Digital transformation is not just about technology

The strength of digital technology, whether it’s mobile devices, analytics or the cloud, does not lie within each individual element; it’s how they integrate across an entire organisation. People may say their businesses are digitally transformed, but this means different things for different organisations, and part of the reason why in many cases, they fail. Acquiring the latest gadgets does not mean digital transformation.

A key factor that differentiates digital success from failure is the existence and execution of a digital transformation strategy. This ‘compass’ for success  must be driven by a leadership team with a mindset to support structural change, coupled with  an organisational culture that’s prepared to embrace ongoing change and innovation.

This mindset and culture applies to all companies; from start-ups to mature organisations. In more developed firms, digital transformation can fail due to a lack of focus, typically because day-to-day activities take priority. However in the current times, COVID-19 is prompting organisations to look to digital transformation to survive. 

Having defined a digital strategy, it should be shared internally, so employees understand the direction the ’compass’ is facing, and how their contribution can make it happen. It’s crucial to involve all employees in the strategy’s definition and execution. A study from MIT and Deloitte reveals 81% of employees in more digitally mature organisations agreed “our organisation has a clear and coherent digital strategy”, in contrast to 15% of employees in companies considered to be in the earlier stages. 

Also, when comparing successful and failing strategies, while the basics of using digital to improve efficiency and the customer experience, are in place, mature organisations use digital to transform their business, allowing them to move ahead of the competition. And while a more extensive and holistic approach requires deeper transformation, it does deliver greater rewards.

One of the biggest challenges is nurturing talent and skills. Digitally mature organisations are more attractive to work for so will have access to a larger internal skill-set (particularly as they provide the perfect environment for younger generations to nurture their creativity, increasing motivation).  Less mature organisations will have to spend to attract talent and because they are slow to move forward, it can frustrate employees with expertise in certain areas, causing them to join companies where their skills are more in demand. 

MIT-Deloitte says the biggest challenge is having employees with the skills and ability to conceptualise how digital technologies can impact their business, giving it the agility to adapt to change quickly.

When it comes to organisational culture, it’s important to ensure digital transformation will benefit the business. For example, digitally mature organisations take more risks, and their executives/employees are encouraged to take risks and adopt new technology and ways of working. Greater agility delivers faster results and quicker returns. And if they fail, this is quickly apparent. The business can then move on, and not waste time or money in something that fails to deliver clear gains.

Equally vital is a culture of idea sharing – often described as an ‘ideas incubator’. Giving employees the time and environment to think and put forward ideas is a clear benefit. The worst scenario is that someone says: “I thought about this but didn’t come forward.

The three concepts proving technology is only the facilitator (inherent in many digital scenarios), and that business success is strategic, are:

  • Younger generations less interested in ownership. They’re more focused on the concept of being able to ‘use whenever necessary’ which changes the offer, making how we communicate with clients very digital. Think UBER and AirBnb.
  • The role of data. Always key, but more so as we digitize processes. This means a greater focus on inputs and outputs and keeping information current, safe, available and clean.
  • Evolution of business models and ecosystems. Businesses cannot work in isolation, offering their products or services only. It is about creating ecosystems that support a ‘one stop shop’ experience for customers.

Industries taking a lead in digital transformation include IT, technology, telecoms, media, entertainment and financial services (the latter commercially and regulatory). 

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