Digital transformation is emerging in marketing, sales, HR, supply chain and finance, as well as in plant operations and maintenance. It’s opening up new opportunities, challenging traditional methods and changing the way we think and act.
Digital transformation can be disruptive, but for companies that want to become new leaders it offers remarkable opportunities. Digital maturity equals 26 percent more profitability, 9 percent more growth and 9 percent higher market valuations according to Accenture and MIT. These are promising numbers, but according to a recent article in Forbes, 84 percent of companies currently fail to achieve digital transformation.
Companies that are committed to helping process manufacturers leverage operational intelligence are key to digital transformation. While software helps to inform continuous improvement, software alone is not enough. A support team is needed to achieve next-generation productivity and a digital-enabled workforce.
Overcoming barriers to successful transformation is ensured by implementing proven best practices. In this article, we consider some of the most important concepts for a successful digital transformation:
- Executive support is critical but not enough
- Start small, celebrate quickly and scale fast
- Big corporations need to embrace the concept of failing forward
- Technology adoption is moving faster and faster
- Management of change is critical for success
These may seem like counterintuitive considerations, but in practice they are not. Understanding how these concepts affect transformation initiatives can increase the chance of success more easily than imagined.
No. 1 - Executive Support is Critical—But Not Enough
Buy-in from the top is a must, but the whole organization should be engaged in the journey.
Decision-makers need to believe in the potential value of analytics and operational intelligence. A frequent challenge is the tendency of leaders to demand a proven return on investment (ROI) before they commit budget to a new and speculative program. Often the economic questions cannot be immediately answered. When this approach of “proof before investment” is pursued, it can easily kill potential opportunity.
Visionary leaders can support the groundwork by helping to tear down internal barriers and highlighting potential gains. By promoting transformation as a positive change for all, executives can attract bottom-up acceptance throughout the organization.
Leaders will identify champions and advocates to generate momentum through cross-functional teams. With the visible support of the executive, teams can be given clear mandates to get things done and sufficient resources to enable the program.
No. 2 – Start Small, Celebrate Fast, Scale Faster
Starting small and celebrating fast with an eye to scaling quickly is the best formula to implement change.
This approach offers multiple benefits:
- Smaller first scope makes the project easier to initiate.
- Quick success encourages, attracts momentum and gets more people on board.
- Proof of achievement helps overcome speculation about value.
- Successful parts of the initial project can be copied to all subsequent scopes
- Takeaways from the initial project can be applied to optimize larger scale success
The single greatest advantage of this approach is the flywheel effect.
When a transformation program is described, it can be difficult for stakeholders to imagine it in practice, like being shown a huge static wheel and told that it could be set in motion. However, when that wheel starts to move — even a little — you can imagine it spinning faster. This makes it easier to believe the next step is possible. The credibility that a quick success generates makes every subsequent step (such as scaling out to multiple plants) easier to achieve.
No. 3 – Embrace Failing Forward
Failing forward is not about embracing failing; it’s about achieving success.
Failing forward is also called intelligent failure, a concept that aims for innovation, agility, learning and resilience — all advantages during transformation. When it’s accepted that (small) failure may inevitably occur there’s room for innovation and change. Removing the fear of failure helps organizations respond more productively, learn more from mistakes and cultivate an attitude that facilitates change.
There’s a difference between the DNA of large corporations and startups. For startups, it may be easier to embrace failing fast and often in order to fail forward. Because they are constrained by limited resources, smaller companies are more open to risk. Within the culture of large corporations, failure is often avoided. Such companies may avoid the risk of even partial failure, which limits opportunities to learn from mistakes, hampering progress.
There’s a lot of hype around the promise of big data, analytics and the connected enterprise, but no one yet has all the answers. Benefits cannot always be quantified upfront — but if the fear of (partial) failure is too strong, transformation programs can die before they can begin.
Failing forward doesn’t mean taking unnecessary risks. It’s better to start small (and be open to learning) than to begin with an oversized waterfall project in which failure cannot be tolerated. Provide the opportunity to learn during transformation by testing a hypothesis and rejecting, iterating or adjusting it. When assumptions are validated, there are no barriers to scaling up fast.
No. 4 – Technology Adoption is Only Going Faster
The pace of innovation and adoption of new technologies is speeding up. Companies need to anticipate new technology trends even faster today to stay successful.
According to the Global Technology Adoption Index (GTAI), there’s a low risk and large reward when adopting new technology. This global survey shows that companies which are actively exploiting analytics, big data, cloud and mobility have on average 50 percent higher revenue growth rates than organizations who haven’t yet adopted these technologies. These same organizations also reported that one or more of those new technologies were responsible for several other areas of company progress, including increased efficiencies and organizational growth.
No. 5 – Management of Change is Critical for Success
An effective Management of Change program is needed to engage stakeholders throughout the organization so that everyone pulls in the same direction.
A Management of Change program shifts behavior and reshapes organizational culture during transformation. Rather than just describing a vision, such a program actively helps people to change. Focusing on a finite initiative, the way things work inside the company is shifted in line with the transformation program.
The Mckinsey influence model notes 4 aspects that support behavioral change:
- Proper insight and understanding of why to change and how the change is meaningful
- Development of the right talent and skills to provide capabilities to behave in a new, successful way
- Role modeling and culture change that requires stakeholders to behave in the new way
- Reinforcing with formal mechanisms so that structures, processes and systems support the desired change.
Start Your Journey
The 5 keys to digital transformation work together, each synergistically adding to the other.
When managing change as part of a vision of a new (transformed) future and enlisting the support of leaders and stakeholders throughout the organization, begin with a small project. By eliminating the fear of failure in that initial project, companies can move faster to benefit from new technologies and overcome the internal barriers to success. By approaching the journey to transformation with proven best practices, companies will realize opportunities for growth.
Bert Baeck is CEO of TrendMiner.