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Digital transformation is seemingly on everyone’s agenda. Recent research by IDG reveals that nearly 90% of organizations plan to adopt digital-first business strategies. But only 44%of those organizations have actually executed their plans. From my perspective, this disconnect is the result of a general lack of understanding of what digital transformation actually entails and what is required to be successful.
Digital transformation is much more than a revamped website, mobile app and social strategy. Digital transformation is the process of transforming an organization to adapt to constant, rapid changes brought by advancements in technology and reduced barriers to enter an industry (i.e., disruption). It’s no secret that the modern marketplace is evolving quicker than ever before, and C-suite leaders globally are finding themselves on a hamster wheel of catch-up with technology. Digital transformation is no longer a buzzword; it’s a survival necessity.
We all agree it is important, but what makes digital transformation so difficult to begin, let along achieve?
Research by McKinsey found that “culture is the most significant self-reported barrier to digital effectiveness.” I believe this shows the right mindset and culture can be the key to success. A 2018 study of 40 organizations undergoing digital transformations found that companies that focused on culture reported financial performances that were five times greater than companies that didn’t. This rings true with my personal experience as well. The principal importance of culture has come up time and time again in my engagements with clients, which range from startups to multinational Fortune 100 companies.
The complicated and people-oriented nature of culture, however, makes it difficult to change. As one Forbes article pointed out, a company’s culture contributes to the business’s values and adds to your brand’s identity.
One way to think about a culture change is as a mindset shift, a collective change in thinking among a group of people. When leading digital transformation, a corporate mindset shift must occur in order to overcome common barriers, such as silos and hierarchies, that I’ve seen can lead to lack of collaboration, institutionalized risk aversion and neglected customer needs in favor of product goals and metrics.
Executive leaders have a significant opportunity to influence the success of digital transformation simply by leading and modeling a mindset shift. Below are five specific ways I’ve found can help establish a mindset of digital transformation:
1. Develop a relentless customer focus. Customer experience should be at the heart of all strategy and decisions. Take Amazon’s success into consideration. According to Jeff Bezos, “The No. 1 thing that has made us successful by far is obsessive, compulsive focus on the customer as opposed to obsession over the competitor.”
2. Enable rapid progress. Create processes that allow your organization to move at the speed of digital. Agile processes (especially if they are extended outside of information technology) can yield dramatically improved efficiency and innovation.
3. Maintain a bias for action. Reward boldness, and encourage team members to test and learn. Focus on creating MVPs versus seeking perfection, and learn quickly from data and iteration. I believe design thinking — a problem-solving process based on a set of skills — is a great example of this type of approach to product development.
4. Establish real-time and proactive measurements. Implement a measurement cadence that enables rapid insights and proactive decision making. Work to create a unified, 360-degree customer view that is integrated across all channels. In my experience, this will allow for more actionable data and faster decision making with the customer at the center.
5. Continually reinforce the ‘why.’ Successful digital change drives the business. Set up metrics that reinforce this reality. Report on the quarterly impact of your digital transformation (not just your web channel). Align resources to enable big bets on key digital value elements, such as customer experience, new partnerships and innovation.
I believe the future lies at the intersection of physical and digital experiences and commerce. In order to succeed, we must enter a new era of customer-centricity, collaboration, speed and agility. This type of success requires a significant mindset shift for many traditional organizations. But the investment in culture is still well worth the effort if you aim for success in digital transformation.
May 6, 2019 at 08:18AM
Forbes – Entrepreneurs