Guest Blog: 9 Critical success factors needed for successful digital transformation
Creating an effective digital change framework
In this blog, we are going to share the digital change framework that we have evolved at Digital Works Group to help businesses deliver successful digital transformation.
What you will learn in this blog:
- A change framework: The key to bringing clarity to a complex task
- What order should digital transformation happen in? A marriage of strategic and execution criteria
- The 9 critical success factors needed for successful digital transformation
- Managing and driving change
Today’s digital environment
Today’s digital environment – characterised by pace, complexity, change, and disruption – is presenting both huge growth opportunities and challenges to every business.
Most businesses today understand the need for business change in response to significant digital-led disruption and increasing competition.
- By the end of 2017, two-thirds of the CEOs of Global 2000 companies will have digital transformation at the centre of their corporate strategy.
- 85% of enterprise decision makers feel they have a timeframe of two years to make significant inroads on their digital transformation before suffering financially and/or falling behind their competitors.
- 87% of companies believe that digital transformation is a competitive opportunity. Source: Capgemini
Changes in consumer behaviour, led by digital, means that whole industries are being turned upside down, employee’s needs and desires are shifting, and increasing investment, globalisation, and cheap technology are blowing holes through traditional barriers to entry.
Rapid business change (aka digital-lead transformation) is required to adapt, fend off disruption and remain competitive.
“Companies that succeed at digital tend to have leaders who share their vision and define a roadmap, create cross-organizational authority for adoption and reward employees for working towards it. “ MITSloane 2015
But herein lies the issue.
Most businesses recognise there is a need for change, but developing a consensus and clear path for what and how to change is what frequently causes digital transformation efforts to fail.
Many organisations have an initial digital strategy but they are lacking clarity and leadership, with confusion around what needs to happen and in what order.
Our digital transformation series aims at sharing practical and proven advice for businesses looking to take the necessary action to think through a digital change strategy and begin to execute effectively.
The insights we share have been developed over years of helping organisations adapt and change for better business outcomes.
A change framework: The key to bringing clarity to a complex task
Before embarking on any digital change programme, it is essential to have a clear understanding where your starting point is and the direction you need to travel for your vision and strategy.
The typical stages of transformation provide a top-level understanding of what needs to be done and the benefits it will bring. As outlined in the graphic below:
In turn, the digital change framework provides the blueprint to successfully move from one stage to the next to effect change from a 360-degree view.
The digital change framework, illustrated below, is built on 9 critical success factors, evolved over time by reflecting on our experiences of helping other organisations successfully move up the digital curve.
We will take a look in more depth at each critical success factor.
The success factors are a combination of both strategic and executional criteria that enables you to develop the right vision, structure, processes, and resources to successfully execute.
Each capability is an essential part of the change jigsaw, to focus your approach, avoid common pitfalls and get the balance right.
Becoming a digital expert
A commission survey by Forrester in December 2015 identified how experts in Retail, CPG and B2B drive results.
Based on the results, respondents were segmented into four categories: experts, operators, strategists and laggards.
The study found that one in 10 (11%) are digital experts, with the majority (57%) of businesses surveyed being laggards – laggard is defined as a company with weak digital transformation strategies and lacking the ability to execute.
A digital expert is able to develop a cohesive, well thought-out and customer-centric digital strategy, evolve the right culture and leadership to drive digital evolution, and then successfully execute and measure change effectively.
By balancing strategic clarity and executional excellence correctly, you will move to the ‘digital expert’ quadrant for digital-led success, reaping the benefits at each stage, optimising, growing and protecting your business.
By moving into the digital expert quadrant you will:
- Deliver excellent customer experience
- Create higher attraction and retention rates for critical talent
- Develop new areas of innovation, via both process and new business models
- Have greater effectiveness and efficiencies
- Demonstrate strategic flexibility
These capabilities lead to:
- Competitive advantage and protection from disruption
- Higher profit through revenue growth and cost reductions
Benefits already being witnessed from digital transformation efforts include increased market share (41%), increased customer engagement in digital channels (37%), more positive employee morale (37%), greater web and mobile engagement (32%), and increased customer revenue (30%). – State of Digital Transformation Report, Altimeter Group, 2016
What order should digital transformation happen in?
It will come as no surprise that strategic change factors MUST come first – with clear vision, strategy, objective and targets sitting right at the top of a pyramid.
These elements are essential to get the direction of change focused in the right way, to answer these important questions:
- Why are you trying to transform digitally?
- What is your priority?
- What is your measurement of success?
- What is your starting point?
How you execute will hang off this vision – technology has to be selected or built. Even as technology gets better, more adaptable and can guide your vision, you will still need to know the detailed vision and objectives.
Change can be incremental, happening project by project, but the strategy must always sit at the heart of this.
Other strategic factors required for successful digital transformation
Your strategy should be underpinned by 3 other critical strategic factors:
- Ownership of ‘digital ’ by ALL of the executive team and sponsored by the board
- Customer experience led throughout the business
- The right organisation, environment and employee experience
These strategic elements enable you to focus on embedding digital across the whole of the organisation and clearly deliver the value back to your customers and other stakeholders.
The executional elements for successful change
Once you have addressed the strategic elements you will need to start to effectively execute!
The critical elements to consider are:
- Developing a long-term technical and data architecture plan
- Making the right levels of investment – realistic and planned
- A communication plan which brings the vision to life – what will the change look like?
- Planning and measuring change ‘centrally’ – for the whole business
- Cross-functional working / the right creation practices – ensuring it is customer-led
An overview of the critical success factors
Let’s go into a little more detail on what we are talking about for each critical success factor.
Clear vision, strategy, objectives, and targets
Central to successful digital-led change, is a clarity on what the business should look like, how it will change, and the role digital has to play. This should encompass the customer’s, employee and company viewpoint.
Vision. The vision should delivery high-level clarity. It should include priorities, ambition and outcomes and specify KPI’s to be used. It should also include your appetite for risk and investments and enablers to the vision.
Strategy. This is about developing a crystal clear direction for the organisation (how do we get there?), building incremental detail over time.
This strategy will define in detail your roadmap (tech, skills etc.) and priorities, capacity, methods and resources – for each stage of change. It should also identify the funding and investment needed for change to happen.
This should be supported by laser-focused objectives of what needs to be achieved, as well as clarity on how this will be done (strategy) and measured, with an absolute understanding of digital’s role within.
This will mean you develop a target to plan to and delivering understanding where change is needed.
Objectives. Your objectives provide your timeline and goals. The roadmap should cover the short, medium and long-term.
Targets. Targets should be clear joint-planning, with ‘agile’ execution methods delivered by digital and technology. Each working together to bring benefits to the business.
Ownership of ‘digital and IT’ by ALL of the executive team
This is about getting everyone behind your vision to make it work.
Defining the role of digital in your business strategy, what it can do and how to achieve the benefits.
Change needs to be led from the top and consensus agreed within the executive team. This can then be cascaded down the whole organisation.
The CEO needs to take responsibility for leading and executing the strategy. The CTO and CIO in charge of technology/data should also form part of the executive team. This ensures that buy-in and decision-making of digital change are directly owned by those at the top, and not further down the reporting chain.
Digital transformation initiatives are currently led by different individuals: CMOs (34%), CEOs (27%), CIOs/CTOs (19%), CDOs (15%), CXOs (5%). – State of Digital Transformation Report, Altimeter Group, 2016
Customer experience led throughout the business
A critical behavioural shift is to primarily plan from the customer’s viewpoint, rather than from process improvement driven.
This is fundamental to success. This should include customer experience across all channels, and also in terms of data and information (analytics, insight, financials, KPI’s), technology and systems (ops, business, automation, HR), and product (supply, logistics and warehousing). In addition, it is critical that your employee experience is considered – tools, training and empowerment.
“From a customer experience perspective, we made the mistake of not putting all our products online. Not available instore and then not available online, a very negative reaction.” Head of Digital, Selfridges (2016)
The right organisation, environment and employee experience
Having the right organisation and cultural environment is critical to successful change. The target is one that creates an incredible Employee Experience (EX). Assisted through digital enablement…
Planned change through each stage, in terms of target values, skills, training, structure, size, processes, communication and cultural/behavioural shift.
Focusing on developing the right digital leadership skills and environment for today and tomorrow, in order to attract, retain and develop strong talent.
A long-term technical and data architecture plan – one that will bring the vision to life
A clear technical and data plan should enable the business vision and strategy from the short to the long-term.
Primarily led by the business strategy, with secondary objectives to control costs. Thereby, removing the risk of precluding effective business.
The plan should highlight the target capabilities, migration planning and investment needed. It should cover interfaces, applications, middleware, information systems, and data and reporting.
Making the right levels of investment – realistic and planned
Budgeting and investing for direct costs, but also the indirect costs, needed to make the transition successful.
Direct costs in new skills, marketing, technology and operations.
Indirect costs in areas such as training and education; expertise to remap processes and measurements; time for better working practices.
Fully comprehending the time and monetary investment of the change.
A communication plan which brings the vision to life – what will the change look like?
This is vital to visualising and bringing to digital vision to life. This is very much about communicating what the business will look like to everyone in a clear and simple way for your customers, employees and your owners.
This plan should be led by your senior management team and articulate the benefits and when things will feasibly change.
Injecting time and efforts to do this regularly and proactively will vastly improve your chances of success!
Planning and measuring change ‘centrally’ – for the whole business
A central change function should be created and tasked with articulating the business strategy into a top-level roadmap covering the whole business. This function should work across all areas to ensure the plans calibrate with the strategy.
This is about setting the pace of change to be feasible and realistic as a business. Encouraging incremental and successful steps across the business to build the momentum of change.
Setting the right KPI’s should be used to measure success, and ensure you are on track with the strategy.
Cross-functional working / the right creation practices – ensuring it is customer-led
Delivering customer-led experience development is central to success – building interfaces/assets once for multiple audiences.
This is about establishing a ‘hybrid’ approach to ensure ‘waterfall planning’ but with ‘agile’ delivery methods.
Working practices should be integrated and transparent through both creation and delivery. A cross-functional, collaborative approach between teams and departments to break down silos and improve customer experience.
Driving change and getting going
A change framework allows you to bring together all the critical success factors needed to drive and manage change.
To get going, change can be small and managed in increments. However, it should be measured against the KPI’s that you set at a strategic level, to deliver clearly articulated business outcomes.
By having a clear understanding of what you want to be, changing project by project and in a joined-up planned way, you have a chance of building momentum and success – for competitive advantage and tangible business benefits.
Need some help with your transformation plans?
Our Strategy & Leadership team are highly experienced in helping businesses solve their digital transformation problems.
We have delivered multiple integration and successful digital transformation programmes.
We can help you to define your vision and create values and behaviours which allow your business to change and grow. Providing hands-on, down-to-earth, proven expertise.
We offer a free 1-hour consultation via Skype or telephone.