The term “digital transformation” can span many definitions and encompass many different functions and disciplines. It can be highly technical and involve development, capex and CTO/IT leadership. Alternatively, it can be very commercial and address the need to find new revenue streams and new channels to market to deliver higher sales or enhanced margins. There is also always a very important, and often neglected, element which is the people and organisational implications – for some it can be liberating and exciting, for others terrifying and an end to their roles as they know them.
Before embarking on any “flavour” of digital transformation it is important to understand the drivers for any transformation. Perhaps the competitive environment has changed and necessitated a material redefinition of a business. Or maybe current or potential customers have changed their research and/or purchasing habits, and the business has to move or lose them. Is your technical architecture out of date and are costs spiralling out of control?
For many in senior management, the term is confusing and unclear as to what it will deliver and what elements of the business it will encompass. As such, I thought it would be helpful to create an aide-memoire for them so they can be in the best position to ask the right questions of their teams and partners who can deliver the “right” transformation for their business, not just a cookie cutter approach of work done previously.
Apologies if this all seems like common sense but I, and many colleagues, have always found first principles and ensuring there is a clear, common understanding and foundation from the top down is critical to any successful transformation.
QUESTION 1 – What problem(s) are you trying to solve?
Be clear on any of the drivers for a perceived change in the business, which can be commercial, technical or environmental. Any proposed transformation must be clear on how it is going to address those drivers specifically – if commercial, then be sure that any solution addresses not only the customer proposition (as this may change your current offering, which is a fundamental challenge to any business), but also the channel (how will you serve customer needs, how will they interact with you) and, critically, be sure there is clear evidence on the customers being there and you can market to them (over and above GDPR obligations!!). Furthermore, there needs to be clear modelling on the financial impact – there are costs of marketing online but there may be margin benefits if commission is removed, or other offline costs can be released.
If the challenge is technical, then ensure that any proposal can meet current or future needs of the customers. Ensure that you have the skill set in house or readily accessible through partners to service any new technical solution. This latter organisational point can be summed up by addressing the simple question “build or buy”. There will be pros and cons to each, but ensure you challenge your team on uncovering true costs of bringing in house vs ability to access skills externally (and what might happen to the costs of those resources going forward – if in high demand then expect them to rise). It may also be a question of the level of configurability (bespoke uniqueness you want or need for your solutions) versus a standard off the shelf solution being used to ‘get by’.
QUESTION 2 – Do we need to look at the wider culture of the organisation to implement any transformation?
This is a very difficult question and will likely need specialist input to ensure it is answered correctly. Of course, every senior executive likes to think their business is adaptable and has the culture to implement fundamental change. However, this is rarely the case unless the business is used to facing constant shocks or changes brought about by technology, customers or competitors. If one looks at pure play online businesses or telecoms businesses, then one can see evidence of constant flex and change of the organisation, skill sets, resourcing models etc– an organisation full of people who know they are joining a business or sector in constant flux are more inclined to be there “with their eyes wide open” and embrace the opportunities (many unforeseen) that this environment offers.
If fundamental changes are new to a sector or an organisation then the senior executives need to assess very carefully if they have the right skills to enact and implement them – this includes themselves, as well as the wider organisation! Too often people at all levels (especially the top) are comfortable in what they know and the skills and experience they have built up throughout their careers. If there is a shock which challenges this and undermines or devalues those skills it can be very destabilising and cause people to react in a number of ways – not all positive. Some may embrace change as a chance to learn new skills. Some may have the natural interpersonal and communication skills to take people on new, and often uncomfortable, journeys. Some may be in denial and fight any change clinging to the “old world order”. Some may be disruptive, destabilising and undermining the transformation. Some may just not engage, retrenching to their own division or function and not engaging to deliver the best outcome for the business or the customer.
This question is actually wider than purely implementation – it also addresses the fundamental ability to recognise and visualise the transformation that is required. If senior executives cannot do this, then the transformation is doomed. Of course, not everyone has to agree – but they do all have to engage positively with an open mind and be open to learn and change. It is often likely that specialist external support will be needed to help facilitate this.
QUESTION 3 – What functions are going to be affected?
At a simplistic level one can answer this and say “all”! In actual fact this probably is not over simplistic and is more likely to be accurate than not. Of course, core functions like technology, marketing, commercial, retailing, distribution etc will all be affected by change. However, support functions will also need to be considered too – for example you may need new legal counsel to address the new channels or propositioned changes you are likely to make.
Critically, you will need to consider new skills and functions. They could be very practical areas covering new technology and channel skills, including but not limited to, app development, website hosting, developers, online marketing, social media etc. However, on the ‘softer’ side it is highly likely that there will need to be organisational and interpersonal skills which need to be brought in or exploited. These skills will be needed to address the likely organisational changes which will take place, and the resultant ways of working which will be introduced. Examples such as agile development, test and learn, matrix management etc will need to be considered and either implemented or configured to the specific organisation and its culture. There will also be new tools to be exploited which can aid new collaborative work practices and dashboards to facilitate data driven decision making.
This last point touches on a fundamental consideration – the organisation and, more specifically, the hierarchy of the organisation. Is it the preserve of the senior executives to make all the decisions (HiPPOs) or is the business empowered, through data, to delegate decisions to the people closest to the action (for example, where to spend development capex, marketing channel spend etc)? Once again, this touches on the senior executives and their relationships to the proposed transformation and how it will affect them individually and collectively.
QUESTION 4 – How do we deliver this and track performance?
In my humble opinion, the most effective and successful implementation will be that done by a business to itself. Having change imposed on, or done to you by someone else will likely build resentment and cause a lack of engagement at all levels. However, in any case where the skills and experience required are not already in the business, it is worthwhile engaging specialist support to help. A business still has to trade and deliver financial performance through any transformation, and by definition any change needs to be conducted as quickly as possible otherwise it risks being out of date. As such, bringing in specialist skills to help manage the programme of change, introduce proven models, engage new skills and experience not currently in house, whilst working in close partnership with line management in the day to day business and resources/functions at all levels is the best model. I have seen partners embed resources into teams to showcase best practice and help the business adopt them. By doing this, it becomes part of day to day normal practice – when done in a culturally sensitive way, risks and rewards are shared, then implementation can be accelerated and embedded more effectively.
Tracking performance has to be considered before the transformation is started – be clear on the metrics/KPIs of success and ensure that they can be tracked in a way everyone signs up to and that they are reported on in a timely manner. These can be financial – sales via new channels, margin changes, marketing spend effectiveness, cost out or on the ‘softer’ side – employee engagement, customer feedback and satisfaction etc.
In summary, be assured that any digital transformation will not be easy, there will be a significant amount of conflict and resistance. However, if the rationale is clear and agreed, then any implementation and outcomes can be successfully managed, as long as the business (at all levels) is 100% behind the change and is providing the right support to help facilitate the change, ensuring close cultural fit and empathy.
It is NOT a one size fits all approach – every business has its own challenges but lessons and best practice can be learnt from those who have gone before and have the scars!!
This article is exclusive to The Business Transformation Network.
