKinsey recently reported that only 14% of organisations implementing a digital strategy have made and sustained performance improvements and a mere 3% of surveyed executives reported complete success in sustaining their digital change.
Despite the small percentage of organisations that do succeed, it has become clear those organisations have a certain set of success factors in common. Here, we consider what those six key ingredients are and discuss how to ensure your organisation’s transformation is part of the successful 3%.
1. A clear strategic approach
Let’s firstly look at why a clear strategic approach is so fundamental. The pace at which technology emerges subsequently makes the implementation of a digital transformation much harder than traditional organisational change. As companies attempt to transform at speed to keep up with competitors and reap the benefits of offering increased value through new technologies, many have onboarded agile ways of working. While promoting agility is completely relevant and is in fact one of the six key ingredients for transformational success, a test and go approach at strategic level will not work on its own. A well-defined digital strategy, albeit an adaptable one, with clear objectives should be defined, and agile methodologies adopted for its execution.
There’s no doubt you’ll face many critical choices when it comes to shaping your digital strategy and outlining your objectives. Some of the questions you may ask at this point are:
– Do you need to build a completely new business model, or should you restructure the existing one?
– Should you be focused on driving innovation or cutting costs and improving operational agility?
– Should you concentrate your efforts on boosting customer experience?
All of these components will shape your overall objectives for transformation. Identifying your priorities will much depend on your organisation’s position; customer demand, competitors and external factors within the market will all impact your decisions going forwards. While arrangements will differ from one organisation to another, McKinsey, highlights common digital strategy objectives:
– Improve customer outcome
– Increase digital revenues
– Increase digital traffic
– Reduce operational costs
– Launch new products and services
– Improve product/service quality
– Improve association with partners
– Reduce time to market
Organisations reporting success recommend that companies embarking on transformation should concentrate on specific strategic goals, aligned with performance outcomes of the business. Defining these organisation-wide objectives rather than pursuing many different initiatives, something which can happen frequently in large-scale projects where many people present different agendas, is the best way to stay relentlessly focused.
Furthermore, positioning these objectives against revenue and growth performance is an effective way of prioritising your digital plans. It also allows you to forecast long- and short-term performance, proving an accurate strategy in delivering sustainability of initiatives.
Allocating investment and resources
In addition to defining your objectives, you’ll need to investigate the allocation of investment and resources to different areas of the business.
– Are there areas that will need more investment for digital initiatives?
– Are there areas which will be de-prioritised based on your objectives outlined?
– Will you need to re-allocate and re-distribute resources to areas that perform better and/or are of higher impact?
– Is there scope to reserve resources for initiatives that span organisational silos to help ensure complete transformation?
2. Be fearless in your vision
Risk aversion is one of the biggest reasons why companies digital strategies fail and often this is down to an existing organisational culture. When companies don’t take risks, they repeatedly end up underinvesting in strategic opportunities. This reinforces the need to promote a higher risk appetite at an organisational level and assessing where to take risks to reach your company-wide digital transformation objectives is part of that.
Digital disruption demands that risks are made if we want to thrive in the future and that’s why you’ll need to be fearless in defining your digital vision. Successful transformations are those that are enterprise-wide in scale. Those that start small but recognise their vision as all-encompassing from the very beginning will achieve the greatest output. This signifies your entire organisation needs to see the effect of a transformation, not just one business unit or a few functions. It’s one mean feat but going big is the best way to claim reward.
3. Stay adaptable
We mean adaptable in every sense of the word when it comes to digital transformation; an adaptable digital strategy, adaptable employees, adaptable mindset and adaptable execution plans are all components driving digital change. In fact, the expedited pace at which the digital landscape evolves permits that ALL of these components must be present in order to ride out the digital storm.
We’ve talked about forecasting investment and performance targets required for a transformation upfront. What’s even more critical is creating a flexible design that allows you to make adjustments to the strategy monthly or even weekly, if required.
An adaptable mindset
Traditional ways of working are ripe for change. Successful transformations must employ agile ways of working if you are to execute quickly in response to a swarm of disruption. This indicates focusing on risk taking, innovation, collaboration and communication. However, to make this achievable, there must be a shift in mindset across the entire organisation. In addition, you must reshape a traditional culture into a digital culture which embraces agile methods. This marks the need to focus on developing and retaining the digital leaders of the future through improved talent management and a leading employee experience.
Many organisations accept the Agile movement but agree an Agile transformation, similarly to a digital transformation it’s easier said than done. What is apparent is that those that do welcome it organisation-wide, achieve consistent success. Perhaps now would be a good time to add ‘Agile transformation’ to your list of digital transformation objectives!
4. Make your CEO a transformation Evangelist
There has been a lot of speculation about who should actually own an organisations’ digital transformation. As a CIO, you should of course take a major leadership role as a key digital influencer across your organisation. However, successful transformations report that digital transformation starts from the board and CEO as they have increased visibility across the entire organisation.
No matter the priority level of the specified objectives, the board and CEO’s investment plays a huge part in the transformations success which you must make clear to them and comparably they must make apparent to the rest of the organisation.
That’s not to say the board and CEO should have direct responsibility of each initiative, its likely these accountabilities will be delegated. Additionally, it must be noted that ownership of initiatives could change as the transformation progresses so providing clarity on who is responsible for owning and delivering each section, as well as clearly defining where the accountability transfers will take place, is paramount.
The core strategy team, CEO and board included, should very much work together to achieve the overall objectives of the transformation and communicate its progress to its markets and employees. This is key to improving customer engagement and creating a digital culture that will conserve over time.
5. Augment digital change management
A digital transformation is not just about technology—far from it. It’s about the people, the processes, the culture and mindsets that accompany the implementation of technology. We’ve dabbled in these discussion points above but calling out digital change management as its own success factor is fundamental.
Firstly, let’s define what change management is.
It’s the process of directing, administering, and managing organisational changes. The scope of change management is far wider than digital transformation, although they are related. Change management harnesses cultural changes, structural changes, business process changes and changes to products and services.
From this definition, it is evident that digital transformation requires a great level of organisational change and thus, organisations that have a clear digital change management strategy running alongside their digital transformation plans are more likely to succeed. Those organisations will focus on empowering customer-centricity and finding new ways to improve processes, products and services. Perhaps most significantly, they’ll focus on transforming traditional cultures and mindsets into digital ones that will allow organisations to thrive and compete long into the future.
6. Future-proof digital transformation
Predicting what lies ahead for your organisation has never been more difficult. Unprecedented digital change gives way to increased complexity and uncertainty as you try to envisage what comes next.
These are just some of the thoughts which may be keeping you up at night:
– What direction will your industry go in?
– How do you know what your customers want if the new technologies they are likely to demand haven’t even been invented yet?
– Who will become your competitors? Are they the same competitors you have today?
– How many of your partners today might become your competitors tomorrow?
But it’s not all doom and gloom. While it’s impossible to predict the future 100% accurately, there are certain questions you can ask that may extend a guiding light, according to Bain and Company.
– What are the most hated parts of your industry and how could they be disrupted?
– How can you envisage your customers purchasing and communicating with you in 10 years?
– How could someone take 50% out of the costs in your industry using digital technologies?
Undisputedly, the need to future-proof technology as much as possible is critical. We certainly don’t have all the answers, but reading this article about storm-proofing your digital journey, specifically the software you adopt, may prove useful!
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