Digital transformation is a rethinking of how an organization uses technology, people and processes in pursuit of new business models and new revenue streams, driven by changes in customer expectations around products and services and new market growth opportunities.

With only 11% of 1,140 business executives surveyed by McKinsey believing their current business models will be economically viable through 2023, it’s easy to understand why 64% of those executives say their companies must build new digital businesses.

Ideally led by the CEO in partnership with CIOs, CHROs, and other senior leaders, digital transformation requires cross-functional collaboration in pairing business-focused philosophies with rapid application development models.

Digital disruption has taken on heightened importance during the COVID-19 pandemic as the adoption of digital technologies in organizations has sped up by three to seven years in as many months, with companies accelerating efforts for fear of being outflanked by competitors.

Contactless options in retailers are now becoming the norm, many IT leaders have re-prioritized strategic technology roadmaps to more quickly adopt cloud software for video collaboration as we move to a hybrid working model and implement machine learning to help organizations manage products efficiently through supply chains.

Digital transformation is also related to capturing the right business insights and making them actionable. There is a significant perceived value in the use of software – many organizations are utilizing mobile apps to help their customers have a better buying experience and are using those insights to improve understanding of high value customers and provide personalized push notifications that result in higher uplift in loyalty memberships and reward programs and/or feedback that improves research and development of new products and services.

A report from Capgemini Digital Transformation Institute and MIT Sloan School of Management highlights that many organizations are struggling to turn their investments into business successes. This might reflect the difficulty for organizations to adapt to the dizzying pace of change in technology innovation (e.g., artificial intelligence, internet of things, automation). Moreover, business model disruptions in many industries are challenging traditional value-chains. Have many organizations have now realized the magnitude of the challenge, coupled with rising expectations of markets, employees, and customers.

There are five simple steps organizations can take to improve their digital transformation journey:

1) Align objectives with business goals

Leaders who aim to enhance organizational performance through the use of digital technologies often have a specific tool in mind. “Our organization needs a machine learning strategy,” for example is something we often hear in boardrooms today. To be successful digital transformation should be guided by the broader business strategy. It is only after concrete strategic goals are established, that an organization can decide which digital tools to adopt

2) IT and business must co-create to solve problems

Leaders cannot demand innovative technology, they have to know what to ask for. There is no single technology that will deliver “speed” or “innovation” as such. The best combination of tools for a given organization will vary from one vision to another

3) Pick effective strategic partners that share common values 

Whether it’s a strategic consultancy, system integrator, or a boutique design shop, leaders need help fulfilling digital imperatives to reduce time to business value. It is also important to collect and leverage the feedback of insiders as well — employees who have intimate knowledge about what works and what doesn’t in their daily operations. Many new technologies fail to improve efficiency or productivity because intimate insider knowledge has been overlooked

4) Redesign business processes, products and/or services around customer outcomes. 

This could include using cloud software to accelerate change, embracing artificial intelligence to boost operational efficiency and providing fast responses to evolving customer expectations

In manufacturing, Porsche is relying on technology to transform their cars with automated driving. It has launched the “Car Connect” app which handles everything from navigation services to real-time traffic information, reading out news to selecting music. All these can be controlled by a touch on your smartphone without physically performing any task. Porsche has created a unique ID for all its customers and gets to know their experiences and feedback both online and in-store. This unique ID also helps in analyzing the product performance.

Disney has utilized an acquisition strategy to jumpstart its digital transformation – buying BAMTech to access streaming technology rather than building in house and spending $52.4billion to acquires assets from 21^st Century Fox to connect directly with consumers rather than through distributors and advertisers.

Our experience working with FTSE 250 organizations suggests that one very important way to know where and how to alter processes, products or services is through obtaining extensive and in-depth input from the customers.

When looking at the order-to-cash process at Castrol for example, customers requested greater transparency about the order approval process, the team helped the department to break down the process into phases and altered the customer portal so that customers could track the progress of their applications as they moved from one phase to the next. To shorten processing time, the department configured software to automatically identify stalled applications and enabled personalized help where required.

Interestingly while leaders often expect that the implementation of one single tool or app will enhance customer satisfaction on its own, experience suggests that the best way to maximize customer satisfaction is to make several smaller-scale changes to different tools at different points of the customer service journey. We are also seeing this play out in the finance arena where many banks and advisory firms are now delivering wealth and retirement advice to consumers using digital channels

5) Retrain employees around digital

Large firms in disrupted industries such as energy and finance are now reskilling staff in cloud, DevOps, CI/CD, and other modern technologies and practices to future-proof their organizations

Shell, TransUnion and TIAA are just a few examples of organizations utilizing software as a strategic asset and training their employees to have the same strategic abilities as other software companies.

While emerging tech and updated processes are crucial, having the right skills on staff is also essential to any digital transformation. The State of Digital Business Report says 84% of companies lack the talent necessary to achieve digital transformation which is why Software engineers, cloud computing specialists, digital product managers, DevOps, Data scientists, data architects, UX designers, digital trainers, writers, conversational brand strategists, forensic analysts, ethics compliance managers, and workplace technology managers have all become priorities in the war on talent for many organizations.

Digital Transformation is a technological change and a cultural one.

It’s evident that in this new world, technology is not a choice, but a fundamental business strategy that must be interwoven into every part of an organisation. Transformation can enable better collaboration within and between organisations, more personalised ways of customer engagement, higher employee innovation and productivity, and more accurate insights from data, all of which help a business grow and give it a better chance of thriving post-pandemic.

It must also be recognized that digital transformation is not just a technological change, but a cultural one as well because businesses must be agile while adopting new technologies and tools and bring their employees along on the journey.

When employees perceive that digital transformation could threaten their jobs, they may consciously or unconsciously resist change. It is critical for leaders to recognize those fears and to emphasize that the digital transformation process is an opportunity for employees to upgrade their expertise to suit the marketplace of the future, not to become redundant.

One way to achieve this is to ask employees what their contributions to the organization are and connect these strengths to elements of the digital transformation journey. This gives them control over how the digital transformation will play out and frame new technology as a way to help employees improve what they are doing well before. It is then perceived as a useful tool for professional development and career progression rather than a perceived threat.

Utilising these five steps effectively allows leaders to focus on changing mindsets and organizational culture and processes before deciding which digital tools to use and how to use them effectively. When you ask employees to envision the future of the organization and then utilize that knowledge to drive the technology, digital transformation is often a lot more successful.