Digital transformation is still one of the business buzzwords of the year. It is estimated that 89% of organizations have digital transformation as a business priority. But if you feel like you’ve come to a standstill in your digital transformation efforts, you are not alone. As many as 84% of digital transformation efforts fail to achieve desired results. And that statistic would likely be higher if we examined only the larger, enterprise level efforts.
What exactly is digital transformation? According to researchers at MIT Sloan, digital transformation occurs when businesses are focused on integrating digital technologies, such as social, mobile, analytics and cloud, in the service of transforming how their businesses work. The preoccupation with digital transformation makes sense given the pace of change. Richard Foster, at the Yale School of Management, found that the average lifespan of an S&P company dropped from 67 years in the 1920s to 15 years today.
Creating digital products receives a lot of press. For example, the 2017 Ford GT supercar's digital instrument display has been advertised as the dashboard of the future featuring a state-of-the-art 10-inch digital instrument display that helps reduce driver distraction. Yet, Ford’s share price is down nearly 30% over the past 3 years. On the other hand, the design of the Airbus 380 aircraft had some exciting digital innovations, but Airbus also leveraged big data to improve customer experience with very positive results on the company’s share price over the past 3 years. GE is another example of a company that has pursued digital transformation to reinvent its own industrial operations through digital technology, and then leveraged those learnings to help its customers do likewise. While the product innovations are sometimes impressive, more than purely product related innovations are needed for digital transformation at the enterprise level.
There’s no doubt that the digital tools which includes social, mobile, analytics and cloud (sometimes referred to as the “SMAC” acronym) creates value – but digital transformation at the enterprise level must go beyond just the tools.
Having a transformative purpose or vision and a process based view is recognized as being important. In “Leading digital,” the authors found that firms with a strong vision and mature processes for digital transformation were more profitable on average, had higher revenues, and achieved a bigger market valuation than competitors without a strong vision. Yet more reason to emphasize that while technology is integral to digital transformation - it can’t just be about technology. If we go back to the early days of the research on digital transformation, it was proposed that true digital transformation at the enterprise level needs to embrace fundamental change is three areas: customer experience, operational processes, and business models.
Focusing on customer experience is central to success. According to the Altimeter Group in 2014, around 88% of companies reported undergoing digital transformation – yet only 25% of respondents indicated that they had mapped the customer journey. The 2016 update to this research, based on survey data from 528 leaders, found that the number of companies which mapped customer journey had risen to 54% - indicating a positive trend – but still a way to go.
Focusing on improving the organization’s ability in improving end to end business processes is also needed for success with digital transformation. Where does your organization stand in terms of its process maturity? Are you just beginning the process improvement and management journey or is the organization well on the way to modeling, improving, measuring and managing its key business processes to achieve business goals? If there is room to improve your people’s skill in areas such as BPM, customer experience and change management, then you may wish to explore the training programs offered on these topics at: http://www.bpminstitute.org/learning-paths.
Further, the answers to the following questions may provide you with additional insight on your organization’s situation on its enterprise digital transformation journey:
1. To what extent is your company strategy driving the digital transformation program?
2. To what extent are you actively challenging the elements of your business model (i.e. value proposition, delivery channels, etc.)?
3. To what extent are you exploring new digital business and digitally modified businesses?
4. To what extent do your leaders have a shared understanding of the entire customer journey?
5. To what extent are you deploying digital to redesign end to end business processes?
Recall the power of the one page principle. This involves in having a high level schematic - just one page for your customer journey map, one page for your business model, and one page for your process relationship map. That’s what drives discussion and collaboration and storytelling. Of course, some of these high level schematics need to be developed at a more granular level of detail – but the one page view is what captures attention and drives dialogue.
The vast majority of digital transformation efforts at the enterprise level are led from the top. Leading by example is part of the success formula as well as defining clear priorities and managing the cross-functional interdependencies that many digital solutions often involve. Chances for success are amplified when employees believe that their leaders have the skills to lead the digital strategy and understand the major digital trends – and that is augmented with stories.
How can you get started on the journey? The following were some of the tips presented by Gartner at the Program & Portfolio Management Summit (PPM) in Orlando:
• Assess your organization’s appetite for risk taking
• Be introspective
• Introduce innovation into every project
• Find a project that can be monetized with digital
• Engage in experiments and communicate lessons learned
One of the keynotes at the 2017 Gartner PPM also emphasized that digital business is an entirely new game, the rules of which are not yet written. Whatever road you choose for your digital transformation journey, it will be important to take into account the central role of customer experience, the power of process management, and the importance of having clear priorities.
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