The Ultimate Guide to Digital Transformation
In order to both thrive and survive in today’s digital world, organisations need to transform into a digital business. The way to do that? Digital transformation.
As digital has not only infused but also changed our everyday lives, it also changed the way we do business – at least, it should. Though ‘digital transformation’ has become such a buzzword, for many it’s unclear what it actually entails, and what it means for your organisation.
That is why we present to you the Ultimate Guide to Digital Transformation, supporting you to completely comprehend its meaning, as well as helping you on your way to becoming a digital business.
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What you’ll find in this digital transformation guide
- The definition of digital transformation
- What drives digital transformation?
- The importance of digital transformation
- The digital transformation process
- Culture as part of digital transformation
- 8 barriers to digital transformation
- Change management in digital transformation
- What’s next? A continuously evolving organisation
1. The definition of Digital Transformation
Today, it appears as though the term ‘digital transformation’ is everywhere. It seems to be used for every project including any kind of digital effort, but should it be? What actually does define a digital transformation?
There are many different definitions going around, some more specific than others. Salesforce defines it as:
“Digital transformation is the process of using digital technologies to create new – or modify existing – business processes, culture, and customer experiences to meet changing business and market requirements.”
Whereas George Westerman, MIT principal research scientist and author, in an interview with CIO defines it as:
“Digital transformation marks a radical rethinking of how an organisation uses technology, people and processes to fundamentally change business performance.”
It’s striking that in both of these definitions, they key focus is not on ‘digital’. It’s on changing the way you do business and deliver value. Where the definition by Salesforce mentions using technology to do so, it’s interesting to note that George Westerman does not single out technology at all, but refers to it as a part of a whole.
So what does digital transformation mean for your business?
A digital transformation process looks different for each organisation, but is the same in its fundaments.
Digital transformation is not just about utilising digital in your business, but changing your business to deliver value in a digital world.
As said before, a common misconception is that digital transformation is all about incorporating technology. In reality, this is only part of it. In the last couple of decades, digital has immensely changed the entire world. It has brought people all over the globe closer together. It has changed the way people work, how we travel, how we connect to each other, how we eat, sleep and work out. It has even changed the way we think, expect and perceive value. Technology has infused our homes, our lives, and the way we function as people. And it will only advance faster and have more impact from here.
Digital transformation is about understanding how digital has infused our lives and changing not only your technology, but your processes, your people, culture and organisational structure as well to exist in a digital world and enable continuous change.
2. What drives digital transformation?
Digital transformation is driven by a combination of multiple trends and triggers; some that have influenced us over the course of several years, others decades, and some only since recently. Let’s discuss four big trends and triggers that drive digital transformation.
Driver 1: Accelerating digital advancements
We are living in the digital age. In the past couple of decades, technology has started to advance at an exponentially increasing speed and has made its way into our everyday lives in a way we couldn’t have even imagined somewhat thirty years ago. And it will continue in the years to come.
This means that these advancements will continue to change our lives the coming years as well. In the way we work, shop, you name it. And this has big implications for your business, which needs to be able to react to these changes quickly.
Digital transformation is therefore not something you go through once, like a ‘round of upgrades’ in your technology and be done with it. It is a fundamental change of your organisation in order to not just become, but stay future proof. It requires a more agile and innovative way of doing business and offering products and services.
Resilience and flexibility
Being agile and innovative is no longer just about competitive advantage – it’s about survival. You organisation needs to be resilient to changes, and not just the ones you can expect. This became especially clear due to the COVID-19 outbreak, which created clear distinctions between resilient businesses that adapted quickly and embraced new and innovative ways to still drive revenue and value to its customers, and the ones who didn’t.
But being resilient is not the same as being reactive. Yes, it’s important to be able to respond quickly to changes, but the organisations that embrace these changes – not just for now, but take them into the future as well – are more likely to thrive than the ones that don’t.
A good example of an organisation that has embraced this agile and innovative way of doing business and transforming not once, but constantly, is Amazon, one of the first big companies to sell products online. Amazon has continuously expanded and adjusted their products and services. Starting out as an online retailer for books, they have expanded to thousands of consumer products, the B2B market, and even online streaming, offering their customers unique services along the way.
Driver 2: IT as contributor to organisational goals
For a long time, the IT department, for many organisations, was mainly there to keep the systems up and running and mind themselves with day-to-day operations. To keep the servers online, maintain the data centre, make sure everyone has Wi-Fi, acquire new hardware, etcetera.
However, the role of IT has been changing. CIOs are tasked more and more with generating revenue, enabling innovation and creating competitive advantage. After all, most digital transformations are driven by growth opportunities. They expect IT to eliminate legacy systems and implement the right technology, as well as contribute to a culture of innovation and a shift in the organisational structure.
Driver 3: Changing customer expectations
Us consumers have become spoiled. When we order something today, we expect it to be on our doorstep tomorrow. That’s not surprising, since many companies have let us have this experience. And as soon as we’ve had it, we want more.
Would you rather buy products from a company that offers a real-time customer service chat, or one where you have to call and stay on hold for half an hour, should you experience any issues or have a question? Can you even imagine a successful company today, without an online customer service? A few years ago maybe, but our expectations have changed. In our interactions as consumers, but in business as well.
So much has become possible due to the use of technology. Every day organisations find new applications of data to offer you an even more personalised experience, while they can already offer you custom discounts on items you’ve been eyeing earlier that month, or automate messages that offer you extra information on articles you’ve bought. And that’s what we’ve come to expect: 70% of customers say connected processes are very important to winning their business.
Each time we’ve had such an experience, our expectations rise. Which in a nutshell basically means that if one organisation ups their game, everyone has to. Failing customer expectations means falling behind, and vice versa. This means that organisations have to continuously innovate and evolve in order to keep up.
Driver 4: COVID-19
An obvious one, but not less important. Due to the pandemic, organisations worldwide needed to rethink the way they work, offices went in lockdown and there became less emphasis on location. During a three month period at the start of the pandemic, technology spend grew at a greater rate than at any point in history. New solutions and processes needed to be introduced to ensure operational efficiency. But it did not only force organisations to quickly get the right technology in place to enable remote working; it provided a new perspective on remote working and the use of technology as well.
Take for example the hiring process. If people work remotely anyway, there are no restrictions to the hiring area: the world is your talent pool. This realisation has many organisations rethink the way they hire, but also the way they collaborate and shape their organisation.
3. The importance of digital transformation
A survey by PwC revealed that 52% of companies plan to cut or defer investments due to the COVID-19 outbreak. However, just 9% of those surveyed will make those cuts in digital transformation. The pandemic has a huge impact on companies’ spending, but not so much on spending on digital transformation. Gartner even predicts that the worldwide IT-spending will increase with 4%. Why is that?
Because digital information is important – no, crucial, to organisations. Now probably even more than before, since many organisations were forced to make a shift to online services and remote work due to worldwide lockdowns. Though the pandemic is certainly not the cause of this importance, it sure did speed things up and shifted digital transformation to the top of the priority list for many.
A need for speed
As technology advances at an increasing speed, so should you. And the COVID-19 pandemic has sped up things even more.
Many organisations are still too slow. By the time they have recognised an opportunity or threat, understand the implications for them and have thought about how they are going to respond, the world has changed significantly already. Resulting in them failing to keep up with events and the market. Using digital transformation, organisations can gain that speed and agility needed to quickly respond and adapt to events, changes and opportunities – not just reactively, but proactively as well. Because nowadays, it’s no longer about the big companies beating the small ones, but the fast beating the slow.
This seeps through to the customer expectations as well. They’ve seen companies adapt quickly already, introducing and customising products and services and playing into trends and current events in the short-term, which results into them expecting this from others as well. 63% of customers expect companies to provide new products and services more frequently than ever before, and 56% of customers actively seek to buy from the most innovative companies.
The critical consumer
As discussed in the drivers of digital transformation, customers have increasingly high expectations, simply because so much is possible already. 76% of consumers expect companies to understand their needs and expectations.
Customers stay if they are emotionally connected
These days, companies really need an advantage over their competitors. Offering a good product or service isn’t enough anymore. After all, nowadays there are probably hundreds of others offering people the same you do, or a good alternative at the least.
You need to go above and beyond for your customer. On a customer service level, as well as on an emotional level: the ultimate customer experience. A report by Motista found that customers with an emotional connection to the brand have a 306% higher lifetime value.
Using technology to create an emotional connection
But, you may ask, connecting to customers on an emotional level: isn’t this a matter of branding, customer service and communication, not IT? Well, yes and no. First of all, as established before, digital transformation is not the responsibility of and doesn’t affect IT alone: it’s an organisation-wide change. Secondly, don’t the marketing & communication and customer service team not use technology? How do they know how and what to communicate to their customers most effectively? Right: through the use of data.
This is a great example of how important it is to embrace digital in every area of your organisation, and letting it influence the way you work in the short-term. Use data and tools to find out everything you need about your customer, discover patterns, predict behaviour and offer highly-personalised experiences. Use your digital tools and create a culture to let information flow freely through your organisation and support collaboration between different disciplines, to enable great customer service and communication that is consistent and customised through each channel and each platform. Embracing digital transformation can let you up your game and rise above your competition.
Innovate to survive and excel
Digital transformation is crucial to enable your organisation to endure and to be resilient.
Just look at the recent COVID-19 crisis: the three in ten organisations with the most successful digital business strategies already had much of the infrastructure in place to deal with the crisis. But let’s make it clear once and for all that yes, though digital transformation is about survival, it’s not about survival alone: it’s about thriving as well.
Yes, if your organisation doesn’t keep up with the times, there’s a good chance it won’t survive. But you shouldn’t see digital transformation solely as ‘one more thing to do’ (an attitude that probably won’t get you far anyway) or a desperate move for survival – you should see it as an opportunity. An opportunity to grow, to move away from manual processes and freeing up focus towards business opportunities and innovation.
The Transcenders: Thriving digital companies
To illustrate what this might look like, let’s take a look at a group of organisations that win at digital, or as PwC calls them: the Transcenders.
They are the winning 5%. PwC discovered that the Transcenders consistently invest in new ways of working, and get significant value on their digital investments in every area PwC assessed.
And this significant value is no joke:
- Transcenders have a 17% higher profit margin growth
- 98% of Transcenders do not fear the extinction of their company
- Transcenders are 200% more likely to attract and retain top talent
Impressive, right? Examples of companies that can be labelled as Transcenders are Netflix, Sony, Porsche and Amazon. Discover more facts and statistics on Transcenders with the research of PwC.
So yes, digital transformation is essential to survive in our modern world. But it’s also necessary to be able to thrive.
4. The digital transformation process
First and foremost, it is important to emphasise the fact that no two digital transformation processes look the same. The way you shape your digital transformation is completely dependent on your organisation’s current state, operating market, employees and organisational goals. However, there are certain stages basically any organisation goes through or has to consider during their digital transformation process, though the contents of these stages may look different for everyone.
Forming a digital transformation team
Though digital transformation is an organisational effort, it is wise to put together a team of people ‘in charge’ of the digital transformation. Having a dedicated team will ensure that there will permanently be attention paid to the transformations and that there will always be people on the case, to ensure it will stay top priority and to establish accountability.
What are the responsibilities of the digital transformation team?
The main responsibility of the digital transformation team is to initiate, lead and guide the digital transformation efforts. All the while ensuring that one specific team leading the way, does not get in the way of implementing a meaningful organisation-wide change. The main goal being to achieve and maintain a digital business, enabling digital transformation to reshape the organisation and contribute to and shape business goals.
Possessing the necessary vision, knowledge and motivation to realise and keep realising change within your organisation, this team will be the driving force behind your digital transformation in every area. This means that they do not only focus on the technological side of digital transformation, but every other aspect as well, such as culture, change management and finance.
This team should therefore have a deep understanding of your organisation, its culture and how it operates. With each person in the team having their own area of expertise and responsibilities, this team is at the forefront of breaking down silos (groups of employees, often based on department, who work separately from other groups, which gets in the way of communication, collaboration and information sharing).
What should the digital transformation team look like?
Though every digital transformation team can be different depending on your digital transformation goals and efforts, the overall areas of responsibility for the roles involved generally look the same for every team. The digital transformation team leads in every area of digital transformation and needs to be able to build bridges between technology and IT, and the business side of change.
Create the perfect mix
Your team should therefore include experts in different areas of the business, to ensure a combination of technical knowledge, communication skills, cultural and organisational change expertise, creativity and leadership. It also requires the right mix of soft and hard skills, such as technical knowledge versus the ability to be open-minded, solve problems or work in a team. Usually, a team of these experts exists of 8 to 12 people in total, and many of them operate close to the business users to ensure short communication lines and that they have true knowledge of and experience with the day-to-day operations.
Your digital transformation team needs business experts who are the voice of the business side of the efforts, guiding IT efforts to ensure that they contribute to achieving organisational goals. It also needs people responsible for financial matters, giving insight into the financial value of your efforts and setting and guarding budgets, and champions of change who can lead the way for adoption and change management.
And naturally, your digital transformation team needs IT experts. They play a crucial role, as they have the ability to advise, implement and manage the technology within the organisation. IT does a lot of the hard work when it comes to making sure the right technology gets and stays in place. Though more often than not, they are not the ones in charge of the digital transformation team.
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Leadership of your digital transformation team
So, who is in charge? Again, this can be different for every organisation, however leadership of a digital transformation team should always possess certain skills and usually operates in the same parts of the business.
Visionary and tech savvy business leaders
Digital transformation is not so much a technology issue, as it is a people issue. After all, it’s about utilising technology to fundamentally change how your organisation operates and offers value. Leaders of digital transformation should therefore have the ability to prioritise business goals over IT and technology goals, as well as knowing how to utilise IT and technology to achieve these business goals. They should have the vision and knowledge to reimagine processes, business models and strategies and lead innovation, pushing others to do the same (which we’ll get into more in ‘Leadership in a digital culture’). Leaders of change should have the ability to look beyond the short-term and constantly search for ways to improve processes and systems.
A priority on C-level
In order to accomplish this level of expertise and involvement, digital transformation leadership usually comes from C-level. After all, to drive these fundamental changes, you do not only need senior experience, but senior influence as well. Influence to drive major changes and get things done with other C-level leaders and the boardroom, such as arranging funding and aligning digital transformation strategy with the business strategy.
Time for CDOs to step up
Though the CTO may first jump to mind, more often the CIO leads the digital transformation team. It also regularly occurs that the CMO is in charge as well. However, more and more organisations are creating a new role to permanently lead digital transformation efforts and the digital transformation team: the Chief Digital Officer (CDO). As this role is relatively new, it’s responsibilities and areas of expertise are less “set in stone” as they are with most other C-level roles, making it easier to shape and search for the perfect balance between business and technical, and soft and hard leadership skills.
Examining needs and setting digital transformation goals
The first and most important step of your digital transformation should be determining the ‘why’. After all, how can you determine success and guide the process, without knowing what you’re trying to achieve? And how are you supposed to align all the stakeholders in the process without them knowing what they’re working towards?
Why do you need a digital transformation?
So you want to transform, great! But why? Are there specific problems you want to solve, either existing ones or problems that may occur in the future? Are there opportunities you’re not seizing or not able to seize? Or are there specific goals you want to achieve, which you can’t do without changing your business?
Start by defining the purpose of your digital transformation. Paint a picture of where you want to be, and what areas need to change in order for you to get there.
Setting digital transformation goals
If your transformation is successful, what would you have achieved? Have you improved your customer experience, increased productivity, enhanced profitability? Defining goals and connecting them to your business goals sets helps to define a clear intention of your transformation efforts.
However, it’s good to bear in mind that it’s not one change you want to complete, but a continuous change you want to achieve. This means that achieving successful digital transformation will change your organization in order to allow further transformation in the future. Or in other words: in the long term, your goals and efforts will keep changing and evolving as you go along.
This, together with other factors, can make it hard to set specific goals to measure the ROI of specific digital transformation efforts. Especially because many efforts, such as culture change, can have a big impact but are not necessarily directly measurable. Therefore, with setting digital transformation goals, it’s essential to keep the big picture in mind: how will you create value? For everyone involved, including your customers and employees.
Take a holistic approach with a focus on innovation, meaning that you see project goals separately (but still related to) your transformation goals. This ensures that one failing or underperforming project doesn’t directly impact your entire transformation effort, making it easier to take risks and takes a load off of potential failures. This kind of thinking also has a lot to do with building an innovative culture, which we’ll go further into later on.
The digital transformation framework
Transforming into a digital business is not a matter of making stand-alone improvements and upgrading separate technologies. Your transformation should be seen as a whole, instead of a sum of its parts.
A digital transformation framework helps you do this. It helps you to determine how and when you will be making changes in what areas of the business, and align all of them to create a fine-tuned mix. With the right framework, you can identify opportunities across the organisation and make sure no area of the business is left unattended, so you can implement technologies in a focused and targeted way.
There are many different ready-made frameworks available from multiple organisations such as Cognizant, MIT and Gartner, which can be tailored to your organisation’s needs, or you can create your own framework. Common themes among existing frameworks are:
- Customer experience and engagement
- Organisation, operations and processes
- People and culture
- Data and analytics
- Technology and integrations
Customer experience and engagement
Organisations can no longer get by on solely offering one product or service. With the competition getting tougher every day and a rising number of alternatives, it’s imperative to put more focus on customer service and the customer experience, offering them an optimal experience during every step of their journey. Ultimately increasing the customer loyalty.
Use your digital transformation journey to figure out how to offer these experiences and create meaningful relationships. You can do this by using digital to get a better understanding of your customer, how they think and feel, and how you can adjust your products and services to be more tailored to them and offer them the unique value only you can.
Organisation, operations and processes
It is time to take a good hard look at how your business functions and operates. Your organisation (and the people in it) needs to be able to respond quickly and consistently to and anticipate for the fast-changing market. It is possible that in order to do this, you need to rethink your operations and processes – maybe even your entire organisational structure.
Silos need to be broken down to create more connected processes, cross-team collaboration needs to happen and information needs to flow freely through the organisation. Digital can be used to for example automating and standardising processes, shifting people’s work from manually executing to designing and auditing them. You can also take a look outside your organisation: does the expertise we need or are looking for already exist elsewhere? Or can certain tasks and processes be outsourced, so we can focus on more important things internally?
People and culture
People are the most valuable asset to your organisation. And digital transformation has a big impact on the ‘people element’ of your organisation, for example the recruitment process and standards, the company culture (we’ll go into further detail on this later) and technology adoption.
See what skills your organisation needs and already has to support the new initiatives digital transformation brings. To truly transform, people need a digital mindset: execution needs to be fast, innovation should be rewarded and people should not be afraid to experiment. They need to be more autonomous to enable fast-paced collaboration, changes and innovations. Therefore, in the future, the ability to learn will become essential.
You can look outside of your organisation here as well, and bring in external expertise to help your employees to change with you.
Data and analytics
Having the right data is a huge asset, and will become even more important in the future. Having this data and using it the right way can help you make smarter, better informed decisions, spot trends and make more accurate predictions. Thus data can help you develop your product or service, customer experience, your strategy, operations and much more.
Key here is the word ‘right’: which data do you need to collect, is valuable to you? And how do you interpret this data, so you can use it to derive value from it as well? Think about how you can collect and process your data in a smart way, so that it contributes to decision-making that ultimately helps you achieve your organisational goals.
Technology and integrations
We’ve emphasised it time and again: digital transformation is not just about technology – though it is a big part of it.
Don’t just start randomly upgrading your current technology, but take a holistic approach to acquiring and creating new technologies. Think goal first, technology second, and continue to invest in technologies that will help you do this.
And though you shouldn’t use technology because of the novelty of it, you should keep an eye on emerging disruptive technologies and think how this could affect your business. And more importantly: how you can utilise it in your business – perhaps by altering your services, or even creating an entirely new business model. Think for example Uber and Netflix, who used technology to change the game and disrupt the entire market.
Developing a digital transformation strategy
Now that you’ve defined where you want to go, it’s time to determine how you’ll get there. You do this by developing your digital transformation strategy.
What is a digital transformation strategy?
The digital transformation strategy will not only set the direction of where you and your organisation want to go, but will describe how your business intends to get there. It’s not just about setting a goal, but creating a descriptive and tangible plan of action to guide you on your digital transformation journey.
How do you get from A to B?
When creating a digital transformation strategy, you should start by looking at where you are now, versus where you want to be. What do you need to achieve in order to get there? What needs to change? How can you measure this? Define the stages of your transformation on a timeline with milestones, metrics and intermediate objectives for different teams and areas of your business.
Include the (future) market
Your strategy should also include a review of the current market, including competitors, regulations and legislation, and desirably predictions of what this may look like in the future, to ensure that you’re not just changing to suit the market today, but tomorrow and the years to come as well, and that your strategy will enable you to build an agile and future-proof organisation.
Analyse to control the risks
Also include the risks you may run into during your digital transformation. Knowing and mapping these threats beforehand, allows you to track them along the way and minimise the possibility they could cause any real problems.
Keep it adaptive
What’s important to keep in mind when creating your digital transformation strategy, is that it’s not a to-do list you need to stick to. It’s not just a lists of tasks, and it’s also not a manual you need to follow word-for-word. You need to be adaptive and change with your strategy, leaving room for yourself to redefine what success looks like if changes or new opportunities should occur. It’s crucial to keep pilot testing and keep analysing the impact of your efforts, and if something’s not working, change it; don’t stick to it, just because you’ve described it in your strategy. Because it’s not just about fixing what’s broken, but about improving, changing and optimising what’s (not) there (yet).
Why is it important to have a digital transformation strategy?
If you want to get from point A to point B, would you check the directions first or just start wondering off in the hope you’ll eventually get there? Let’s assume you’d want to know where you’re going: the same goes for digital transformation. It provides a roadmap you can follow to successfully transform. However, there are more reasons an effective strategy is very valuable.
Split your transformation process into manageable steps
Chances are, a lot (and we really mean a lot) needs to happen to truly become the kind of organisation you want to be, and to perpetuate that into the future. Looking at a mountain of changes can be daunting and discouraging, and more importantly: it does not exactly ensure the smoothest and most effective process.
Creating a digital transformation strategy allows you to break up the transformation process into smaller, more manageable steps, making sense of the chaos and prioritising the changes that need to happen first, resulting into a logical process. And within this logical process, you have the opportunity to allocate and manage your resources every step of the way as well.
Determine what is actually important to your transformation process
Filter out the noise from what’s important
You can anticipate and predict all you want, but it’s always likely you will encounter things you haven’t prepared for (just one of the reasons your strategy should stay adaptive). Having a digital transformation strategy in place with your priorities established, enables you to filter out the noise and determine what is actually important to your transformation process and should be incorporated or be taken into account, and what are peripheral issues that you don’t have to deal with right away.
Create an organisation-wide understanding for change
As said before, digital transformation is an organisational effort. Therefore, it’s paramount that the entire organisation is included in the process. This starts with creating your strategy. This strategy will function as a visible template for employees. Helping them to understand what changes are ahead, what they mean for and what’s expected from them, and shows that the transformation will benefit both the organisation and those within it. It helps with getting everyone involved from the very beginning – an essential part of a successful digital organisation, which we’ll get into later discussing the significance of culture.
Keeping collective focus and alignment
Digital transformation requires many different changes in many different areas, for many different teams and departments. Everyone in the organisation working together on every project as one immense team just isn’t feasible – or is it?
In a sense that everyone in the organisation is working on every small project together: no, it’s not. Everyone in the organisation is however working towards common goals and to achieve a common state of being. So teams and departments do work separately from each other, but all towards achieving the same things.
Having a strategy in place keeps this collective focus and constantly acts as a reminder what people are working towards, and the fact that they’re doing this all together. That the projects they’re working on are contributing to a greater good. This also helps keeping all these different efforts aligned.
Monitor and manage your progress
So when you’re walking from this point A to point B with your directions in hand, your directions will occasionally say something like “you now see a big tree on your left” or “once you’ve passed the small yellow house, you can turn right”.
Your digital transformation strategy enables you to constantly review your progress based on your plan, versus what you’ve already achieved and still need to achieve. Are you still working towards the same goals? Are all your efforts still contributing to them? Or did you get distracted by side issues or different projects? Your digital transformation strategy is there to let you know if you’re still on track.
5. Culture as part of digital transformation
An often overlooked but vital element of digital transformation is the organisational culture. You can have all other elements, such as technology, data and products and services, figured out and perfectly tuned to your organisation, but if you don’t pay attention to your culture, you might as well suspend all your other efforts – because they will fail.
In order to become a digital organisation, you’re going to need a digital culture.
Why culture is at the heart of digital transformation
We can keep on repeating that culture is important, but we’d much rather show you. To illustrate significance of your company culture during a digital transformation, we’ve gathered some facts and figures:
- In a BCG study of 40 digital transformations, companies that focused on culture were five times (90%) more likely to achieve breakthrough performance than companies that neglected culture (17%).
- Of the 5% of companies who win in digital, 84% mandate collaboration and cross-functional work.
- Of that same winning 5%, 92% capture and act on ideas from all staff levels.
- The number one factor in engaging and retaining talent, is a strong culture and leadership – it’s even more important than good renumeration.
Now you may be wondering what acting on ideas from all staff levels and cross-functional work have to do with a digital culture. We’ll explain.
4 Characteristics of a successful digital culture
There are four main areas that differentiate a digital culture from a traditional one.
1. Autonomous and cross-functional teams
Your digital organisation needs to move fast, and thereby everyone in it. In order to do so, the traditional silos and departments need to be broken down and a focus needs to be placed on people’s skills and knowledge, rather than their position in the organisation. You can realise this by enabling cross-functional teams with people from different areas of the business collaborating, often project-based. This enables the crowdsourcing of knowledge and ideas, making optimal use of the expertise within the organisation.
Also, these teams need to have the autonomy to make judgement calls and quick decisions themselves, without these decisions having to go up and down the hierarchical ladder, to enable fast-paced decision-making.
2. A flat organisational structure
Speaking of the hierarchical ladder: it needs to go. Naturally, some level of hierarchy will probably always exist, but it should not determine who should innovate or come up with new ideas. To achieve the cross-functional teams and organisation-wide collaboration mentioned in the previous paragraph, not to mention sourcing knowledge and ideas from every level of the organisation, you need a flat organisational structure. This allows employees to be more engaged and for decisions to be made faster in the autonomous teams we discussed earlier.
3. Fast innovation and initiatives
Mindset is a very important element of a digital culture, as well as encouraging this mindset. A digital culture should foster innovative thinking and a venturous attitude, motivating people to come up with new ideas, start projects on their own and to engage with partners and customers to develop new solutions. People need to get comfortable with the uncomfortable, as it’s OK if not all projects are successful. As long as people fail fast, learn from them and keep experimenting and improving.
Agility is also a part of this mindset, not only in the way of working, but in people’s roles as well. Because not only can their role be very flexible working in cross-functional teams, due to the adaptability of the digital organisation, their roles may also continuously change as well.
4. Attention to learning and upskilling
Since people’s roles and responsibilities are not as set in stone in a digital organisation, so are their skills. As the organisation has to keep changing and evolving, so do people’s knowledge. After all, it’s the people in your organisation that work towards achieving the organisational goals. A true digital organisation therefore invests in the education of their employees, helping them to acquire new knowledge and skills which can be applied towards achieving your goals.
And especially since the lines of traditional roles and teams are blurring, people need cross-functional skills to keep up. For example, people in IT require more and more soft skills, while several other roles that before required little to no technical skills need to be able to work with more software tools than ever before.
Leadership in a digital culture
A new kind of business requires a new kind of leadership. The kind of leadership that can not only embrace the digital culture and mindset, but can enforce and encourage it.
True digital leadership has eye for the day to day operations, but does not get stuck on it and is able to look in the future as well. They do not only see the things that need to be fixed, but they also see the things that do work, but can be improved. They look for untapped opportunities and unexploited potential every day, and are not afraid to act on them; even if it means venturing into uncharted waters. Because how else would you create something new?
That does not mean that digital leaders are careless. When thinking ahead, they should always take potential risks into account and anticipate threats to prepare for them.
Moreover, leadership in a digital organisation empowers others to do the same and maximise their own potential, in order to harness it towards the business. Time and energy should go into facilitating the digital culture we discussed earlier. For this, they need great soft skills to guide people through change and praise them when they fail and learn from their failures. They should have great knowledge of the business, as well as the business it’s culture and people.
6. 8 barriers to digital transformation
Digital transformation can be challenging; for some more than others. While every organisation has their own sets of challenges to deal with, there are a few common barriers that get in the way of many digital transformation processes. We explain eight of the most important ones.
1. Legacy technology
Organisations trying to transform are often still relying on their legacy systems. It is a big and costly project to replace your legacy technology, which causes many to try and transform alongside their legacy technology, or even on top of it. But when you spend most of your IT budget maintaining and operating those systems, not much is left to bring your organisation into the future. Besides, it doesn’t really help change your organisation: it just adds more tools and confusion.
2. A lack of IT talent
Since the 90s, more and more organisations started to outsource their IT, causing more IT talent to flock towards outsourcing and vendor companies. Leaving these organisations with IT talent mostly dedicated to IT maintenance and operations, while the external talent gained experience with developing technology and creating solutions, and thus an innovative and engineering mindset. For a while, this was fine, however it is this mindset and capability many companies need in their IT team to support their digital transformation.
3. A tech-first approach
Many organisations fail their transformation before they even begin with a backwards approach of choosing the technology they want to use, and building the rest of their business around it. This is setting your business up to fail, as you are not clear on what business objectives you want to achieve by using this technology, and not optimally working towards achieving your business goals. You may be working with the wrong technology to do so all together.
4. A lack of leadership vision
There is often still a big misconception around what digital transformation actually is. It’s not unusual for organisations to think they’ve just gone through a successful digital transformation, when in fact they’ve just upgraded their IT systems. Sometimes, leadership or the CIO have their mind set on upgrading the operations and functional aspects of technology, but fail to take the holistic approach needed to impact every part of the organisation. Or they think about what short-term changes would be useful now, without making the changes needed to be successful in the future market.
5. No digital mindset
Issues with vision or mindset are not just problematic among leadership, but the rest of your organisation as well. On one side, this has to do with culture. A digital organisation has to embrace innovation and risks, though some employees are simply not willing or able to do so, resulting in them resisting the change. On the other hand, it has to do with skills and the willingness to acquire them. It’s not just IT that needs to have technology skills: everyone in the organisation should have them, at least to a certain degree, to be able to deal with the digital tools they need to do their work. Naturally, not everyone is going to have these skills right away, but it will be a problem if people are not willing to learn, explore and experiment. After all, that is all part of the digital mindset necessary in a successful digital organisation.
6. Insufficient change management
Digital transformation does not represent just one big change, it represent many big changes over a big period of time, enabling you to change even more and faster in the future. If not handled well, people will get tired of these changes, with the risk of ultimately resisting them. It’s therefore important to have experts in change management on your team, whether it’s internal or external, to help your employees embrace continuous change, support them in seeing the value and helping them to adjust.
7. Company silos
A big part of your digital transformation process is about breaking down company silos and enabling collaboration across cross-functional teams. Otherwise, you may see a lack of communication within the organisation and different teams or departments starting to compete for resources. But where completing a digital transformation while maintaining these silos is simply impossible, breaking down these silos can be a difficult process too. After all, humans are creatures of habit, and have gotten used to certain hierarchies and clear areas of responsibility. Also, with these boundaries fading, fear may arise that credit may not be given where credit is due.
8. Lack of standard KPIs
One more time for the cheap seats in the back: every digital transformation is different. Every organisation has their own unique digital transformation goals. Digital transformation is still relatively new. And moreover, digital transformation requires many changes that don’t directly deliver results with an instantly measurable ROI. All of which means that it can be difficult to establish metrics for success, which often is used by executives or shareholders to not transform at all. Which, if it wasn’t clear by now, we don’t think is a wise decision.
7. Change management in digital transformation
People are the most vital, though often the most difficult, element in digital transformation. Because people generally don’t like change. Ironic, since a successful business is about changing (and especially evolving) all the time. Therefore, adoption and change management should become a lasting phenomenon in your organisation.
Why adoption & change management are important
The most common reason change processes fail, is because they’re disconnected from adoption plans. It is therefore not surprising that according to IDG’s Digital Business Survey, 89% of businesses will prioritise digital adoption.
Your employee experience has a direct impact on your business, as it is your employees who deliver your results. Today, employees are spending an average of 22 minutes a day trying to figure out how to accomplish tasks while working with new applications. Imagine your company was constantly rapidly going through changes, without any form of change management – how would that experience be? How happy, not to mention productive, would you be as an employee, and how much time would be wasted?
Why functional training is not enough
So when your organisation is going through many changes, it would make sense to invest in training, wouldn’t it? Yes, it would, however that’s by far not enough. More often than not, training sessions are too superficial to actually have impact. Mountains of knowledge can be shared, but if people don’t actually acquire the skills or understand both the application and implication, as well as the value, you may as well cancel your training sessions all together.
In addition to the functionality of technology, people need to understand the benefits of all the changes put together; why they’re changing, what value they get out of it, and how all changes fit into the bigger picture.
People need to see the value of the transformation and the potential of the improvements that come with it, such as the technologies, processes and culture change. When going through digital transformation, time and effort should be invested into realising an elaborate change management and adoption plan, for now and future developments, to achieve an optimal employee experience in an ever-evolving organisation. Not just training them in the functionalities of the changes.
Telling your digital transformation story
Becoming a digital organisation is not just something that you do, it becomes a part of who you are. Own that identity and bring your employees along on the journey.
When going through transformations, you can show your employees all the graphs and bullet points and statistics you want. They may convince the brain – but as cheesy as it sounds – they won’t convince the heart; they have no emotional value.
In your adoption and change management efforts, invest in getting to know your “audiences” (employee groups) and what value they get out of the transformation – what they’re future would look like. Develop a vision of what that future would be for your organisation, and what it would mean for the people in it. Through storytelling, you can express the meaning of your digital transformation efforts, beyond just the functional value.
8. What’s next? A continuously evolving organisation
As a digital business, you are never done with change. You will probably never be done with transformations or improvements, and that’s a good thing. Because it will help you to become and stay successful in the days to come, and it is now part of who you are, your company’s DNA.
In this ongoing transformation, don’t lose track of the why; don’t just change for the sake of change, but because you actually believe it will contribute to achieving your goals. Keep asking for feedback, analysing, pilot testing and adapting, to make sure you’re still on track and keeping your focus.
A digital transformation can be daunting, but if done right, it’s ultimately worth it. Become future-proof and start your digital journey today.
How Workspace 365 supports your digital transformation
Workspace 365 offers an adaptive and customisable workspace which enables you to unite and simplify all your technologies and information in one place, making them accessible from anywhere, anytime. Workspace 365 supports your digital transformation by:
- Uniting and simplifying everything a person needs during their workday in one place, enabling a smarter and more efficient way to work
- Offering technology-independence and agility, by allowing you to switch and adapt technologies beneath the surface, without interrupting people’s work
- Providing one easy-to-use interface, supporting employees to work with different technologies easily
- Offering tools such as Micro Apps and live tiles to support the adoption of technology among employees
- Offering tools and Micro Apps live tiles to enable communication and collaboration across teams, departments and the entire organisation
- Continuously monitoring the market and people’s needs and wishes, in order to quickly adapt and improve to cater to your digital transformation and business needs
Discover more about Workspace 365 and its features and functionalities in the What is Workspace 365 whitepaper.
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