Digital Transformation

Digital Transformation

A blog by Raj Mitra

March 10, 2019

We hear about Digital transformation in the news and how it is one of every company’s objectives but why are companies struggling?

According to Korn Ferry, “Companies are making meaningful investments and commitments to “going digital”, but they still feel like they’re struggling. Despite the fact that 96% of organizations see digital transformation as critical or important, 75% of them are “not very confident” in their ability to execute a digital transformation - and 84% of executives believe that their organizations do not have the skills and capabilities to deliver on their digital ambition”. This means just 15% have the necessary skills and resources to execute on a digital transformation.

This view is also shared by McKinsey and Company, the Digital 20/20 takes McKinsey’s most effective diagnostic assessments on digital and analytics and integrates them into one single solution, giving C-level executives a holistic view of their company’s digital opportunity. Based on McKinsey and Company’s work with more than 700 companies over the last three years, it shows that while the many of the companies have invested significantly in digital and analytics initiatives few have achieved the hoped-for ROI. “Often times, they approach their transformation with little understanding of which areas to focus on. Only 15 percent of companies have fully integrated analytics into their business processes, and many CEOs are struggling to deliver on a digital strategy”.

According to McKinsey partner Tanguy Caitlin, more than 100-plus thought leaders across the top digital companies worldwide—including digital natives Amazon, eBay, and Google, as well as legacy companies, were interviewed to learn what their magic formula was. “High-performing digital winners are orchestrating their strategy across the entire organization,” “They’re not just looking at one department but rather ensuring there’s integration across several critical ones, like strategy, analytics, technology, marketing, organization, and operations.” The significance of this is that a scattered approach perhaps one in IT or operations is unlikely to provide any meaningful benefit. The digital journey needs to be integrated across all departments and organizations, a complete end-to-end picture.

So fundamentally where does a company start:

1) Understanding the long-term strategy for the business, that is a deep understanding of the where the value is migrating. Where to reduce expenses? Where will growth come from? How does International subsidiaries and markets fit into the bigger picture? Here we set the vision of what a successful digital transformation may look like. This requires a thorough strategic understanding on where the market is going, the threat of disruptive forces and technologies, the competitive landscape and changing customer attitudes and behaviors.

2) Designing a digital transformation strategy that targets “customer journeys”. A good place to start is to transform the “core”, the critical processes along with the people and adapting related digital technologies. After the “core” is digitized the company may look at additional areas where growth may come from. Aligning key stakeholders to the strategy becomes paramount. The CEO needs to be instrumental in getting the board of director approval as well as aligning the senior executive management of the company. With that done, the leaders need to get the employees on-board, this may be an effort in change management. Change is difficult for many, but leaders must drive change.

3) Assigning leaders and resources to lead the digital journey making sure every function is represented. If there is no executive management and board of director sponsorship, then the transformation is doomed to fail. In this step the company needs to understand what skills and technologies are needed. Based on a thorough understanding of the digital ecosystems, the company needs to identify the key partners, including those service firms that may actually accelerate the transformation. Once these aspects are in place it becomes a project management effort that needs to be executed. At every step the company needs to understand the risks and take steps to minimize risk.

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