Digital Transformation – Learn and restart

Perspective 

The successful first-take digital transformation does not exist. Iterations are unavoidable and highly necessary when companies try to navigate through the digital pitfalls and barriers that they (or organisations in general) strive to overcome when launching digital initiatives. One question that often comes to mind is “we have stalled how do we move on?” This perspective outlines three step-zero initiatives that support the restart of the needed digitisation:

  1. Establish common ground on digitisation in the management group
  2. Establish a digital governance practice
  3. Manage both sufficient resources and sufficient mandates that support the digital strategy

These are further elaborated below.

We acknowledge and appreciate that companies certainly are different and that the aim of this perspective is not to mimic the digital titans (Amazon, Google, Apple, etc.) and their approach to management of digitisation. Instead, the aim is to highlight the two facts that most no-tech companies undergo the same initial obstacles, and that ways to overcome these obstacles exist. Specifically, we stress that cultural differences among companies make it impossible to find one unique approach to digital transformation, but we believe that the recipe for getting started is industry-agnostic.

The learning

Companies fail to reap the benefits from digital initiatives or do not manage to get initiatives properly started. We recognise these as natural steps up the digital maturity ladder where the number of topics are overwhelming and impossible to fully grasp. On the back of crashed-and-burned symptoms, the five most commented-on digital transformation experiences are

  • “Different picture of the digital future (no common ground)”
  • “Uncertainty of responsibility”
  • “Overrun in budget and timeframe”
  • “Slow or no progress in initiatives”
  • “Low or no effect from digital initiatives”

The above boils down to the fact that any transformation process is extremely complicated, and since we still find ourselves at the offset of the new digital era, it makes sense to emphasise that the vital mindset for getting started is explore, learn and adapt, instead of sticking to old habits or pushing back on experiences from elsewhere.

The restart – step zero initiatives

The above learnings are essential when it comes to understanding the magnitude of the digital endeavours that lie ahead of us. It is obviously important to understand that the competences for solving these issues are rarely to be found within the structure and skillset of conventional companies as we know them today, and that it normally takes more than a year from the first encounter for one of the five learnings to unfold – and what happens next is that CXOs are left with a feeling of “now what?”

We suggest you benefit from these learnings through the following simultaneous three-step approach, which supports the restart of the needed digitisation.

1. Establish common ground on digitisation in the management group

A digital strategy is a vital part of the corporate strategy and must be treated accordingly. Hence, the common ground must be established within the top management group, which subsequently owns the digital transformation programme. Our experience shows that this alignment is almost never in place, i.e. top management have different and most often contradictory agendas which hinder alignment on actions, priorities and resource allocation.

We recognise that people come with very different, predetermined perspectives on the digital transformation topic, and we certainly advocate alignment facilitated through workshops and the sharing of viewpoints within the management team in question.

A typical offset would be one-on-one interviews highlighting the necessity for further alignment and dialogue.

2. Establish a digital governance practice

Solving the organisational dilemma and governance structure around a transformation of this magnitude is essential to success. So how do you organise the digital business development? “Where do we anchor it within the organisation?” and “how do we increase the likelihood of success?” are some of the themes we are repeatedly approached with.

We highly recommend both cross-organisational KPIs and a governance structure that caters to the current digital maturity level. Keep in mind that this is a joint journey that affects all dimensions of a company, from operations to sales – all stakeholders have to move in the same direction, and this is only achieved if joint incentives and clear governance practices are in place from the onset.

3. Manage both sufficient resources and sufficient mandates that support the digital strategy

One of the most common mistakes is underestimating the amount of economic and human capital required by a digital transformation. Hence, the needed resources should not be found in pockets on an ad-hoc basis; a dedicated budget has to be prioritised. Moving away from saying “IT is a cost” to “Digital is an asset” is thus a regime shift that changes the way companies define themselves, and it should be respected accordingly.

When you manage the digital transformation resources and mandates, your budgets and timeframes must be kept separate from the traditional IT budgets, simply because your understanding of the requirements is of a different magnitude, and insufficient knowledge will lead to failure of the initiatives and the subsequent failure of the transformation.

Beyond step zero

We reiterate that none of these three parallel steps – despite them being step-zero initiatives that all companies and organisations must go through – are trivial, and overcoming them is a crucial milestone on the road to digital success.

When the step-zero initiatives are in place, the work on the digital transformation itself can be restarted (or continued in some cases). Obviously, digital development initiatives can run in parallel with the restart, and by no means do we wish to close down or postpone successfully running projects.

Without direction on priorities, we highlight these six critical digital transformation areas that should be strategically addressed and prioritised on the back of a successful digital restart

  • Engage customers
  • Transform products
  • Optimise operations
  • Empower employees
  • Strengthen digital capabilities
  • Manage talent

Ambitions should be determined and communicated to all internal and external stakeholders.

Conclusion

Without exceptions, all major companies have initiated digital transformation initiatives in some, typically less structured, format. Months, if not years ago, they recognised the need for starting the unavoidable digital journey, and subsequently, a dedicated driver was assigned – typically a business developer or manager with some development expertise, but without any digital transformation experience as such. The outcome is that initiatives have failed because of at least one of the five reasons mentioned above, and this happened despite a common urgent understanding of the necessity of digital engagement from the top management group members.

This crucial learning must trigger a digital restart where the step-zero initiatives are properly addressed and managed to ensure that the six digital transformation areas can be properly handled afterwards.

For further discussion on the topic, contact:

Tim Madsen
tim.madsen@qvartz.com
+45 61 22 42 69

Jesper Adeltoft
jesper.adeltoft@qvartz.com
+45 29 69 69 36