It's crucial to successful digital transformations that the decision-makers commit, practice targeted communications, and implement appropriate incentives. And the principles and behaviours that drive the process are equally important. So, to improve your chances, I have listed a couple of questions that you could create answers to and potentially get your desired digital transformation right.
It's hard to find a more overused term today than 'digital'; only the word "sustainability" can compete on the same buzz level. Simultaneously, decision-makers understand the need to raise their digital outcome, many struggles with doing it. Everyone wants to know how and what to prioritise to transform companies into digital enterprises. This transformation is a considerable challenge for you, your company and your established business model. To become a digitalised company requires that you are willing to evolve how you do business. Some are already doing so; others will be in a hurry quite soon.
Do you know where the change is occurring?
Digital affects most aspects of customer behaviour and your operations. However, it is challenging to know where, how and what to begin with. To demystify the process and bring structure to it, I suggest decision-makers review the frontiers where significant changes are happening, the core parts of the company affected by the change, and the foundations needed to support the change.
Suppose you systematically work through the identified items and rank each issue by its feasibility. Again, this case will provide a clear overview of how the landscape changes and how to think through the implications. But, again, it's essential to look beyond your sector: digital disruption doesn't consider industry boundaries.
Which customer journeys matter?
When setting your plan, you need to consider customer journeys - the sum of an individual's interactions with your company across all channels to accomplish a task. Focusing on customer journeys helps ground the transformation in the practical realities of change by keeping the customer front and centre. In addition, optimising customer journeys forces you and your company to identify every process, technology, capability, and transition needed to improve and deliver exceptional customer experiences.
When you have mapped the customer journeys, you can focus on how digital can improve each touchpoint, be better, faster, more efficient, and integrate them into one unified and modern experience. In addition, KPIs and performance incentives will need to be adjusted to track and reward progress on customer journeys.
How will you collaborate across functions?
Your digital transformation will not succeed by creating a separate enclave for digital; digital impacts all functions across your company. Digital leaders prioritise internal collaboration, and their processes and people seem to be integrated across their business and practice incentives for sharing.
Some of these companies succeed in building a cross-functional team that bring together key individuals from marketing, sales, service, R&D, IT and support for specific initiatives. Some assemble self-managing project teams who bring complementary skills to a task. Skilled people participate in guilds, where they share their expertise and discoveries.
To build momentum, cross-functional teams need decision maker support, a mandate to get things done, the right resources to build out a program, profit-and-loss responsibility and accountability. In addition, all incentives must reward the successful delivery of an entire customer journey or a complete product rather than actions that matter for a particular function.
What is your decided approach?
Many successful companies work on a concept and test it in cooperation with their customers. Then, they try and iterate the idea until they seem to get it right, delivering what customers want and understanding why to address their needs and expectations. Using this approach, companies can avoid getting caught up in overly ambitious specifications, so-called market research that misses the point, and way too long planning cycles usually produce something customers don't need and want.
But testing and iterations don't mean that you let your teams do as they want or like. Successful digital initiatives are continuously reviewed in all parts of the customer journey - analysing, checking conversion patterns, mapping them to engagement levels. You must focus and do relentless tracking of digital KPIs and prompt course correction when needed. You need to set straightforward methods and targets.
Are the budgets tied to progress?
Many digital transformation efforts are hampered by budgetary cycles that aren't sufficiently responsive to what's happening in the company.
Some claim that less than 15 per cent of companies can quantify the ROI of their digital initiatives. I argue that it is much lower. My recommendation is that decision-makers need to stay close and follow the development of the initiative and always be prepared to either pull the plug if the KPIs fail to move in the desired direction or quickly pump in more budget if the performance justifies it.
It would be best always to consider short-term milestones: not necessarily revenue outcomes but measures such as growth in new customers or customer engagement in a particular product.
I know some companies that have successfully practised keeping the budget for digital initiatives separately. However, outside normal processes, such an approach can only succeed when relevant metrics are put in place to track ROI.
Do you have the mechanisms to challenge ideas?
Despite what you may have heard, not all ideas are good ideas. So, to prevent flawed arguments from squandering resources, you could set up an "Expert panel", including people who know your company and offering inside out together with some digital natives from modern companies.
With deep digital experience and outside perspective, the gathered experts can ask the right questions, uncover problems, and spot opportunities for your company to prioritise things that possibly can become disruptive.
Another option is to set up an advisory board to guide you and your company through its digital transformation. Introducing these external advisors to your existing organisation is an excellent way to inject critical knowledge and experience into your decision making.
Are your people empowered to act?
In most companies, there are always reasons not to do something new. The reasons vary; it can be as simple as the fear of change or other things that potentially can paralyse new initiatives. That's why you need to empower the teams working with digital initiatives and give them real responsibility, so they can break through your functional silos and get the possibility to take the lead.
To lead a prioritised digital initiative involves short-cutting slow and established processes and moving quickly. That demands dedicated resources and budgets, as well as C-suite decision-making power. The CEO needs to able the initiatives to act fast without C-suite advance approval.
How does your IT department operate?
It's hard to undergo a digital transformation with a good legacy IT architecture.
You need to protect the integrity of transaction-focused systems with sensitive data, and your IT department needs to provide a separate system providing nimble customer-facing capabilities.
New features and databases can be added when needed without touching the underlying systems that run the rest of your business. This secondary high-speed system must support agile development and prototyping, driven by an experimental approach and mindset.
In developing high-speed systems, decision-makers must put relevant analytics and intelligence to provide real-time insights into customer needs, behaviours, and expectations, determining the personalised interactions, content and suggestions delivered to each customer.
Becoming digital involves establishing a cyclical dynamic in which processes and capabilities continuously evolve in response to inputs from prospects and customers.
Have you prioritised your digital initiatives?
Your digital transformation isn't a time-framed effort but rather a prioritisation of digital initiatives combined to make the digital transformation happen.
Each initiative should be executed by a capable cross-functional team supported by broader support for implementations and operations. The success depends on how your decision-makers and top management coordinates and prioritises initiatives when they run in parallel.
All relevant decision-makers need to map out the initiatives to ensure that all initiatives are aligned with the business strategy and the desired future state. The executives must prioritise the initiatives, align the dependencies between the initiatives and coordinate the resources and budgets.
The leading digital companies manage hundreds of initiatives in parallel. And they automate all tasks possible to free management to use more time on the strategic change and goal fulfilment.
To succeed with digital transformation requires that you are willing to pay the effort to change how you run your business fundamentally.
I hope that answering the above questions will help you understand how to increase your company's chances to start a successful digital transformation.
In this PDF, you summarise the main obstacles to digital transformation and how to overcome them.
Founder, CEO & Strategist since 2001. Anders provides thoughts and reflections about what and how to think about onlinification and digitalisation in B2B. Asks a lot of questions, and knows what to do with the answers.