August 20, 2018

3 Business Essentials For Effective Digital Transformation

Digital Transformation (DT) is not necessarily about digital technology, but about the fact that technology, which is digital, allows people to solve their traditional problems. And they prefer this digital solution to the old solution.

Solving for “traditional problems” goes a lot deeper than just improving a product or process. These problems are often core business problems. Evolving “old solutions” involves a lot more than doing something different. In many instances, these old solutions are viewed as tried and true, and resistance to change puts DT on hold.

In reality, essential business structure and function defines and determines DT. Emerging in 2014 as an enticing business solution label, companies threw a cape on it and used it to characterize attempts to go “more digital.” Not surprisingly, this atmospheric mentality rarely yielded long-term success.

As a result, companies are re-evaluating their business models at a molecular level. For the future realization of digital transformation efforts, this is very good news. Refocusing essential business objective alignment, leadership, and change agency topples barriers and erects the right infrastructure for digital transformation.

1. Align with and Commit to a Singular Business Objective

There seems to be an unspoken belief in a mythical digital transformation vacuum where digital solutions hit KPIs and give a business new lifeblood without really getting in the mix. Snap back to real life where DT rests its full weight upon the core pillars of the business. This is where the real work begins.

Building the right processes and tools to make business better is all-encompassing. Finances, analytics, KPI measurement, strategy, tracking, efficiency, product and brand optimization all sit at this table. When a company perceives DT as investments in a new website, apps, etc., they forget that these deliverables are business applications. All business applications require measurement against business goals that stem from an overarching business objective. If no universal business objective exists, the concept of DT takes them backwards.

Growth or Gains: Pick One, and Go

Growth or gains? That is the question. There is no best option–it all depends on what path makes the most sense for your long-term business goals.

A growth plan centers around:

  • KPIs that embody a high-risk, high-reward mentality
  • Employing more investigative tactics
  • Strongly supported and relentless R+D efforts
  • A test-and-learn mentality
  • High levels of awareness of ops margins/expenses and marketing budget
  • Reinvesting and scaling up high opportunity growth avenues
  • Discovery of new business channels and improved sales processes

A gains plan focuses on:

  • Completion and analysis of a full audit of operational systems
  • Finding opportunities to increase ops margins
  • Building new, more efficient internal systems
  • Optimization of (often already existing) products and services
  • Investment in lower risk cash sources
  • Prioritization of more predictable, established business channels

Ultimately, leadership must have the ability and courage to choose, build toward, and invest in one of these objectives.

2. Move the Right Mountains with the Right Leadership

Digital transformation works to augment business processes. The desired end game is cost reduction, increasing revenue, or growth (aka:  measurable business results). A lack of understanding around business results directly reflects the state of leadership. Degenerate leadership structure and function cannot be fixed with DT.

Leadership cohesion is inherently difficult but can’t be seen as an added bonus. Taking the “we can just work around it” approach with DT is the same mentality that sees building a cool app as a solution for a shotty website. Transformation can’t deliver when the company codebase is broken. In fact, it will only serve to further expose the cracks.

It’s Not Just OK to Ask Questions, It’s Necessary

Personalities, creative aspirations, financial expectations, career plans, brand interpretations–all of these things come into play. And at leadership levels, it can turn into a stifling game of extreme group dynamics. For DT to work, the questions to which leadership needs unified answers are:

  • Do we have the right leaders in the right places?
  • Do these leaders have the resources (people and budget) they need?
  • Where do we see the need for third party involvement?
  • What kind of timeline do we have set for this, and is it reasonable with our structure?

Simply put, each leader must be able to perform their defined role, and only that role, in achieving the bigger business objective.

3. Support a Dedicated Digital Transformation Champion

Leaders can be identified based on their ability to drive change. Whether positive or negative, driving change and having influence is an undeniable X factor (exhibit A: politics). Change agents (DT champions) are an even more elusive slice of the pie. They don’t just handle their responsibility and accountability to change and improve a business, they lean into it. Transcending the inherent difficulties involved with business transition, positioning, and staff augmentation is where they find satisfaction and deliver value.

Breaking the Mold is Uncomfortable but the Only Way

DT champions conduct their audits and establish processes with a dispassionate, objective stance that almost resembles a third-party perspective. When it comes to building a new website, or re-branding, for example, it’s difficult to avoid old habits and historical positions.

Herein lies the strategic challenge:

  • If your playbook focuses only on capabilities and internal processes, you’re not listening to the market. You need to offer partners and customers something human that will improve the way they work, live, or play.
  • If your strategy is based purely on design principles, it won’t deliver on business objectives. Analytics and research exist for a reason and build credibility alongside engaged audiences.
  • If you throw all your eggs in the quantitative data/research basket, you won’t benefit from internal insights. Everyone needs their special sauce for a unique value proposition.

DT champions must represent this range of perspectives while putting together effective, agile digital business tools that satisfy the previously stated business objective.

In order for this individual to make this happen, however, it takes a village. Supporting the mission is essential. DT champions may drive the car, but if the alignment is off, the car is stuck in the shop. Internal buy-in, understanding, and transparency from the top down is what makes the engine go.

Digital Transformation is Business Transformation

In many cases, the first step is admitting you have a problem. It is the very nature of businesses to be diverse and subjective. But these different perspectives and tactical approaches need to be unified if the business wants to grow or gain.

If, for example, you want to launch a new app but your existing code and web framework is broken (even in seemingly small, functional ways), the enhancement will end up further exposing the underlying issues. DT can neither change nor fix a business that will not address directional, leadership, or brand problems. All businesses have barriers and challenges, especially heading into uncharted territory. To have real success and yield significant, measurable results via digital transformation, these issues must be addressed as part of the plan.