More Than Words: Defining Digital Transformation in a Meaningful Way for Organizations
CDOs, CTOs, and other business leaders have been told repeatedly that digital transformation is an essential “competitive differentiator for leading organizations,” as Gartner, Inc. describes, and that there is little time to waste as competitors digitally transform themselves. However, while the potential benefits of digital transformation are well understood, the pitfalls to achieving them often remain hidden — at the peril of these decision-makers.
Boston Consulting Group (BCG) found in late 2020 that “more than 80% of companies plan to accelerate their companies’ digital transformation.” For too many companies, however, the labor and investments associated with digital transformation will not drive real business value. Instead, those initiatives will fizzle — never realizing broad organizational adoption, never really getting off the ground.
How can these decision-makers look beyond the hype to realize lasting benefits that make sense for their companies? How can they create a strategy that yields results for their teams and the company? By defining digital transformation successfully at the start — with advanced analytics as its central focus — business leaders can facilitate a self-sustaining “decision supply chain” that makes this success a possibility. Here, we examine common pitfalls in modern digital transformation and how defining true transformation in the context of an organization helps shape meaningful and lasting results.
A Brief And Recent History Of Digital Transformation Mistakes
In 2021, leaders across all business sectors are attempting different forms of digital transformation. However, successful digital transformation isn’t just difficult. It’s actually quite rare. In fact, according to BCG, “70% of digital transformations fall short of their objectives, often with profound consequences.” In many cases, companies lose sight of their original business goals because they fail to consider the cultural and operational change requirements for success. BCG noted that “this is where the trouble usually starts.”
In one well-documented example, American car company Ford attempted to launch a new segment, Ford Smart Mobility, to enhance mobile technology features in its cars. The new segment had virtually no congruence with the rest of the company, and as a result, that lack of integration caused the initiative to languish despite large investments. In another example, Proctor & Gamble launched broad goals to become “the most digital company on the planet.” Its broad initiative struggled because senior leaders failed to clearly define its purpose from the start.
This lack of leadership and vision is pervasive. In January 2021, Deloitte found that while 85% of CEOs agree that “being a digital business is important for success … only 40% agreed that they possess the vision necessary to lead a digital business.”
In analytics, for example, business leaders struggle with the inertia of traditional, manual tasks they seek to replace with digital tools and automated capabilities. Even at companies where most employees recognize the potential of advanced analytics, the broad cultural shift that would make the digital initiative possible is met with resistance.
Securing the right technology is part of the equation, but BCG already found that there is “no correlation between the quantity of resources devoted to the transformation program and the outcome.” It’s people and their behavior together — employees, processes, and company culture — that’s “usually the determining factor.”
Driving Real Value Through Digital Transformation
Successful digital transformation begins with a clearly defined strategy grounded in two principles: The transformation must take hold and endure, and the transformation must drive real, measurable results. In analytics, for example, digital transformation should improve companies’ existing “business-decision supply chain” — the sequence of processes by which data producers turn raw data into trusted and actionable business information — rather than focus on technology adoption alone.
With these goals in mind, business leaders can focus on aligning digital transformation with specific employee behaviors required to ensure the initiative is successful. In the case of advanced analytics adoption as part of digital transformation, the following three approaches can help business leaders realize this success.
1. Facilitate a new data culture, made possible by your digital initiatives.
Business leaders often overlook the cultural and collaborative changes that successful advanced analytics adoption requires from employees. BCG recommends creating a “change agenda,” one that ensures company leadership is “aligned on what it will take to effect the change required in behaviors and skills across the organization.”
2. Identify KPIs and invest in improving decision-making that drives results in those areas.
BCG notes that most companies lack “a clear vision backed by a set of strategic imperatives and quantified business outcomes, linking digital to the overall business strategy and sustainable competitive advantage.” Business leaders who prioritize putting actionable, purpose-driven insights into the hands of their employees and fostering a culture of collaboration can align digital initiatives with those of their teams and, ultimately, key KPIs.
3. Align transformation efforts with measurable business results (ROI).
Successful modern analytics environments span business groups, featuring dedicated tools and intuitive interfaces custom-designed for employees. As digital transformation begins, business leaders can align these tools with select employees to deliver defined outcomes, creating a foundation of success as business leaders scale to other groups with the same approach.
Overcome Complexity With Collaboration That Makes Sense
Successful digital transformation is always complex, but so are today’s business challenges. Fortunately, the right strategies and digital solutions can help streamline internal collaboration across teams and simplify the ways both employees and business leaders tackle complex problems.
As McKinsey explains, “companies can inspire more productive relationships among groups and foster a sustainable competitive advantage for the company by preserving the impact of their transformation activities for the long term.” It’s by prioritizing those sustainable aspects in early strategic development that digital transformation yields real, lasting results for employees and the company.