A common conundrum: you’ve run a successful business for many years, but over time, new technologies and trends have enticed your loyal customers to look at other products and services. Digital transformation is hard to escape. To remain relevant and competitive you must take a critical look at how you are operating and delivering value to your customers.
The retail industry has seen significant adoption of online shopping. 76% of Americans use the internet today compared to 40% in the year 2000. This shift has caused traditional brick and mortar retailers, such as Best Buy, to evolve their business models. In fact, Best Buy has been able to post a 7% increase in year-over-year revenues, partly as a result of closing its 257 small format mobile stores and offering price matching with lower-cost online retailers (The Week). Let’s take a look at how organizations are undergoing successful digital transformation campaigns.
Avoid Pitfalls
With the rate at which technology has evolved and adopted by consumers, change is certain and constant. However, this change doesn’t have to be all at once; it can be taken in different strides and managed differently based on the organizational impact of the change. A study published by SAP in 2017 cited that 84% of companies regarded digital transformation as critical, however only 3% had completed a company-wide effort (Forbes). Any sort of change is difficult, however, when considering digital transformation, a holistic approach must be taken that includes not only technology but the organization as a whole.
Silos – Often, we see departments that are at the front line of change and have jumped to establish capabilities or departmental solutions. While these solutions seem to solve the immediate problem, they fail to connect the dots across the organization. With this approach, any departmental solutions that are not harmonized and aligned to strategic outcomes can result in a band-aid approach, and in turn, cause internal competition over priorities and resources. Ultimately, this can slow the pace of transformation and the ability to successfully compete in the market. To avoid this battle, a digital transformation must be led from the top at the executive level and must communicate clear strategy, direction, and priorities for the organization to react quickly and effectively (HBR).
Technology – Digital Transformation is enabled through technology and would not exist without the rapid changes in consumer behavior. Organizations that take a technology first approach may lead themselves down a path that may not solve the ultimate problem (Forbes). Therefore, a customer-centric approach to problem-solving should be leveraged to understand the problem or opportunity, define the approach, and then identify the technology or solution to move forward with. Ultimately, the golden rule is to ensure the transformation’s strategy aligns to the organization’s overall mission and strategy.
Skills Gap – Organizations that invest in developing their people are four times more likely to establish the appropriate skills in their leadership to drive effective change (G.C. Kane, D. Palmer, A.N. Phillips, D. Kiron, and N. Buckley, “Coming of Age Digitally” MIT Sloan Management Review and Deloitte Insights, June 2018). However, when we consider changing the operations and the way people are used to doing their jobs, this requires focus and investment in the right areas. The same report states that 90% of organizations surveyed said they needed to update their skills at least yearly, but only 34% felt their skills development efforts were effective. With the pace at which technology is evolving and impacting the way organizations are doing business, new and innovative approaches must be considered to provide training and work environments that foster this change and ability to learn. Many organizations have not only turned to formal training but also set up virtual or dedicated teams to experiment with new technology or collaborative groups to determine alternative business models.
At one client we have seen a significant investment over the last year to form a brand-new team, bringing together various areas of the business and IT. The team has been tasked to collaborate and come up with innovative ways to help solve problems for the business portfolio. To help facilitate this effort, a new dedicated area was built for the team that employs the use of open workspaces, writable walls and cutting-edge technology that is impacting the industry. To ensure this team is effective, co-locating with one another amongst technology was only a single measure. Ensuring alignment to the business objectives has been instrumental in ensuring that the team has a mindset where they are exploring technology and experimenting with ways it can be used to directly combat pertinent challenges. This team has been able to accelerate the time to solution and evolve the capabilities to bring new insights to the business. This is just one example of how organizations can work to become effective by aligning the right resources.
In 2018 alone, worldwide spending on digital transformation efforts will surpass $1 trillion, which is an increase of 16.8% from last year. As you look to the next year, where significant investments will continue to be made to support digital transformation, ensure that you are taking a holistic approach by leveraging organizational change management along with determining ways to utilize new and innovative technologies.
