Digital Transformation Strategy: The Boardroom Cheat Sheet

Senior management (and board members) are undoubtedly keeping a close eye on the global drive towards digital transformation. Many of our readers are in the middle of executing a promising digital transformation strategy. Yet, some companies are struggling with transformation success, while others have not even started on that road.

While digital transformation carries big benefits, it isn’t easy. This is why many organizations have not yet embarked on programs to lead this. Projects often fail. The reasons for failure are complex, but it can come down to getting the basic approach wrong.

That’s why, in this article, we go back to the basics. What exactly is digital transformation? And how can companies kick-start a digital transformation strategy – and achieve success?

Transformation vs. Change

Change is a constant – it happens every day, it is relatively easy to achieve, and it is usually incremental. Companies experience change year-in, year-out. New technology goes to market, companies adopt the benefits and subsequently experience some degree of positive change.

Transformation, on the other hand, is far more disruptive. Digital transformation creates a new future and moves past previous constraints. It does so through a comprehensive change in working practices and processes, in effect practicing enterprise agility.

The first step is understanding just how deep, disruptive, far-reaching real, and effective it is. Your digital transformation strategy must involve a root-and-branch review of your business and its operations.

Take a lighter touch, and the chances are that your strategy will have limited impact – leaving the benefits of success to your competitors.

The Broad Influence of Digital Transformation

Digital transformation affects almost every aspect of a business, so it’s important to have a measure of focus when starting on your strategy.

In other words, which aspects of your organization will the transformation affect the most? Or, where should you focus when developing your strategy? We think there are three key areas of impact:

• The business model. Digital transformation runs deep, impacting entire business models – and indeed the reason why a business exists. Countless companies will become obsolete if they don’t take a transformative approach that accounts for the power of digital. So, start by thinking about how technology improves, transforms, and indeed affects your business model.
• Operational transformation. Like the effects of change, technology has a greater impact on everyday business operations, from the smoother collaboration between employees to industrial transformation based on IoT and 5G. Operations are rendered more agile, more cost-effective, and safer thanks to new technology.
• Customer (and client) experience. Finally, readers will identify with the way B2C interactions have changed thanks to technology significantly. Digital transformation permanently modifies how customers, clients and stakeholders interact with your organization. It holds across the board, whether B2C, B2B, or government and non-profit.

So digital transformation reaches wide and deep and will change your organization at all levels. Why would any organization willingly go through that much change?

Digital Transformation Benefits

Companies are in the pursuit of profit – not technological and social experiments. That said, digital transformation delivers real benefits, which is why organizations are keen to implement it. Here’s why:

• Lower cost base. Less paperwork, more efficient operations, and lower staffing costs are all up for grabs. Digital cuts out manual processes, lifting your company to a higher level of efficiency. For example, switching to digital meeting solutions significantly reduces paper cost and the human effort required to manage meetings.
• Revenue growth. While digital reduces your costs, it also grows your revenue. Digital tools can power your marketing activities with data-driven insights to grow sales. Transformation can also deliver new products and new markets.
• Greater customer retention. Customers prefer the smooth, fuss-free processes that digital brings. Digital also delivers more customized products and services, contributing to greater customer satisfaction in the long run.
• Disruption. Digital has the potential to deliver a positive course change for your organization. In fact, it could even be an entirely new business model. You can rely on digital transformation to deliver faster speed to the market with higher innovation.
• Increased business resilience. Digital transformation is changing markets around the globe. Companies must embrace digital to keep their competitive position and to ward off challengers. Furthermore, digital delivers a more agile, more adaptable organization.

While going digital has its costs, the benefits are clear. But what is the best way to get started? How can companies get a degree of momentum, given the scale and complexities involved?

Kick-Starting Transformation and Building Momentum

Digital transformation is a long-run project – more a marathon than a sprint. Yet starting transformation with a sprint can help build momentum for the long haul. We suggest three stages to a digital transformation strategy:

1. Quick wins. See how and where your company can use technology to secure dramatic, effective changes: a new product or a dramatically improved process. Quick wins can power and motivate bigger, deeper changes and provide stamina when the digital transformation gets tough.
2. Scale and deepen initial projects. Identified successful wins? It’s time to start building a digital transformation team – and a framework. Broaden transformation efforts to go beyond specific projects, encompassing entire business functions.
3. Sustain change. Technology is always changing, and for better or worse, this means that transformation never stops. Develop a sustainable process that ensures ongoing transformation so that your organization’s digital path never stalls.

Steady and considered progress is the best approach. It will put your transformation program on a sustainable course.

A Best Practice Wrap-Up

We said at the outset that digital transformation often fails despite the best of intentions. However, it’s a well-beaten path taken by many others. Here are some top tips:

• Lead from the front. Digital transformation will never fully succeed if C-level leadership and boards do not take the lead. It’s not a job for the IT team – it is a root and branch organizational overhaul. Senior staff must actively lead and provide the vision for success.
• Staff engagement is key. It would be best if you motivate staff by outlining positive outcomes with re-assurances around roles and retention. Ongoing staff communication is a must alongside the appointment of transformation champions.
• Consider the customer. Digital may deliver cost benefits, but what does it mean for your customers? Factor in the entire customer journey and make sure it is wrinkle-free.
• Deploy cutting-edge tech. There’s little point in kicking off a digital strategy based on technology in its sunset days. Ensure your IT partner is ready with innovative technology solutions like board portals that reflect the future, not the past.
• Synchronize between IT and everyone else. Technical features are what powers your digital transformation, but usability is what really matters at the end of the day. Test during the roll-out of new technology and incorporate feedback to keep the usability aspects of your strategy on track.

We can go on, but in truth, successful digital transformation is as much about taking the right actions and avoiding missteps – as it is about maintaining a mindset.

Culture is Critical for Transformation Success

At the start of this article, we pointed to the difference between transformation and change. Leaders must understand the difference when embarking on transformation – or all they’ll end up with is change.

Transformation, therefore, is a mindset. This transformational mindset must permeate your organization, from the top right down to the staff level. We argue that successful transformation depends in large part on the right mindset – and a culture change.

Because digital transformation is a long-run process, companies must instill a culture that accommodates and supports digital change. This runs alongside our previous point of staff engagement: digital transformation runs so deep that, quite frankly, everyone must be on board – all the time.

Here, boards play an important role. The powerful oversight and orchestration capabilities of boards can drive the culture that makes digital transformation successful. A pro-active board about the project will act as a cheerleader – driving the culture that transformation success requires.

And there’s no doubt that such long-haul projects will require cheerleading to sustain momentum and motivation – and success.

—

To learn more about what strategy to pursue when undergoing digitalization, read our article on digital transformation in the boardroom – it’s a powerful illustration of how digital has the capability to deliver empowering change for boards of organizations.