Slow Down to Go Fast When It Comes to Digital Transformation
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The term digital transformation has been around for a couple decades, and even in 2021 there is no sign of slowing down. According to a recent Statista article, investments into digital transformation are expected to double between 2020 and 2023 and projected to reach $7.8 Trillion in 2023. The definition of "transformation" has drastically evolved over the past 20 years when the term first entered our paradigm -- technology has improved, virtualized computing has exploded, consumer expectations have pivoted and of course, a pandemic completely changed how we all live and work.
Amidst all this change, organizations struggle with understanding how they can measure much less maximize their return on investment by embarking on a digital transformation.
A recent article published by McKinsey (June 2021) with a fairly innocuous title offers some great insight: "How boards can help digital transformations."
We could not agree more! Based on our experience partnering with customers of every shape and size for the past 30 years, some interesting trends have emerged:
- Digital transformations typically are not measured and commonly lack a shared barometer for success.
- Investments into digital transformation are often siloed in nature, and struggle to achieve the force multiplier impact that was originally expected.
- Changes in leadership during the transformation journey have a dilutive effect, especially if the objectives were not clearly defined and shared amongst the leadership team.
- Smaller organizations tend to reap more of the benefits in their transformations, they have the luxury of being more nimble, fewer stakeholders and less fear of failure.
What traditional consultancies do not necessarily share is how organizations should take initial steps in order to properly cast their transformational agenda and subsequent strategy. Before looking outwards for help with a digital transformation, organizations should prepare for the transformative investment. At WWT we have experience partnering with clients on various technology and digital transformations across industries and service offerings, and offer up some practical advice for organizations looking to transform.
This mantra might seem counterintuitive for an organization that is eager to move quickly and drive transformational change, but there are key considerations necessary to set the right foundation for a successful transformation journey, digital or otherwise.
Seek organizational input with key stakeholders
Reaching consensus is not necessarily the goal at the early stage of a transformation; however, ensuring everyone who will be involved and providing them with a voice is imperative. Identifying the key decision makers along with building empathy with change enablers is a key first step in the journey.
Examples: Financial controllers, regulatory and compliance stewards, franchise or business partnership managers
Identifying barriers & inhibitors to speed
Certainly tackling the "why" is a commonly understood place to focus prior to embarking on any transformation; however, the often forgotten sequel to this critical thinking is proactively addressing the "why not." There may be a number of deeply rooted factors that must be addressed in order to be successful and honestly, left un-attended they may undermine the goal of moving fast or result in a far greater long term investment.
Examples: Aging systems, legacy processes, prohibitive contracts and commercial arrangements, labor constraints, gaps in key leadership roles
Focus on flexibility and future proofing
The old adage, "the only constant is change" is none more applicable than when you consider the rate of change that occurs in technology. Consumer and enterprise technologies will continue to evolve, and it largely stands to reason that every company should simply accept the brutal reality that they will be in a state of perpetual transformation, right? Surely there is a better way.
Alternatively, consider perhaps the goal of transformation to be primed and ready to accept the next change or be faster to market than your competitors. We believe a prudent predecessor to transformation is focusing on areas you can proactively guard against painting yourself into a corner, which impact your ability to scale, be flexible for growth and own your own future. Understanding and anticipating future change will help create focus on where the transformational investments should be made.
Examples: Build vs. buy (re) evaluation, technology infrastructure, data management strategies, real estate portfolio
Return to the basics and measure often
To determine if any transformation is successful (or complete), organizations ultimately must understand how they will measure progress, how that contributes to overall value to the company, employees, shareholders, etc. When starting a new digital strategy engagement, we typically ask some basic questions about organizational measures of success, how they are defined, the data sources and the frequency published. Many organizations tend to conflate their measurements of success, typically because silos will gravitate to KPIs that are more tightly coupled to their near term wins and losses.
Our recommendation is to wade through the various scorecards, return to the basic tenants of how your business creates value and forcing some hard conversations of which metrics really matter. Creating this shared alignment throughout the organization will help create focus and teaming, and unlock the ability to more easily prioritize disparate initiatives that may not ladder up to the common objective.
Example KPIs: Cost of goods sold, same store sales YOY, basket size, customer lifetime value
Any investment of time and capital into a digital transformation should ultimately be supported by a sound business case and with the buy-in from a cross-functional team of decision makers. The hardest part of embarking on a transformation may be creating this initial alignment amongst the competing priorities of serving the "needs of today" vs. the "needs of the future."
Our WWT Digital practice is well suited to help customers who are embarking on a digital transformation, or even looking to make a pivot in the middle. We can help apply some of these principles in order to understand where you should be allocating energy and focus in order to get the most out of your transformational investments.