Saturday, May 18, 2024

Digital Transformation Imperatives

The COVID-19 global pandemic was a dramatic accelerant of the application of technology at work. Throughout the world, within a matter of days, the vast majority of all organizations were grappling with immediate pressing existential concerns where survival was mission number one priority. This required them to rethink everything—their purpose, strategy, business model, operating model, employee policies, customers, and how technology factored into the equation across all these dimensions. Whatever the answers to these questions, technology became a major enabler transformation, and the ability to quickly learn and adapt to this new normal was essential to survival.

Technology continues to evolve at breakneck speed, impacting the changing world of work in a myriad of ways. Add to this vibrant ferment of technological evolution a variety of powerful other forces, such as hyper-competitive responses, blurring industry boundaries, residual pandemic effects, volatile geopolitical dynamics, and perpetually shifting customer expectations and the picture becomes highly muddled. To make sense of this bewildering array of transformative forces and fast-evolving new technologies three fundamentals are clear:

First, turbulence is a fact of organizational life. The circumstances of an organization’s next major crisis vary, but its appearance is inevitable. Previous Brightline® research surveyed more than 1,200 senior global leaders and executives about management decisions and organizational strengths during and after crisis events (Brightline®, 2018). A total of 68% of our respondents agreed with the inevitability of their organizations facing a crisis in the future. When facing a crisis, organizations must make a deliberate break from their traditional ways of working. Operating in “business-as-usual” mode, prevents organizations from isolating their in-crisis “business unusual” context, identifying new learnings and applying them to post-crisis transformation efforts.

Second, successful organizations embrace and maximize technology. Brightline® research shows that organizations that are successful at implementing strategy rank using new technologies as their number one competitive advantage. They see technological breakthroughs, such as AI, digital ecosystems, business platforms, metaverse environments and cloud computing, as critical to their success. Yet, technology falls to the number three priority for less successful organizations (Brightline®, 2020). In the next three years, organizations expect emerging technologies to be a top driver of transformation (Brightline®, 2022).

Third, organizations need to better lead and manage the transformation journey. According to Brightline® research, 70% of enterprise transformation projects fail to meet business leaders’ expectations (Brightline®, 2022). The depth, scope, and complexity of enterprise transformations reveal why this failure rate is so high. Their primary objectives continuously evolve. They are inherently multifaceted. They are simultaneously far-reaching in vision and pragmatic in execution. They are flexible and schedule-driven, value-focused, and explorative. They affect the activities of a single worker in a single department and the operations of entire business ecosystems.

Dynamic, complex, and divergent forces require continuous alignment of internal and external perspectives. Some key elements to success include strong and dedicated leadership, powering people, and focus on the customer. Without these, enterprise transformations are prone to failure.

Creating the Role of the CTO

According Brightline® research, the role of chief transformation officer (CTO) is increasingly recognized as an important element in achieving digital transformation (Brightline®, 2022). This individual must be able to understand and respect diverse stakeholder points of view and yet align all parties in pursuit of greater goals. To do so, the CTO must also be able to build trust in the process, so that stakeholders engage as owners and work to collaboratively drive change, rather than feeling that change is happening to them. Ultimately, the transformation leader must be able to mobilize the power that lies at the intersection of technology and human creativity, complexity, passion, and energy to build a permanent, company-wide changing capability.

Powering the People

The crucial realization must be that digital transformation—now more than ever—requires leaders to put the people first. At the end of the day, technology does not change organizations, people do. According to Brightline® research, organizations that focus on developing internal talent are more likely to transform faster and achieve greater results (Brightline®, 2020). If the notion of digital transformation and people is true, organizations need to harness the discretionary effort of its people to maximize the benefits of technology. Paradoxically, the more complex the technology solution, the more likely it is that external resources, rather than internal, will best bring sought-after capabilities and know-how. However, while external sourcing is the quickest way to a digitally enabled organization, changes in mindset, leadership, and general upskilling are required to sustain the change efforts.

Focusing on the Customers

Together with the people in the organization, the organization’s customers are a leading force in any given digital transformation. A senior vice president in the transformation and finance department in a large telecommunications company told us: “[Transformation value] starts from the customer’s perspective. What are the pain points for the customer? How do they want to do business with [us]? You start there and say, ‘how do we go fix these things?’ Usually, if you can go fix some of those things it’s because of inefficient processes, old ways of doing things. If you fundamentally improve that customer experience, there’s value that comes out the back side of it, whether it’s retaining your customers longer, selling more to them, or actually making your teams more productive and more efficient” (Brightline®, 2022).

According to Brightline® research, evolving customer expectations was considered a top driver for enterprise transformation in 2022 (Brightline®, 2022).  Similarly, customer experience scores high for expected outcome and success criteria in enterprise transformation. While it is hardly surprising that customer experience tops the list vis-à-vis transformation drivers, expected outcome, and success criteria, it speaks volumes for our belief that customer insights are crucial for the success of a transformation initiative.

Conclusively, digital transformation is complex journey and requires significant efforts. By appointing a designated leader (like the CTO), powering the people, and focusing on the customers, organizations will address imperative elements for successful digital transformation.