So, What is Digital Transformation (DT)?
Talk about the buzz phrase of the decade. Digital transformation means a lot of different things to different people, anywhere from software installation to the use of artificial intelligence. So, for a better contextual read, let’s be clear on what I mean when I talk about digital transformation; I am referring to the transformation part that digital enables.
Our consulting group considers digital transformation the set of organizational changes impacting business models, culture, business process, and industry domain. The result is that the company thrives through improved customer experience, high-performing employees, and positive investor sentiment. The digital part is the tool that enables a company to get there.
Sadly, the focus for many companies rests with the digital. Many software vendors believe their software will achieve your digital transformation, but the people and processes transform the business.
Think of digital as your kitchen stove; it’s an expensive investment, but it is just a tool. It becomes more valuable only when you apply the right recipe, ingredients, and cooking skill; otherwise, it just sits there. The key is in understanding that you need to invest in the right groceries, have some decent cooking skills, and follow well-defined processes for the best success.
Don’t get me wrong, you need the stove, and having one where all burners work and it’s built to last makes for a better experience. But a stove is a tool that will not fill your stomach or whet your appetite.
Failure Rates
I may be committing digital transformation blasphemy here, but I don’t believe that 70% of digital transformations fail. I feel100% of digital transformations reach the level of success achieved through their commitment to data, process, and organizational change.
The Digital Divide
When embarking on a digital transformation, your tool selection must be directly related to what the organization wants to achieve and be the right tool to enable your company to transform. There are three concerns we repeatedly witness within organizations embarking on their digital transformation.
- The current team doesn’t know what they don’t know, primarily if they have never used the software before, so they are flying blind.
- The vendor believes in the full functionality of all parts of their software. When singing the praises of their product during the sale cycle, they never expect companies to budget for a minimal subset use of the software.
- Many companies fail to include a third-party advisor to bring reality to life in the sales cycle conversation or liaison between the vendor and the client. (recommended)
Due to these three issues, budgets often land heavy on the technology and go light on the adoption.
Know what you want to transform
Before embarking on selection committees and technical reviews, the executive must be clear on why they need to transform and have a vision for what that transformation will achieve. It sounds like common sense, but I can tell you that many digital transformations launch without that vision. A technical installation is implemented but fails to change business models, culture, business process, or industry domain.Operations continue the same activities, roles, and outputs they have always done. They kept cooking as they’ve always cooked, buying the same groceries, preparing the same meals; all they did was replace the stove. Nothing transforms, and lifestyle remains the same, but with a considerable expense on the books.
Let’s say the doctor told you that if you don’t change your lifestyle soon, you are at 98% risk of a fatal heart attack. You don’t just go out and buy a stove!
Business disruption and the inflection points creating the need to transform requires a bigger picture view. Transformation is like a lifestyle change that avoids the risk of a potential heart attack (disruptive market loss).To gain success, you cannot ignore the transformational activities and focus only on the tool.
Four core areas of Transformation
Focus on four core areas if you want to transform your business and not limit the activity to transactional efforts.
- Technology– the tools you’ll use once you have transformed
(stove, utensils, pots, and pans)
- Data – the information supporting the transformation
(temperatures, cooking times, food selection, heart rate, blood pressure, and cholesterol levels)
- Process – how you will do things differently and what items you will no longer continue to do
(exercise, healthy food combinations, giving up trans fats, avoiding sugar, new healthy cooking practices, and increasing daily movement.)
- Organizational Change – adopting new activities, behaviors, and methods
(learning to use all the unique features of the stove, changing daily routines, learning new types of seasonings, researching recipes, trying fresh foods, joining a walking group, hiring a trainer.)
When your business is hit with innovative external disruption, forcing you to change your business model, the tools you use will matter, but what you do with the data, processes, and organizational changes to support the use of those tools is critical.Do not underestimate the need for budgets, resources, and planning to be allocated toward a more holistic approach. A clear vision of what you want to achieve as a business must come first, and attention to feedback is imperative.
Patti Blackstaffe is CEO of the advisory group GlobalSway, focused on igniting the fusion between technology and humanity. She is on a mission to connect the dots between leadership, transformation, and governance, helping organizations develop a new generation of responsible leaders. Patti’s book, Hacking YOU: A Digital Leader’s Guide to Self-Awareness, is slated for publishing at the end of 2021.