To successfully innovate, companies need to set a clear vision for digital transformation efforts. Here's how to do it.
Digital transformation became a priority for many companies in 2017, with 47% of CEOs saying they face pressure from their board of directors to make progress in digital business, according to a recent Gartner survey. And that pressure seems to be paying off: 56% of CEOs said their digital efforts have already increased profits.
However, in a 2016 study, Leapfrog Marketing Institute found that two-thirds of CMOs and CIOs felt their CEOs lacked a strong commitment to digital transformation. And more than half of CIOs said they have no formal digital transformation plan, according to a recent CIO Jury survey. Common barriers to successful digital transformation efforts include an inability to experiment quickly, legacy system, and poor collaboration between IT and lines of business.
"Many companies miss the mark with digital transformation," said Forrester analyst Brendan Witcher. "They look to technology to create transformation, when in fact genuine, sustainable change has more to do with culture, organization, and evolving measurements of success than tech itself."
Enterprises often transform around the notion of "What should our company look like?", Witcher said. Instead, they need to build a vision around tangible value they can create within customers' experiences along the journey. Leading companies are not building business strategies that have a digital component—rather, they are digitizing every aspect of their business strategy, Witcher said.
"When the corporate vision is not clear, that impacts the speed of adoption of both senior management and middle management," said Gianni Giacomelli, senior vice president and business leader for digital solutions at Genpact. "People will not act just because technology is ready. There's a big component of corporate urgency that needs to be created from the corporate vision. It's really important."
Companies that lack a corporate vision are less effective in digital transformation efforts, according to past research from Genpact. "There's a very strong correlation," Giacomelli said.
Digital leaders take three distinct steps to formulate digital visions, according to consulting firm Capgemini:
1. Define a clear target
Executives need to clearly explain what needs to change, as well as what the resulting benefits for the company, employees, and customers will look like, to help employees visualize the future of the organization, according to Capgemini.
When it comes to determining where to start your digital efforts, Giacomelli recommends thinking big, but starting small so that you can scale quickly. Executives should analyze their portfolios to determine what actions can be taken, and score them against metrics that matter to the company, such as what is highly visible, or what is inexpensive and effective. Then, choose a few deliberate places to start, where you can product results and scale quickly, Giacomelli said.
Gartner analyst Hung LeHong recommends starting with the most important parts of your business, be it a process, product line, or customer segment.
2. Engage the organization
While executives should paint the broad picture of the future, they should leave the organization to fill in the details, Capgemini noted. Leaders can keep the vision specific enough to offer employees a clear direction, while still offering them flexibility to build upon it.
Businesses and customers must be ready to accept digital changes culturally, LeHong said. "The best way to change culture is to have somebody else go first," LeHong said. If one division of a company makes a change, and is successful, then other business units will follow. "Proof that it actually works is probably the strongest factor for culture," LeHong said. Leadership and talent follow close behind, he added.
SEE: How Sephora is leveraging AR and AI to transform retail and help customers buy cosmetics (free PDF) (TechRepublic cover story)
3. Evolve the vision over time
An organization's vision must evolve over time, as technology continues to advance and improve, Capgemini said. Companies need to be able to continue to build on this vision as well, Giacomelli said. "For many companies, the corporate vision ends up ossifying itself because of the inability to scale beyond the first successes," he added.
- The top 10 barriers to digital transformation (TechRepublic)
- Why CIOs must step up to lead digital transformation efforts (TechRepublic)
- Five winning plays for digital transformation (ZDNet)
- Advanced Business Skills Bundle (TechRepublic Academy)
- Ebook—IT leader's guide to achieving digital transformation (Tech Pro Research)