With technologies like big data, artificial intelligence, cloud, and mobile disrupting the marketplace, enterprises are facing a substantial threat from start-ups and modern IT solutions. For instance, Blockchain has created a threat to the entire centralized banking system. Chatbots will automate the work of the consumer helpdesk. The use of sensor technologies in homes has enabled enhanced security thus, posing a threat to the traditional security devices (as well as their manufacturers) and there are many more similar examples. To keep up with the changing technological scenarios companies need to go change their structure to support agility. This is called a digital transformation.
“Digital transformation is the use of new-age technologies over traditional business processes to build a scalable process of innovation, optimization, and growth.”
This requires a company to shift from age-old management practices and activities towards more dynamic setups. Thus, digital transformation usually involves a change in a company’s culture and hierarchy. It typically covers the following aspects of the business:
Scaling digital transformation is a pressing concern but, to realize this potential, businesses need to enable themselves to transform. They must establish new metrics, realign organizational structures, rearchitect technology platforms and develop greater digital capabilities.
How do we do this?
Digital transformation is not just about changing processes and technology; it also involves a shift in organizational culture. How does ‘design thinking’ help to tackle this?
To create such a culture, it is important to live it every day, demonstrating that it is part of the daily work and not just lip service to appear innovative.
1. Establish the New Business Process:
Digital transformation begins with redefining the existing business process. This could be entire operations or something very minute like optimizing the customer feedback mechanism. Being the CIO (or CxO) it can be tough to change a process that has been working well for a business for years. This is the fundamental problem with the digital transformation that requires you to take calculated risks. You will need to analyse the markets and internal company data to find out the processes that have a scope for optimization.
2. Identify Key Technologies:
While many recent technologies are seeing rapid growth and adoption this doesn’t mean that you will need to implement all of them in your business. The choice of technology depends upon the process you are trying to optimize. Technology is just a means to support your idea. People often get overwhelmed with modern technologies and try to implement all of them in their current business processes. The focus should be on finding the technologies that rightly fit your business objectives and implement them effectively.
3. Decipher the Paradigm of Innovation:
When you start with the digital transformation it is highly unlikely to find the right fit in the first attempt. Even if you do find a good fit you will need a mechanism to implement innovations easily in future. This requires the company to shift from traditional managerial hierarchy to engage more with employees on the lower end of the chain. It also means to redefine the culture to create a dynamic environment where opinions and changes are embraced rather than suppressed.
4. Construct a Talent Pool:
To implement innovative technologies, you will need skilled and dynamic people who are willing to shape the ideas into an actionable plan. Without skilled IT experts, it will be difficult to implement innovative technologies. Alternatively, you can outsource the enablement work to IT companies who are skilled in the technology you are trying to work on. The benefit of this approach is that you will save the recruitment and training expenses and will be able to pivot from one strategy to another. Even when you do outsource the project you will need an in-house team to communicate changes and implement them within the organization. In this case, the need to hire new people depends on the abilities of your existing workforce.
5. Define a Roadmap:
Now that you know what you need to do, it is time to define the roadmap for execution. The entire implementation should be done in phases. Preferably you can test your hypothesis on a small scale before going all out with your plan. Each phase of execution should end with a risk-mitigating milestone i.e. an achievement which shows the risk of execution being reduced. Securing approval from the top management, finalizing the vendors, etc. are good examples of risk mitigating milestones.
6. Determine your KPIs:
A plan is incomplete without a goal. To measure the effectiveness of your plan you will need to set up some key performance indicators (KPIs). These metrics will demonstrate the effectiveness of the plan and will also guide future decision making. You will need to set up smart goals that have a clear achievable figure along with a timeline. These goals will guide and optimize the entire execution and ensure that the team does not lose focus.
Now we know that this is not an easy journey. It takes guts, perseverance, change management, and the full commitment of the executive team and board. But it is folly for any company to plan a future that doesn’t include digital transformation. Digital transformation is no longer an option for companies. Digital platform companies are taking over, and technology and customer focus are central to what and who they are. The digital elite is winning and winning big. The only question is, are your board and your management team ready to do what it takes?