THE MOMENT OF TRUTH IN DIGITAL TRANSFORMATION
by Claus Helbing, Platinion Managing Director, Boston Consulting Group
Digital transformation initiatives often face a moment of truth, when the goals and ambitions of the transition face the hard reality of challenging business hurdles.
It’s not unusual for a digital transformation to get stuck. Initiatives can often become stranded in siloed business functions, unable to make the leap from aspiration to actualisation. This is often because companies lack the necessary skillsets and capabilities to truly scale digital across the enterprise and establish it as the normal way of doing business.
Overcoming this moment of truth is vital. It is the inflection point which can define the success of the journey. It is the point where a company must decide if it will refocus efforts using the capabilities it has developed and lessons learned on the transformation journey so far.
Stages of a digital journey
Establishing digital as standard is essential in building an agile modern business. It provides the flexibility to make rapid changes in a volatile operating landscape, respond to disruptive technology, enhance risk management, and ultimately delivers value to internal and external stakeholders.
There are three key stages of a typical digital journey which must be carefully navigated. The initial stage is taking the tentative first steps towards digital, as leaders assess the potential of digital projects and launch key pilot projects in order to demonstrate value.
The second stage comes from scaling pilot projects into effective operational solutions. Technology departments typically take the lead on setting this digital agenda, driven by evolving technology opportunities and informed by data.
The third step is empowering business units (BUs) to take active ownership of digital initiatives, transforming this journey from a technical exercise into one which delivers true value to the business.
A truly ‘bionic company’ will integrate this technology transformation alongside human capabilities to place them central to business operations. Boston Consulting Group’s (BCG) research reveals that from 2017 to 2020, bionic companies grew their EBITDA 1.7 times faster and their enterprise value 2.2 times faster than companies with simple digital proficiency.
Boosting bionic companies
The global COVID-19 pandemic offered a stark testing ground for the resilience of bionic companies. This unprecedented landscape delivered a stress test with encouraging results, with analysis revealing that the market capitalisation of bionic companies recovered at a much earlier stage of the pandemic.
We have identified five boosters that can accelerate the transformation to a bionic company. While some are more powerful than others, their interconnected nature means all are essential to nurture a positive transition.
Let the business lead overall transformation efforts. Traditional IT teams are likely to see transformation as a purely technical effort. Allowing BUs to set transformation agendas will ensure that the digital vision is consistent with tangible goals that are aligned with business objectives.
It’s critical that companies also focus on high-value initiatives that aim to reinvent core end-to-end operations. This holistic approach to transformation is a major driver of success.
Educate the workforce to unlock the greatest value of transformation. As companies turn more towards data and digital processes, workers must be supported to embrace data in order to improve decision making and boost positive outcomes.
Companies should also look to adopt platform thinking that facilitates cross-functional teams. This enables a business to draw data and insight from across the organisation, improving agility and promoting more effective use of data.
The final booster is the critical need to leverage data and AI capabilities. The most successful bionic companies put AI at the core of their transformation journey, and roll it out across a wide range of processes. This is a powerful enabler that allows companies to unlock the greatest value from their data.
Three steps to success
So where does this leave those of you with bionic company ambitions? There are three concrete steps that senior leaders can take to empower an effective digital transformation.
- Put the business in charge. Digital transformation is a business transformation, not a technical exercise. Bring BUs together to discuss digital ambitions and digital ROI. BU leaders should own and inform digital transformations.
- Mandate a digital upskilling program. Work with business units in order to determine the upskilling programs needed to support your digital initiatives. These should be designed and developed in partnership.
- Double down on tech and data. Collaborate on a roadmap for key technology and data capabilities to achieve strategic business targets and business outcomes.
Key performance indicators (KPIs) will be essential to measure progress and evidence success in steering a digital transformation. Unlocking the greatest possible value from this journey will be critical in an increasingly competitive and data-driven business landscape.
Overcoming the moment of truth and accelerating past the inflection point will require fundamental changes in how companies approach digital transformations. In doing so however, they unlock the potential of a truly bionic future.