Digital transformation: what it means and why change management is crucial

Meredith Carson, Managing Partner, Golden Equator Consulting

Digital transformation encompasses how organisations employ technology to re-imagine and re-invent their processes and offerings to achieve a competitive advantage across the business. Over the years however, “digital transformation” has been used as a catchall term that encompasses not only transformation but also the integration of digital technologies that automate manual processes and addresses operational inefficiencies within an organisation, as well as the optimisation of the suite of digital systems that an organisation uses.

Overlooking the distinctions between digital transformation, integration and optimisation is problematic for businesses as it leads to misalignment in objectives and expectations, as well as misplaced and squandered resources – which is often why digital journeys fail.

Another reason why digital journeys fail can be attributed to a lack of alignment – especially within senior management – in articulating and defining need-states and the required solutions.

Last but not least, change is an inherent part of any digital journey. It can also be a confronting process for those most affected. However, organisations often overlook the importance of drawing up a change management strategy in order to communicate change, drive adoption and foster inclusivity – especially with those affected by the digital initiative.

All of the above can lead to suboptimal outcomes when engaging internal stakeholders about the need for digital investment and support.

It is no wonder that 70% of organisational digital journeys hit roadblocks and fail, according to research by McKinsey.

To achieve success in digital journeys, it is essential that organisations map out and clarify the nature of the digital journey required – whether it is digital transformation, integration, or optimisation. It is also important that organisations draw up a plan to manage culture and change. All of these will help all stakeholders understand how and where resources are best placed, as well as enable their buy-in and adoption.

Digital Transformation – the rise of tech giants

Digital transformation is the evolution of new business operations, outputs and outcomes. It involves harnessing technology to help a business anticipate new market requirements. In its finest form, digital transformation has the power to create new market leaders and disrupt industries.

Think about how Netflix has redefined the way we access entertainment and the impact it has had on the industry, from cinemas to movie rental stores. Think about how ride-sharing apps have negated the need to stand by the roadside to flag a taxi and has improved personal safety through tracking. Think about how video meeting applications have removed the need for people to be in the same physical space to conduct a discussion.

Digital Integration – the often misunderstood and overshadowed digital journey

While “digital transformation” is the term most often thrown around, what businesses more frequently require is digital integration.

A digital integration initiative involves assessing an organisation’s existing workflows and determining whether greater efficiencies can be achieved through the use of technology. Digital integration also encompasses the concepts of “digitisation” (making analogue data digital) and “digitalisation” (using technology to enhance and augment formerly analogue processes).

More commonly, digital integration involves the use of analytics to better define customer profiles and segments, and then using this data to improve customer experience through better digital user interface design, for instance.

Digital Optimisation – spotting the looming iceberg on the radar

Digital optimisation means tackling an increasingly common problem: digital bloat.

Digital bloat occurs when different teams across the organisation use many digital tools, some with overlapping functionalities and many with incompatibilities. Some teams use Asana, while others use, Trello, Smartsheet and the like. The usage of multiple digital tools across teams also creates costly silos, double-handling, and frustration.

Sound familiar? Unfortunately, using a multitude of fragmented digital systems that result in inefficiencies and process roadblocks is a sign of the times. Hence the need for digital optimisation.

The digital optimisation process involves taking stock of all digital tools that an organisation currently uses, identifying overlaps and conflicts, and thereafter finding potential opportunities for the consolidation of data, systems and processes.

Ensuring digital journey success

A digital journey is exactly that – a process and not a one-off project. It is deep and affects many, if not all, aspects of a business; it requires dedicated resources and time investment, as well as an appropriate change management strategy.

An example of change management success can be seen in Sansiri’s organisation-wide digital initiative that sought to improve work productivity as well as the customer experience.

Sansiri – one of Thailand’s premier property developers – first set up a cross-functional steering committee comprising members from IT, Marketing, Product and Finance. Besides overseeing the organisation’s digital initiative, the steering committee was also responsible for the internal communications plan that would convey the “whys” and “hows” of the initiative.

The plan encompassed both online and offline channels – which even included information and advisories placed on the back of bathroom doors. Moreover, Sansiri organised townhalls to educate staff and enable them to raise any questions about the new policies and software. These efforts resulted in optimal employee buy-in as well as fluency in Sansiri’s initiative.

Besides the need to manage change, it should be noted that digital journeys are strategic and long-term endeavours. Therefore, it is important not to lose sight of measurements, progress, and adjustments. Strategies for digital transformation, integration, and optimisation should be implemented and improved upon in phases to ensure success.

Given the pervasive nature of digital initiatives, and results that may be incremental or realised in the long-term, it is also important to obtain senior management buy-in and support for the long haul and to keep the lines of communication open with regards to progress.

That is why digital initiatives should have success metrics that are well defined and structured in a way that can be easily understood by the entire organisation – not just the IT team.

Having a very clear and deep understanding of the business problems or the opportunities that organisations wish to address is the most important first step. With a clearly defined purpose, the business can then decide which digital path should be taken to reach their goals – transformation, integration, optimisation, or even a hybrid – while putting together a digital taskforce that includes internal stakeholders, teams, and trusted external specialists.

In digital journeys, it is highly advised to start small, stay humble, test and learn. Approaching it with a “beta” mindset will mean that organisations can remain nimble, listen to feedback, course-correct along the way and ultimately, achieve the objectives initially set out.

Against the backdrop of the COVID-19 global pandemic and potentially lower level of business activities, the time is now for businesses to rethink about what digital initiatives they might need to implement presently to stay relevant and competitive for the next decade.