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Digital transformation: getting it right Digital demands different strategic approaches. Radhika Palany explores six make-or-break areas
Digital is no longer just a buzzword: as Gartner’s 2018 CIO Agenda Report showed, it is a top three business priority. Yet digital transformations continue to suffer from high failure rates. Most companies struggle to move past experimentation, with only a minority reporting successful scaling or harvesting of their digital investments. There are six critical areas where digital transformation demands a different approach to conventional business strategy and management practice. Relevant in Fortune 500 global companies, start-ups and the public sector alike, they can each be the difference between success or failure.
1
Clarity and commitment
Making digital a strategic management priority is key. A digital investment in one part of the business often requires cross-financing, cutbacks or change in another, causing conflict and delay. By incorporating digital success metrics into business-unit goals, leaders can ensure cross-functional alignment and commitment. Paradoxically, digital visions are often unclear, based as they are on evolving technologies whose business applications are not yet fully understood. Education ministers’ inspiring visions, such as ‘digital education 4.0’ and ‘anytime, anywhere learning’, often cause widespread confusion in the public administration and resistance from teachers as they are light on detail. Visionary leadership must be combined with execution clarity. Having the right metrics can help unblock resistance to change, as one major software firm found out. Having missed first quarter sales targets for a new flagship digital product, leaders realized that the problem lay with their
Dialogue Q3 2019
conventional sales metrics: commissions were based on total revenue, across all products, and since the new product was heavily discounted to gain market access, it was demotivating sellers. By switching the metric to units sold, the company created immediate sales momentum.
2
Culture of learning and growth
Digital puts organizations under unprecedented pressure to learn on-thego at the same time as delivering growth. A strong learning culture, open to risk-taking and failure, is crucial – yet all too often, companies underinvest and even ignore this critical soft capability. Take the example of a global consumer electronics giant – a $32 billion business with 1,000 employees across 40 geographies. Embarking on a major digital transformation, the company president said: “We will see if we have the DNA for this.” He was referring to the Herculean effort required for people to unlearn old practices, learn new skills, and find new ways of creating value. Digital transformation presents a major test of how far the organization’s culture supports its people in that effort.
3
Workplace of the future
Digital affects organizations at functional, operational and resource levels, and often in unexpected ways. For one mid-sized office supplies company, the decision to switch to a customer relationship management (CRM) platform initiated a series of unanticipated changes that included setting up a new sales operations function, outsourcing unmanaged