Introduction: Digital transformation was already accelerating rapidly in the pre-Covid world. But post Covid, the rate of transition to digital has increased exponentially. Pandemic lockdown protocols forced explosive growth across a range of industries and sectors such as; freight, health care, medical research and digital transformation. Even mom-and-pop clothing stores in small regional centres now have a digital face to their business! The pandemic is an enormous business disruptor, which has forced an urgent need to embrace digital provisioning to remain not only competitive but, in many cases, viable. With no way to physically go to the store, digital goods and services provisioning has become the norm. Adopting new digital technologies can be intricate for large organisations, or even smaller organisations, if it is a complex process transition that requires significant change management efforts. Change managers play a critical role in enabling organisations to navigate challenges and opportunities!
In this blog post, we will explore the key challenges of digital transformation, share examples of successful digital transformation initiatives, and offer some practical tips and strategies for change managers to help their clients achieve their digital transformation goals.
Challenges of Digital Transformation: Having worked on a range of digital transformations, I can attest to the challenges, but also the benefits. The work up front is significant, but the final rewards potentially very great. Core challenges of digital transformation I have encountered include:
Resistance to change (or, as I prefer to call it, change reaction): Employees may resist adopting new digital technologies. This can be caused by status quo inertia and strong affiliation to the current state, the catch-cry of which is, 'but we've always done it this way'. It can also be about the fear of lost job security, and / or loss of power and status, as skills and decision-making transfer from people to baked-in digital algorithms. This can lead to delays and setbacks in achieving high adoption, and realising the business benefits, or even just getting things live and functioning!
Lack of clarity: Without a clear understanding of what digital transformation entails, and how it will impact the organisation and people, it can be challenging to develop a comprehensive plan. Phased transition, if it's a significant piece, is required, and it is important to do things in the right order (more on that below).
3. Inadequate resources: Digital transformation requires significant investments in technology, infrastructure, and learning, which can strain resources. An incremental approach is often advisable, and the pace of change must stay within the organisation's ability to absorb it successfully.
4. Poor root cause analysis: Sometimes digital transformation is embarked on without proper understanding of the organisation's core drivers to do so, and without a clear vision of the path. It is not sufficient for leaders to state, 'digital is the way forward', just because someone read an HBR article that said so. Perhaps the organisation is in catch-up mode to close the digital distance with an early adopting competitor? Or, maybe it has experienced a shrinking market, as the central city exodus narrows sales at bricks and mortar outlets? Reasons must be clearly articulated, and the gains to be made stated in ways that resonate with each segment of the receiving audience.
5. Inadequate future state service design. To move to a digital mode, the related processes, procedures, business and system rules that will inform the future state must be mapped in rigorous detail and road-tested with business users and external customers. I have seen a range of digital initiatives falter, because the process mapping was not undertaken, or validated, in enough detail to produce a functional digital product that met the real need. This means poor user adoption and low realisation of business benefits.
6. Lack of end-to-end integration: Often an attractive front-end-portal is delivered in the first phase. This is the shiny, sexy aspect of digital transformation. But the customer goodwill of a nice front porch, will be quickly eroded if the fulfilment processes at the backend are archaic, and don't meet customer expectations of a responsive, low-stress digital experience. It's awesome for customers to type their needs into a jazzy, graphically designed portal, but what they want most is great outputs generated expediently from those inputs.
Successful Digital Transformation Initiatives:
Despite the challenges, many organisations have successfully undergone digital transformation initiatives. Here are some examples:
MacDonald's and KFC have both introduced digital ordering stations with touch screens. This has also allowed for increased customisation and precision in ordering, and process efficiencies via role specialisation. To an extent, the digital ordering stations outsource the order-taking function back to the customer! The innovation helps increase customer engagement and satisfaction.
Walmart: Walmart has used machine learning artificial intelligence to improve its supply chain management which has reduced waste and increased product speed to market. This has led to increased efficiency and reduced costs.
Domino's Pizza: Domino's Pizza were early adopters of digital transformation. They introduced an app that lets customers order pizza with just a few clicks, increasing convenience through accessibility and ease-of-use. This technology helped improve customer experience and increased sales for the company.
Practical Tips and Strategies for Change Managers: To help organisations successfully navigate digital transformation, change managers can take the following practical steps:
Develop a clear understanding of the organisation's current state. Contribute to the root cause analysis to determine the most compelling drivers to go digital. Fully understand the current pain points and how digital innovation can solve for them - and what it can't fix. Advocate for strong end-to-end service design and customer experience focus group input to ensure there are no 'weak links' in the digital customer offering, and that high expectations for improved service can be realistically met.
Develop a comprehensive digital transformation strategy, tied to the organisational business strategy. This must include clear objectives, timelines, and metrics for success, and include a realistic roadmap to achieve full digital conversion, which will take several years to achieve in most cases.
3. Communicate the benefits of digital transformation to employees and stakeholders in role appropriate language. Provide a role-based roadmap that shows each transition phase clearly and articulates the benefits, skills and competencies and support that will be offered at each stage. Crucially, allay, or at least appropriately manage, any fears that digital implementation means job losses.
4. Advocate with the sponsor, and purse-string holder, to provide adequate resources for the digital transformation initiative. This includes investments in technology, infrastructure, behavioural change, learning, systems training, and new skills and competencies development, such as digital related customer complaints management. Also provide appropriate performance management and KPI related incentives to motivate adoption.
5. Monitor the digital business progress in a baseline, pre digital transition, and success measurement phase and make adjustments as necessary.
6. Enable and support the change leaders to advocate consistently for the benefits of the digital journey and celebrate the wins along the way.
Conclusion: Digital transformation is a critical undertaking that organisations must embrace to stay competitive. This has been accelerated by the Covid pandemic. Change managers play a crucial role in helping organisations navigate the challenges and opportunities of digital transformation. By developing a clear understanding of the organisation's current state including pain points, mapping the desired future state at a detailed and thorough level, developing a comprehensive digital transformation strategy, advocating for adequate resources, roadmapping viable transition states at a rate of change that the organisation can absorb, course correcting via digital business readiness activities, and enabling leadership advocacy, change managers can help their clients achieve their digital transformation goals. By following these practical tips and strategies, organisations can successfully navigate the complex process of digital transformation and reap the benefits of increased efficiency, improved customer experience, and enhanced competitiveness, despite ongoing pandemic uncertainty and ambiguity.
References:
Aral, S., & Weill, P. (2019). Thriving in an Increasingly Digital Ecosystem. MIT Sloan Management Review, 60(3), 17–19.
Bughin, J., LaBerge, L., & Mellbye, A. (2018). The case for digital reinvention. McKinsey Quarterly, 2, 1-9.
Cameron, E., & Green, M. (2015). Making sense of change management: A complete guide to the models, tools and techniques of organizational change. Kogan Page Publishers.
Chui, M., Manyika, J., & Bughin, J. (2018). The dawn of the age of artificial intelligence. McKinsey Quarterly, 1, 1-16.
IBM. (2019). The state of digital transformation. Accessed from https://www.ibm.com/downloads/cas/ZYKRVZ3V
KPMG. (2019). Digital transformation: The age of innocence, inertia or innovation? Accessed from https://assets.kpmg/content/dam/kpmg/xx/pdf/2019/06/digital-transformation-2019.pdf
McKinsey & Company. (2018). Leading agile transformation: The new capabilities leaders need to build 21st-century organisations. Accessed from https://www.mckinsey.com/business-functions/organization/our-insights/leading-agile-transformation-the-new-capabilities-leaders-need-to-build-21st-century-organizations
Westerman, G., Bonnet, D., & McAfee, A. (2014). Leading digital: Turning technology into business transformation. Harvard Business Press
Barb Grant, the author, is a master change practitioner, who mentors change managers and change agents to deliver change that gets adopted and delivers meaningful results. She is the Director of Encompass Consulting, 'Bold Change' and CM2 change mentoring and author of the #1 Amazon bestselling book for change agents, 'Change Management that Sticks.' Barb is a frequent speaker on topics related to change management and the successful leadership of change.
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