Digital transformation is the number one concern of directors and business executives globally in 2019, according to research conducted by the Enterprise Risk Management Initiative at North Carolina State University and the management consulting firm Protiviti Inc. Just a year ago, the researchers said, it was tenth on the list.
The huge leap within a year reflects the speed and magnitude of digitisation as it affects every organisation, challenging leaders to show they have the agility to keep pace with digital disruption.
Transformation is a challenge. According to a report by McKinsey, 70% of digital transformation initiatives fail. An article in Harvard Business Review stated that of the US$1.3 trillion that was spent on digital transformation in 2018, “it was estimated that $900 billion went to waste”.
So, what does it take for digital transformations to succeed?
There is no one-size-fits-all solution that applies to every organisation. However, based on what I’ve observed from changing business patterns and my own experiences, here are two questions that might help leaders to start thinking in the right direction.
Question one: What do your customers think about you?
The best customer experiences will come from the way you respond to the ideas and comments of your actual customers. The process of ideation should be outside in, and not inside out.
Many organisations start with technology. As soon as they introduce a new app or tool for customers to play with, they expect customer satisfaction to improve by leaps and bounds.
But eventually, they get disappointed when the technology doesn’t deliver the impact it promised, which can lead to an internal blame game and low morale in the organisation.
The source of the problem isn’t that someone proposed a mediocre idea. When your people don’t have any authentic information and real-time statistics from real customers, and they are put in a room to brainstorm, chances are they will come up with some fancy ideas just for the sake of it. This will just create confusion and misalignment of organisational values and business strategy.
The problem is the starting point. Instead of starting with technology, start with your customers. Empathise with them. Heed the positive comments as well as the negative ones. Negative comments will help you identify possible flaws in your products and services, and maybe in your overall organisation.
Once you have honest feedback, value it. Work and make changes wherever possible. The only way to know where to change and how to change is through detailed input from your customers.
Question Two: What work culture does your organisation promote?
Some startups have a work culture that exemplifies agility in decision making, fast prototyping of products and solutions with no hierarchy. What roles do these qualities and traits play in transformation?
Digital transformation is a mixture of experimentation, ambiguity and resilience. There is no guaranteed outcome for experiments. Most initiatives start with a sense of optimism and positivity backed up with grit.
Transformation is not about one big storm sweeping every old tradition away in one blow. It is mostly a long journey of small changes that happen every single day in bits and pieces. That is why consistency and willingness to repeat and iterate is so important in transformation.
Some leaders want to change everything about the organisation from day one of their transformational journeys. That only puts unnecessary stress on your people and invites frustration for you.
Hierarchy can be a stumbling block against each of the small changes that you ultimately want to add up to a big change. If you want to see sustainable transformation with measurable impact, you need to ensure that hierarchy doesn’t quash the creativity and efforts of your people.
Monique Shivanandan, the Group Chief Information Officer of Chubb Group of Insurance Companies, said: “The biggest part of our digital transformation is changing the way we think.”
Changing technology is the easy part of digital transformation. Changing people is, however, the real challenge, and it all starts with how we think: What do you think about your people and your customers? And what do they think about you and your organisation?