By Jen Sweeney
To say that much has been written about digital transformation over the past five years would be an understatement. Digital transformation is everywhere—it has been covered extensively by both mainstream and industry publications, and it has been researched exhaustively by Forrester, MIT Sloan Management Review, Gartner and other firms. The primary message in much of what is written is that, in order for businesses to compete, digital transformation is a requirement, not an option. (In a 2014 report, Gartner predicted that a lack of digital business competence will cause 25 percent of businesses to lose competitive ranking by 2017.)
And while business leaders understand that digital transformation is a necessity, many still aren’t quite sure what it is or how to make it happen. This lack of clarity could be attributed to the fact that digital transformation is not a clearly defined process—such as a technology migration, with steps to follow and a timeline to adhere to—but a broad strategy that can be executed a number of ways over the course of months or even years.
The good news for business leaders is that best practices are emerging, and researchers are paying attention.
TAKING RISKS BECOMES THE CULTURAL NORM: BUSINESSES WILL NEED TO ALLOW FOR FAILURES AND EMBRACE THEM AS A PART OF A SUCCESSFUL STRATEGY. EMPLOYEES ARE OFTEN JUST AS FEARFUL OF TAKING RISKS, AND EMPLOYERS SHOULD ENCOURAGE EMPLOYEES TO BE BOLDER.
A report published this week by Deloitte and MIT Sloan Management Review (titled “Strategy, Not Technology, Drives Digital Transformation”) offers a number of significant findings, including:
- Digital strategy drives digital maturity: As the title of the report indicates, strategy is key. A clearly defined digital strategy is the backbone of transformation.
- The power of a digital transformation strategy lies in its scope and objectives: Organizations should develop approaches with an eye on transforming the business, rather than operational strategies that are focused on individual technologies.
- Maturing digital organizations build skills to realize the strategy: Provide employees with necessary skills to support the digital strategy.
- Employees want to work for digital leaders: Workers will seek out the best digital opportunities, and businesses will have to continually adapt to retain and attract them.
- Taking risks becomes the cultural norm: Businesses will need to allow for failures and embrace them as a part of a successful strategy. Employees are often just as fearful of taking risks, and employers should encourage employees to be bolder.
- The digital agenda is led from the top: Digitally mature organizations are more likely to have a single person or a group leading transformation efforts. Leaders are digitally fluent, which doesn’t require technological expertise but rather the ability to articulate the value of digital technologies to the company’s future.
In addition, authors of the report make note of three key digital business trends: greater integration between online and offline experiences, data that’s more tightly infused into processes, and business models reaching their expiration date more quickly.
“Whatever the end state of digital transformation turns out to be, reaching it is not simply about technology,” the report states. “Our research found a truism that is often lost in the face of technology hype: Digital maturity is the product of strategy, culture and leadership.”
The report’s authors conclude that, for business leaders to determine whether their organizations are poised to compete in a digital future, they should ask themselves the following questions:
- Does our organization have a digital strategy that goes beyond implementing technologies?
- Does our company culture foster digital initiatives?
- Is our organization confident in its leadership’s digital fluency?
If business leaders answer anything other than “yes,” they had better get to work.