- Many businesses try to innovate, set up incubators or invest in digital technology, but fail to succeed.
- There are many obstacles that get in the way of successful transformation, including leadership, capability, cultural resistance and underestimating the amount and impact of change.
- Focusing on the customer and avoiding these common pitfalls will help organisations implement digital intelligently.
If you knew that your transformation only had a 25% probability of succeeding, would you even attempt it? You might not have a choice, because your customers or shareholders or both demand that you change and improve how you do your business.
Every single organisation we work with in New Zealand is thinking about how they need to change to better and more effectively meet the needs of their customer in the future. Organisations observe the pace of technology change – coupled with increasing customer expectations and globalised competitions – and know they need to change how they do business. This typically means embracing digital and data and new ways to deliver new customer value more effectively.
Organisations we work with approach ‘digital transformation’ at a different scale, scope and pace to maximise their chance of success.
So how could you improve your odds? What follows are five areas that organisations often find problematic when it comes to transformation, and how we’ve seen clients overcome the obstacles and succeed.
Transformation is often driven from the top down. There’s nothing wrong with that, and of course, senior endorsement is critical. The CEO and other executives should be the ones considering long term prospects of the organisation. Problems occur when employees, those responsible for the execution of the transformation, are not brought on the journey.
The vision of the leadership team needs to be translated into a plan and that plan needs to be simple to understand, clearly explaining how the company intends to go from A to B, and in what timeframe. One big block to transformation is that people don’t necessarily understand what is being asked of them. Has the ‘why’ of the transformation been clearly and succinctly explained to them?
Teams need to understand why the business is changing, and how that will affect them (positively as well). Knowing what the future will look like, and how they can play their part in executing the transformation is crucial. This will avoid the problem of the frozen middle, one of the biggest transformational failure points, and create buy-in instead of resistance, as well as resilience and forgiveness, for the turbulence or uncertainty that may follow.
If you need to transform, potentially doing things radically differently than they were done before, how will you change the skills of the staff to do those new things?
Say you have 50 people in a particular team, working a particular way, and all of a sudden you ask them to do something differently – what’s the response? Are they capable of doing it differently? Can they be trained or upskilled, or use new tools? The alternative is to go to market to tap into new talent with the skills you currently don’t have. Either way, retooling or re-hiring require a commitment to investment that must be considered as part of the transformation.
When asking staff to do things differently, it’s also worth considering whether you will restructure how teams are put together and realign their responsibilities accordingly. Keep in mind that you are also asking them to keep the business going, and profitable, while they adjust to these changes. It’s a big ask, but potentially important. Similarly, could this also be the right time to align your internal structure with that of the customer journey?
3. Scale and complexity
Another problem we encounter is organisations trying to change the world within a three month project and working with unrealistic (or undefined) expectations. For example, ‘let’s pour in a few thousand dollars, hire a consultant and get it done’. They quite often underestimate the complexity of the change (and therefore also underfund it).
Digital transformation is not the same as old-school tech implementation. We aren’t talking about going from a local email servicer to Office365, but a systemic and fundamental change in the way an organisation operates. Being unrealistic about what can be achieved in a timeframe is a sure-fire way to frustrate staff and end up no further forward than you started.
Partly this is a cultural problem; the speed of technological change is increasing and keeping up with it is unrealistic. Businesses must adopt a state of continual, incremental change. The task of digital transformation is significant as well as ongoing. In this way, projects can be seen as part of a greater agenda or goal, and completed successfully and on budget.
Innovative companies don’t bank on just one or two ideas. They often try a range of them, taking a portfolio approach to see which work and then go with those. Again, it is cultural or behavioural problems that we see getting in the way of this. Throwing out ten ideas and seeing what works and then fully committing is not something a lot of companies are comfortable with.
Businesses need to be comfortable with failing fast and allocating resources to trying something that might not go anywhere. This shouldn’t be confused with a scattergun approach however. By having absolute clarity of vision over where your business is going, experiments and emerging tech can be selected and trialled quickly and those that do not further your goals dismissed just as speedily.
The most important factor (and foundation for transformation) is your customers. If they aren’t at the start, middle and end of your transformation you will certainly fail in one way or another.
We see many instances where companies have been implementing digital capabilities but not focussing on the customer value being created. That’s obviously a problem.
If you aren’t focusing on the value being brought in by customers upon a successful transformation, why are you transforming in the first place?
Everyone talks about it, but if you are unsure where to start, it really does come down to the customer journey.
What is the journey like now? What should a significantly improved journey be like in the future? By breaking the journey down into its most valuable steps you will be able to understand what works, what doesn’t, and perhaps how it can be re-invented.
What many people miss in this is not understanding where the existing customer journey impacts on existing systems and processes. If you don’t understand what the impact is, by mapping the details of existing systems, then moving to something new, you will produce nothing but problems.
This is especially important for leadership to understand, as from their position it is easy to assume they know how things work in an organisation only to find out there are many more steps involved than suspected.
Focusing on the five levers outlined above, and ensuring that the current state and desired future state are both well understood before starting to change, businesses will stand a much better chance of success.
In our experience, it has been organisations that tackle the above areas effectively, while always focusing on the customer, that have been successful over those that haven’t.
By using transformation as a catalyst for change – of internal cultures, thinking, and ways of working – businesses will ensure they will be the winners of tomorrow.
This is a New Zealand version of an original article by Berry Driessen previously published on Digital Pulse.