Four Steps to Digital Transformation

Digital transformation is a huge challenge for established traditional organisations. The very bedrock that they have built their successful businesses on is crumbling and the tried and tested processes that they have relied on for decades are no longer fit for purpose.

Add to the above the pace of change that this is happening and it represents a frightening scenario.  For example who in Ford two years ago would have thought that their biggest competitor is likely to be Google who have invested heavily in electric (and driverless) cars?

You only have to think of how Amazon, Alibaba, Netflix and Spotify have transformed markets – often at the expense of the establishment, and it’s not going to stop anytime soon with the emergence of big data, the cloud, social and mobile all converging at the same time.

What’s important for business to understand is that it doesn’t matter what sector you’re in, whether it’s a product or service or whether it’s B2C or B2B – digital transformation will impact your business. The buying model has changed forever and companies need to adapt if they are going to survive.

So with that scary prospect in mind, how do businesses turn digital transformation to their advantage? Here’s four necessary steps they need to take:

Step one – recognise the need for change

The first step will probably be the hardest – to recognise and accept the reality of digital transformation. It won’t be easy for many organisations, particularly those currently doing well, to see any cloud on their horizon (pun intended) or see the emergence of smaller more agile competitors, but those that do acknowledge the need for change must embrace it wholeheartedly. Digital transformation is not a lip service exercise.

Step two – company-wide communication and acceptance

Having accepted the need for change then it must be communicated and accepted throughout the business and across all divisions. Digital transformation is not just a sales and marketing challenge but one that impacts on every part of an organisation. And it needs to be communicated at all levels of the business too. Younger employees already run their daily lives in digitally transformed markets so can help with the change – but the vision must come from the top.

Step three – become agile and accept failure

To start the process then the next step is to discard nearly all the methods that you have managed business change before. Typically, traditional businesses will plan long and hard before, investing, testing and monitoring a new process or practice. Failure often marks the end of the project.  In the meantime a more agile competitor has arrived on the scene, stolen your thunder and more importantly market share too.

Companies need to accept failure as part of learning and they have to be prepared to experiment with ideas using fast track methodologies even outwith their organisation. One good example of this is LV (Liverpool Victoria insurance group) a traditional financial institution that recognised this need for change. The company understood that it was very difficult to test emerging technologies that were of interest to the board within the confines of the existing IT infrastructure. IT manage large complex projects with legacy systems and don’t have the capacity to explore new initiatives. The solution was to create a position called Fast Track (Innovation) Director whose responsibility is to do just what the title suggests. It has allowed LV to pilot emerging technologies much quicker and at lower cost and to assess whether they should be incorporated into their overall business strategy going forward.

Step four – acquire the right talent

Next a business that is committed to digital transformation has to look at whether it has the people with the skills needed to deliver the change required e.g. creative technologists, corporate entrepreneurs, software developers, data analysts etc. If not then they need to be recruited and that’s when you discover that they’re already in demand.  It’s not just your competitors that are after them either, it’s start-ups with VC backing and digital agencies too.

So attracting this talent is difficult which may possibly reveal an uncomfortable truth; would this type of person want to work with your company? In the same way that buying behaviour has changed, so has the recruitment market or talent acquisition as it is now sometimes referred. This type of person will probably have very different employment expectations from the previous generation and so companies need to recognise this.

In summary, digital transformation will mean business disruption, if they are going to accept the inevitable need for change. For many it will be painful but ultimately worth it.  For those that don’t recognise this need it may well be fatal. Competition today will still come from traditional rivals but increasingly more will come from emerging businesses where digital is part of their DNA.


First published on the Brightfire blog on 4th December 2014


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