The challenges that come with digital transformation
The digital tsunami is moving at a rapid clip, encompassing all aspects of business and society. Understanding this dynamic and making the necessary changes is the context for digital transformation. The starting point is to assess your businesses’ state of digital preparedness based not just on technology, but on a comprehensive picture of digital integration and engagement throughout the business and its environs. This transformation poses five key challenges to businesses of all sizes: leadership, customer experience, employee and supplier engagement, increased competition and a talent war.
‘Digital transformation’ is a term that has been used to describe anything from creating a responsive mobile website to developing a social media strategy, but in reality the term involves much more than just a few end products. As technology is infusing and permeating every part of the business today, we argue that any ‘digital transformation’ cannot be viewed in a silo. Marketing Week columnist Mark Ritson rightly states, “Digital is indeed everywhere, it’s impossible to find an Archimedean point where digital ends and so-called ‘traditional’ channels begin”. Truthfully, today digital is at the heart of every business and it’s a reflection of the fact that the environment and customer behaviour is changing. The digital age has accelerated that change and therefore businesses need to be fast at changing themselves to meet that customer behaviour.
Business leaders across all sectors are grappling with the strategic implications of these transformations for their organizations and it’s ecosystem. In this context, there are a number of challenges that need to be understood.
- How does the change in digital business models impact technology and people?
- How do we adjust the business plan and marketing plan to support the transformation (and vice versa)?
- How does it impact the brand and existing customers?
- Are we hiring the right talent to support our growth, or will our current employees hold us back?
Until recently, organizations dealt with these challenges by adding chief digital officers to drive the transition to digital strategies and tools. Ultimately, this tactic will be inadequate at every level and a disappointment to the business.
Digital transformation has to be led by the C-suite
Faced with technological disruptions and winner-takes-all economics, leaders now understand that a successful digital transformation demands a culture guided by themselves to promote innovation, encourage risk taking and empower employees at all levels of the company. Becoming a digital enterprise requires far more profound changes than merely investing in the latest digital technologies and the C-suite team are searching for new business models, fundamentally rethinking their operating models, revamping how they attract and foster digital talent, and considering afresh how they measure the success of their business. As analog operations are converted into higher-performing digital businesses through the adoption of new technologies, the role of the chief digital officer is giving way to C-level leaders with digital skills. CMOs must now be proficient in supporting digital brands and using powerful new tools and cloud platforms. CIOs must hire, lead and support teams that are agile enough to support emerging business models. Even human resource leaders must adopt their skills to attract and hire digital artisans who don’t simply support existing architectures, but can also innovate with newly developed tools and practices. The days of business leaders leaving digital strategy to the CDO are over.
But, change is hard
But not all organizations are ready to make their own digital transformation. It’s human nature to avoid change, especially disruptions that are painful for those unable to adapt. Some may argue, “Why fix something that’s not broken?”. Smaller organizations may also object to moving forward with a digital transformation due to the cost. A real transformation can require a significant investment in everything from new customer interfaces and experiences to back-end systems that support functions such as finance or sales. So they hold back, allowing competitors to take advantage of the opportunities, hoping (perhaps in vain) that they can catch up when the technology is more affordable. Another challenge arises from inflexible organizational cultures that depend on outdated technologies simply because, “That’s how we’ve always done things.” These companies are handcuffed by old systems and policies that keep employees from doing their best. Tomorrow’s leaders must address these challenges head-on, adopting strategies that go well beyond compliance to focus instead on innovation. In time, tech laggards will see both customers and employees opt for better opportunities to interact with fast-moving competitors that are disrupting older, stable businesses and creating innovative customer experiences. Even disruptive companies such as Netflix and Facebook are constantly on the lookout for new ways to update and disrupt their own businesses. They know that eventually someone will do it — why not make sure that person is in-house when they can create the next big thing so the organization will benefit?
Re-skilling people is an important part of this transformation
In the digital economy, two factors have been particularly influential. First, transparency has become the new normal, with job applicants now having access to a wealth of inside information and peer reviews. Second, the competition for talent has intensified, with the digital skills gap widening. It’s not just technology! Successful transformation requires both the tools and the talent to make it happen. The people running your transformation are as critical as the strategies and technology that make it possible. And while many organizations invest in training for their staff, the rate of technological change is accelerating so quickly that much of the training is obsolete as soon as it’s delivered. Effective digital transformations require continual investment in people and training that, until recently, only a few organizations could afford.
What is your transformation mantra?
Embracing and implementing digital transformation is the means and not the end. Leaders today are changing their organizations from slow-moving analog systems into innovative, agile companies equipped to compete well into the future. And the changes they enable over the next two years will no doubt reinforce the growing gap between fast-moving, innovative companies and the digital laggards in danger of falling behind forever.