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How to Make Digital Transformation Meaningful

Top executives are increasingly in the hot seat to start digital transformation to leverage the potential of digital technologies to compete head on and drive business forward. That’s the finding of the latest EY 2022 CEO Outlook Survey, which finds 47% of the 2,000 CEOs surveyed are relying on information technology, more than any other strategy, to compete in the economy ahead. These include using technology and automation to replace higher cost labor roles and improve customer interactions. Leveraging technology was a strategy that surpassed other priorities, such as investing in existing businesses to accelerate organic growth and value creation (21%), optimizing balance sheets or improving working capital management (22%), or focusing on sustainability (13%), or other strategies such as increasing sales, or expanding into new geographies.

Digital transformation is a business-model reinvention that requires different functions across the organization to work together in new ways, and can happen only through large-scale investments in building an entirely new set of capabilities,” the report’s authors, led by McKinsey’s Eric Lamarre and Kate Smaje, point out. Thus, it involves full organizational transformation and support. Everyone’s buy-in from top executives to the ranks is an integral part of a success. As Joe McKendrick pointed out on Enterprise Tech, Forbes, you can’t take a sluggish organization, drop in the latest technology, and expect an overnight miracle.

 

Howard Tiersky, in his latest book, Winning Digital Customers: The Antidote to Irreverence, compares digital transformation efforts to icebergs — with customer experience visible at the top, but a lot of work that goes underneath the waterline. We look at the complexity and level of the iceberg itself — much of it unseen to the world.

 

“If you are undertaking a digital transformation, driving the realization of your customer journey vision, you are in the iceberg business,” Tiersky says. The “invisible” layers under the waterline include technical architecture, data, business operations, and business model. “Companies that succeed in delivering elegant digital experiences have modern, unified architectures based on microservices and common data layers. They have systems designed to have near-zero percent downtime.”

Digital Transformation

Digital transformation may be appealing, but it won’t succeed without getting everyone in agreement and on board with what needs to be done. Tiersky provides recommendations for accomplishing what is perhaps the most challenging part of technology-driven change:

Paint a compelling vision of the future. “Have a strong story why change is essential and back it up with data,” Tiersky urges. “Pitch the transformation vision in such a way that you inspire people to want to participate. Having a compelling vision and method of communicating it, is critical to achieving this.” Share “parenthood” of the transformation. “People resist change, but they support the change they create,” he states.

Identify allies and change agents. “In any given enterprise, there are certain people, even if a minority, who are hungry for change,” Tiersky points out. “Start by assembling an informal digital transformation team. Find those innovation heroes who are committed to making a difference, whether it’s part of their job descriptions or not.”

Drive alignment at all levels. “Transformation efforts always need diverse teams participating, designing, building, testing, marketing, and selling a solution.” Tiersky says.

Instill confidence.  “One reason people fear change is they worry it will fail — wasting time and money and possibly creating embarrassment,” he states. “These fears can become a self-fulfilling prophesy. Leaders need to demonstrate the confidence that will empower their organization to deliver at its best.”

Define clear goals and celebrate signs of success. “The sooner you can start to prove the transformation is working, the faster you will bring people on board,” says Tiersky. “One way to show quick progress is to begin by tackling some of the easier parts of the transformation. Quickly find points of pain that can be fixed for rapid, measurable impact. Be sure to measure that impact and communicate it broadly.”

Start the transformation where it’s most welcome. “Prioritize your initial efforts in the areas of the company that are most welcoming to change and where the barriers are lowest,” he advises. “That way, you can demonstrate not just optimization, but true transformation is possible, beneficial, and even rewarding. Start with a specific new product that needs innovation. Focus on just one area and apply design thinking to prove it can work. Then expand to more areas of the product and services portfolio.”

Ultimately, Tiersky emphasizes throughout his book, it’s not about going digital because it’s the trendy thing to do, or because the IT department has gotten a hold of some shiny new tools. It’s all about customers, and meeting them where they are. All efforts and investments should be inspired by, and designed for the customer, period. “If a company is successful today, it’s not because they are a digital business, but because they are resonating with an audience of digital customers,” he states.

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