Nov 10, 2023

Ten Commandments on how organizations should execute digital transformation strategies - By Dr. Gaurav Nagpal

It is a well-accepted fact that digital transformation is critical for the success of almost every business. The digital transformation ideas and endeavours that may have been considered earlier as “nice to have” eventually became “critical to have” for most organizations, especially after the advent of the pandemic or during it. Many such endeavours got pushed higher on the agenda of the CIOs during the last few years — for instance, increasing the reach to the customers through chatbots, developing automation tools for resilience, and even enabling the employees to work from home.

The radical changes that have happened over the last several years in terms of how we book our travel tickets, how we purchase services related to insurance, banking, education, and healthcare, or even how we order food and groceries — all of these are just few basic examples of digital transformation.

From Digitization to Digitalization and then to Digital Transformation

The holistic digital transformation journey generally consists of three steps — digitization (digitization and organization of information), digitalization (automation and streamlining of processes), and finally, digital transformation (transforming the organization’s operations, strategic directions, and value proposition).

While the first step “digitisation” may not exist for digital natives, as they may have been born digital and have the digitized data from day 1, the legacy companies may still have to spend a significant effort in this step. The second step of digitalisation makes the processes faster and more reliable. The third step of digital transformation is about harnessing the power of data and information to make a digital strategy. It is a well-acknowledged fact now that almost every business needs to have a digital strategy; however, just having the strategy is not helpful, unless it is executed properly.

In my view, here are ten key aspects that an organization needs to consider, while executing its business strategy.

1) First, it is important to note that digital transformation is not merely about implementation of technology, but it also needs to ensure that the execution of these projects leads to a business benefit, which may be tangible or intangible. Such benefits may consist of business process improvements, an enhanced customer experience, better employee satisfaction, etc. Business process improvement outcomes due to digitalisation initiatives may be in the
form of better product quality, enhanced output, lower cost, higher asset utilisation, more personalisation to customer needs, safety at workplace, lower turnaround times, improved employee morale, safety at workplace, etc. For this to happen, it is important to keep your customers, employees, and resources in focus, while executing these efforts.

2) Second, digital transformation initiatives have to be driven top down from the leadership team. The kind of internal resistance to change that the organizations come across in these activities, and the quantum of change management that these initiatives require, can be addressed only with the approvals and buy-in from the senior leadership.

3) Third, if a proof of concept can be explored, while making the business case for such initiatives, that can make the future steps less risk-prone. A small survey with the stakeholders to capture their current pain points and their suggestions on how those pains can be alleviated, can be a good starting point. The pilot launch in a test market, or starting with a minimum viable product can also be good tools for risk mitigation. Data-driven and evidence-based decision making can also help reduce the chances for setbacks.

4) Fourth, it is also very important to integrate the IT strategy with the business strategy. Digital transformation can happen only when there is a team that talks about both — business and technology. This may not be a dedicated team, but may be the operational people who need to come together for a few hours every week, to work on these projects.

5) Fifth, the decisions related to the execution of digital strategies need to be brainstormed in an inclusive and consultative manner with various stakeholders and cross-functional teams. This is because the nature of problems is so multi-disciplinary and inter-organizational that a holistic decision can be taken only in participative mode of decision-making.

6) Sixth, the agile methodology of project management, rather than the conventional waterfall approach, needs to be adopted for implementing digital transformation projects. If the projects can be broken down into smaller focussed sprints, this would ensure step-wise execution that is the need in these times of volatility, Uncertainty, Complexity and Ambiguity (VUCA).

7) Seventh, there have to be adequate budgets in place, the lack of which can lead to failure of digitization efforts. And extensive homework needs to be done on the planned cash flows for the initiatives. Multiple scenarios need to be considered and a detailed sensitivity analysis with underlying variables needs to be performed. This can facilitate the comparison of the actual cash flows with the planned cash flows and corrective actions can be taken as per the need.

8) Eighth, it is important to bring about a cultural change in the organization where the fear of failure is reduced, and people are encouraged to challenge the status quo. This can happen when the employees share among themselves, the best industry practices and ideas related to improving the business processes, systems or models, and all such ideas are given sincere consideration in the process of arriving at the solution to a problem.

9) Ninth, needless to mention, there is a need to measure the business value created by the digital initiatives, when they are taken up. It is also crucial here to define what is valuable for your organization, and how should you measure it. And not just measuring the results, but drawing the insights from the results, and comparing the results with the original business case or with some pre-established benchmarks is also crucial.

10) Last but not the least, the digital transformation exercises have to be executed continuously, without any break and as an ongoing activity. These are not one-time activities, but rather a fundamental part of the organization’s DNA, as the business atmosphere is highly dynamic in today’s world, which requires digital strategy to evolve with time. This can be facilitated, when the execution team gives the feedback to the strategy team, and the suitable corrections are made to the strategy, as needed.

Working professionals in an organization too need to be willing to leverage data-driven and evidence-based decisions in the digital transformation journey, which can help in creating a unified and consistent customer experience. This is where, upskilling of working professionals can play a very important role in successful execution of digital transformation initiatives. The executive education programmes with work-integration elements can be used by an organization as a tool for continuous learning of their workforce. Attending such programmes can empower working professionals in taking up digital transformation efforts that are well-rounded, holistic, and aligned with an organization’s overall strategy.