In today's world, the expansion of digital has compelled many companies to adapt quickly. But this shift hasn’t happened overnight, and so, there are still many companies who are struggling to fully understand what digital transformation is. Nor do they have total control over their own processes of digitalisation.
So, what do executives need to do differently? In this article, we will review the most common issues companies face when developing their digital transformation strategies, and highlight the seven questions you should ask yourself when reviewing your company's digital transformation strategy.
According to a study published by Forbes and Progress, out of 700 decision-makers in charge of digital transformation, 75% would opt for a step-by-step digital transformation strategy as opposed to deploying a strategy all at once.1 Of those without a digital transformation strategy already in place (24%), the majority agreed that transitioning to digital is important. Yet, the same respondents also added that they did not have the means to achieve it (59%).
The study revealed a disconnect between understanding and action. On the one hand, leaders had an awareness of the need to implement a digital transformation strategy. But on the other hand, few had actually put strategies in place. To that effect, a digital transformation strategy also depends on collaboration between the different departments within a company. For example, an IT department would consider investing in the Cloud. Operations would aim for this investment to go into data analysis. Finally, the Marketing department would opt for investing in digital channels. These departments need to align, and a digital transformation strategy should address and accommodate these disparate departmental needs.
One aspect is certain: to take full advantage of a digital transformation strategy, you need to have one in the first place. In 2017, Harvard Business Review analysed 2,000 companies of different sizes, from various industries and countries, to identify the different digital strategies that have been implemented over the years.2 The results showed that digital initiatives often had disappointing results with little impact. This highlights the need for a well-planned digital transformation, underpinned by a thorough digital transformation strategy.
The allure of new technologies often leads companies to cave into adopting them before they fully understand them. This frequently occurs without a clear idea of the impact on the business, and with a lack of strategic thinking. Before investing in Artificial Intelligence (AI), Cloud, or other solutions, it is important to have in place a solid digital transformation strategy, one that is tailored to your business. Read on to see how you can do this with the help of the seven key questions:
Do you fully understand digital transformation and its potential?
According to Jeff Skipper, a leading Digital Consultant, the first thing you need to do is make sense of digital transformation and its potential.3 Digitalisation offers great opportunities: not only does it enable more flexible and efficient work processes, it also allows for the adoption of entirely new business models. In some cases, companies from outside of a specific industry are able to enter new business areas faster and more cost-effectively, completely turning markets upside down overnight. For example, platform or freemium models changed the way companies create added value for their customers. To inspire you, we have compiled a list of some of the most successful examples of digital transformation.
Therefore, start by considering whether your digital strategy is exploiting the full potential of digital transformation. Next, analyse your organisation's strengths and value proposition, and check to see if these strengths can be applied to new services or products. Lastly, build a strong vision and set the goals to achieve it.
Do you place your customers at the centre of your strategy?
A common mistake is to focus your digital transformation strategy on the business without considering who your strategy addresses. Taking the end customer into account should be an essential part of developing your digital transformation strategy. It is worthwhile investing time and resources in understanding who your target audience is, and what their needs, values and desires are. Put yourself in your customers' shoes, study and anticipate their needs, and then build your value proposition based on this information.
New technologies and processes such as Big Data and predictive analytics are of the utmost relevance today. They will help you to collect and leverage valuable data on your customers' needs, and how they are changing. In the end, this will enable you to react to the changes in a way that is beneficial to your business.
Does your digital transformation strategy encourage innovation?
In the digital age, customers' needs and market conditions can change very quickly. Your company must be able to adapt fast to new trends, so innovation is the magic word here.
Yet, innovation is not easy to budget for, so you have to create the right conditions for it. This can even include rethinking the entire structure of your organisational structure. For example, agile working in cross-functional teams is a well-known way to promote innovation. Teams working in an agile way should be able to make and put in place decisions as autonomously as possible. At the same time, they should be able to show a high degree of individual responsibility. Open and transparent communication is another tenet that should be visible across the entire company.
Innovation is a process based on hypotheses that helps transform ideas into marketable, revenue-generating products and services. Yet, many innovations fail, and that is why it is crucial for an organisation to learn from their mistakes. Therefore, make sure our digital transformation strategy offers an answer to the question on how to promote innovation in your organisation. It should be the starting point, which over time will adapt based on customer needs and internal learning.
Do you know what role technology has in your digital strategy?
When asked about digitalisation, many people think of technologies such as smartphones, virtual reality, Cloud computing, Big Data, 3D printers or AI. Yet, as these questions show, technology is only one of myriad considerations you should make during a digital transformation.
A successful digital transformation strategy shows how technologies can be used to increase the automation and efficiency within your organisation, whilst creating value for the customer. Start by understanding which technology trends are driving your market and which trends are emerging in others. Then, try to determine how new technologies will be tested in the future, and which parameters are critical to the success or failure of such tests. This will give you a better overview of the new technologies emerging and the possible digital solutions for your teams to work with.
Another aspect to take into account is how you can distribute the responsibilities around the use of technology. For example, creating the role of Chief Digital Officer to help you regulate the use of data in your company, and how you can approach the topic of Cloud computing.
How does your strategy connect with your company's culture
A digital transformation strategy is directly related to the corporate culture. After all, adopting new business models and having full focus on customers can have a strong impact on a company. And taking the necessary time to assimilate the change is not always possible in today's fast-paced business world. That is why you should begin going through a cultural change as soon as you start developing your digital strategy.
Involve your teams in the transformation process, and help them understand the real value of digitalisation. The reason why this matters is because far too many employees are being pushed to adopt new technologies and ways of working without understanding why the change is necessary. If you adopt a "train-the-trainer" attitude from the beginning, you will have a better chance of success. As a leader, you should also be transparent in your communication and let your teams know about the challenges and goals ahead. Open communication is a key factor in a successful digital transformation process.
Establish an agile culture that encourages innovation and continuous improvement, and invest in your employees' knowledge, such as digital training. But bear in mind that your strategy may need to rely on new expertise, in which case, you need to find the right specialists externally.
And remember that cultural change plays a central role in digital transformation, and as it affects all employees, it requires a lot of time and a sensitive approach.
Have you considered the possible risks of your strategy?
Any digital transformation project involves risks for a company. Before starting, you must evaluate these risks as well as tracking and analysing them. By doing so, you and your team will be able to see the potential outcomes of the digital transformation strategy you are about to build with greater clarity.
For example, ask yourself what could be the main reasons for your strategy to fail in the implementation phase. Here are some aspects to consider:
In this phase, you can carry out internal and external pilot projects to consider all potential risks. Internally, these pilots will assess how employees will react to the introduction of new technologies, working methods, and organisational structures. They will be a good indicator of how open teams are to change and how quickly users adapt to using new tools. The results of these tests will be decisive in shaping the company's digital transformation strategy even further. External pilots will show the company how customers react to new technologies.
Another risk you should consider is that of cybercrime. In this regard, you need to develop a solid strategy to ensure your company's data security and compliance with existing regulations, such as the EU General Data Protection Regulation (GDPR).
Do you have a process to collect feedback on the strategy?
The last question hints at two important points of your strategy that are often omitted, both related to feedback.
The first point refers to the systematic collection of feedback, which should be part of your general business strategy. Thus, feedback ought to be central to your digital transformation strategy too.4 By using recurring surveys, focus groups, and other techniques to collect feedback, your strategy bases itself on the best possible data. Next, you should analyse this feedback and incorporate it into your digital strategy.
The second point refers to building a process into your digital strategy. This will ensure regular evaluations of the strategy, and ways to redirect it, in case it becomes necessary. The fast pace of digitalisation will further increase the rate at which new technologies reach market maturity. That said, if your digital strategy is flexible enough, and adaptable to constant change, it will survive. And with it, your company's ability to remain agile.
Now that we have greater clarity on developing a digital transformation strategy, the next step is to put it into practice. Easier said than done.
It is crucial to define clear roles and identify the experts who will be involved in the implementation phase. Who makes the most important decisions? Many CEOs want to lead the digital transformation of their company themselves. It makes sense given all that is at stake and the ubiquity of digital in all departments. Yet, you should be aware that this takes considerable time out of your agenda. That is why it is worth considering delegating certain tasks to your Chief Digital Officer (CDO) or Chief Information Officer (CIO), in order to get the most out of your company's transformation.5
What is more, you should create the best conditions for teams to be successful. As a leader, you will be the one to ensure your teams do not stray from reaching their objectives. Thus, define (digital) corporate goals, and establish Objectives and Key Results (OKRs) for all teams. The "Objectives" should include larger and longer-term goals, while the "Key Results" should be broken down into quarterly (smart) goals. Regular measurements of Objectives and Key Results (OKRs) will help you track all actions taken towards reaching the objectives, and will help you make the necessary adjustments in order to optimise execution.6
This article has highlighted the main issues in developing digital strategies. It also put forward seven key questions to help you to review and optimise your digital strategy. Needless to say that the better the strategy, the easier it is to put it in place successfully. Therefore, remember to:
Finally, prepare yourself for a process that, owing to the ongoing technological and social changes, might not end soon. So, make the journey to digitalisation your goal.
1. 'What, Exactly, Is A Digital Strategy? It Depends Upon Who You Ask', Forbes, June 2016.
2. '6 Digital Strategies, and Why Some Work Better than Others', Harvard Business Review, July 2017.
3. 'Digital transformation strategy: 7 key pieces', The Enterprisers Project, August, 2019.
4. 'What is a digital transformation strategy?', Techradar.pro, November, 2019.
5. '6 Steps Framework to Implement Digital Transformation in Business', Newgenapps, December, 2017.
6. 'How to Develop a Digital Transformation Strategy: Step-by-Step Guide', Medium, September, 2018.