Digital transformation: Best practices

Embarking upon a successful digital transformation requires a resolute commitment from decision-makers, targeted communication efforts, and the deployment of suitable incentives. The principles and behaviours that underpin the process are equally vital. To boost your likelihood of success, please consider generating answers to several pertinent questions, enabling you to achieve your digital transformation objectives.

In the contemporary corporate landscape, the term 'digital' is ubiquitous, rivalled only by 'sustainability' in its omnipresence. Concurrently, decision-makers are cognisant of the imperative to enhance their digital outcomes, though many grapple with this challenge. The question of prioritisation plagues businesses as they strive to metamorphose into digital enterprises. This transformation poses a formidable hurdle, requiring a fundamental evolution in your business's operations. Some have begun this journey, whilst others will soon be pressed to follow suit.

Do you know where the change is happening? 

The digital realm significantly impacts customer behaviours and your operations. However, understanding where and how to begin can take time and effort. To unpack this intricate process and provide a structured approach, decision-makers should assess the sectors undergoing the most profound changes, identify the core aspects of the company affected by this shift, and consider the infrastructural foundations necessary to facilitate the transition.

By systematically addressing the identified issues and ranking each by its feasibility, you will gain a comprehensive overview of the shifting landscape, allowing you to grasp the implications fully. It's vital to remember that digital disruption pays no heed to industry boundaries; therefore, thinking beyond your sector is crucial.

Which customer journeys should be prioritised?

As you craft your strategy, you must account for customer journeys - the total sum of an individual's interactions with your company across all channels, aiming to complete a task. By focusing on these journeys, you anchor your transformation in the tangible realities of change, ensuring the customer remains the central focus. By optimising these journeys, your company will be compelled to identify every process, technology, capability, and transition necessary to enhance and deliver exemplary customer experiences.

Upon mapping the customer journeys, you can concentrate on how digital technology can refine each interaction, facilitating a more efficient, seamless, and modern customer experience. It's also important to adjust KPIs and performance incentives to monitor and reward progress in enhancing these customer journeys.

How will you encourage cross-functional collaboration?

Your digital transformation cannot prosper in isolation. It is a process that permeates all functions across your company. Leaders in the digital sphere prioritise internal collaboration, integrating their operations and personnel across their businesses and fostering a culture of shared incentives.

Successful organisations often assemble cross-functional teams, uniting key individuals from marketing, sales, service, R&D, IT, and support for specific initiatives. Others form autonomous project teams, pooling complementary skills to accomplish a task. To sustain momentum, cross-functional teams require support from decision-makers, a mandate to perform tasks, appropriate resources, profit-and-loss accountability, and aligned incentives that reward the successful completion of a customer journey or product development.

What is your established approach?

Thriving businesses collaborate with customers to develop and test concepts, iterating on ideas until they accurately meet customer needs and expectations. By adopting this approach, companies can circumvent the pitfalls of overly ambitious specifications, misguided market research, and protracted planning cycles, often resulting in unwanted or unnecessary products or services.

However, testing and iterative processes do not equate to unrestricted team autonomy. Successful digital initiatives demand constant review across all customer journey stages, analysing conversion patterns and mapping them to engagement levels. It's crucial to relentlessly track digital KPIs and be prepared for course correction when necessary. Clear methodologies and targets should be established.

Are your budgets tied to progress?

Many digital transformation efforts are hindered by inflexible budgetary cycles, which should ideally be adaptable to the company's progress.

Alarmingly, less than 15 per cent of companies can accurately quantify their digital initiatives' return on investment (ROI) - the actual figure is likely even lower. Therefore, decision-makers should remain closely involved in the development of initiatives, prepared to withdraw funding if KPIs are not aligning with objectives or increase budgets when performance justifies it.

Short-term milestones should be considered, focusing on measurable outcomes such as growth in new customers or engagement in a specific product rather than solely revenue outcomes.

Some companies have successfully maintained separate budgets for digital initiatives. This approach can only flourish when relevant metrics are implemented to track ROI.

Are there mechanisms in place to challenge ideas?

Contrary to popular belief, only some ideas are viable. An 'expert panel' could be established to prevent unconvincing arguments from consuming resources, composed of individuals intimately familiar with your company and digital natives from contemporary companies.

Armed with in-depth digital experience and an external perspective, this group of experts can pose the right questions, uncover issues, and identify opportunities, enabling your company to prioritise potentially disruptive ideas.

Alternatively, an advisory board could guide your company through its digital transformation, injecting invaluable knowledge and experience into your decision-making process.

Are your teams empowered to act?

Within many companies, there exist numerous reasons to resist novelty, ranging from fear of change to internal paralysis stymieing new initiatives. Empowering the teams engaged in digital initiatives is imperative, bestowing them substantial responsibility to overcome functional silos and take the lead.

A prioritised digital initiative demands swift decision-making, bypassing slow and established processes. This requires dedicated resources and budgets, as well as executive decision-making power. The CEO should be able to act swiftly without seeking prior C-suite approval.

How does your IT department function?

Successfully transitioning to a digital platform requires a sound legacy IT architecture.

While it's crucial to safeguard the integrity of systems containing sensitive data, your IT department should also provide a secondary system that offers customer-facing capabilities.

New features and databases can be added as required without disrupting the underlying systems that manage the rest of your business. This secondary, high-speed system should foster agile development and prototyping driven by an experimental mindset.

When developing high-speed systems, decision-makers must incorporate relevant analytics and intelligence to provide real-time insights into customer needs, behaviours, and expectations. This will determine the personalised interactions, content, and suggestions delivered to each customer.

Becoming digital involves establishing a cyclical dynamic wherein processes and capabilities continuously evolve in response to customer feedback.

Have you prioritised your digital initiatives?

Digital transformation is not a finite effort but a series of prioritised digital initiatives that collectively facilitate digital transformation.

Each initiative should be undertaken by a competent cross-functional team supported by broader resources for implementation and operations. The success of these initiatives hinges on how well decision-makers and top management coordinate and prioritise when they are running in parallel.

All relevant decision-makers must map out initiatives to ensure alignment with the business strategy and desired future state. Prioritisation of initiatives, alignment of dependencies, and coordination of resources and budgets fall under the executives' purview.

Leading digital companies manage hundreds of initiatives concurrently, automating as many tasks as possible to free up management to focus on strategic change and goal fulfilment.

Succeeding in digital transformation necessitates a fundamental change in operating your business.

Addressing the above questions will provide valuable insights into increasing your company's chances of successfully embarking upon a digital transformation.

In the accompanying PDF, we summarise the primary hurdles to digital transformation and offer suggestions for surmounting them.

Want to know more? Through our digitalisation guide: what, why, when and how to use it, you'll find much more to read!