What companies have done for decades is put together a strategy. This is their best guess for how to achieve their vision for where they want to go. They have done that at planning meetings once a year—built 3-5 year strategies, gone out and tried to execute to that strategy, then met up again at the end of the year to see how they performed against their goals, tweaking their approach if needed. This approach to strategy doesn’t work anymore. The world is moving way too fast to have a set-it-and-forget-it strategy.Read more
Digital is disrupting legacy business models and changing the way businesses operate. In the next 10 years, half of the S&P 500 will be at risk. To survive, businesses must move fast, adapt quickly and be innovative. Those that fail to do so will lose momentum and get left behind.
The verdict is clear: every business must become a digital business.
Digital transformation can unlock growth and innovation. But it entails inventing new digital business models, building intelligent platform capabilities, reimagining customer experience and igniting a culture of innovation. Inevitably, it requires companies to run two races at the same time – optimizing your current business AND inventing your future business.
Traditional organizations lack the agility and inventiveness of digital businesses and struggle to capitalize on market opportunities. The urgency and importance of digital transformation is being recognized by large companies as they embark on massive enterprise-wide initiatives. Yet, there’s a big disconnect between the desire to transform and the ability to do so. Up to 84% of digital transformation initiatives fail, with a loss of billions of dollars annually in the US alone. Misaligned expectations, and rapidly changing customer and business needs date strategies before they are minted. Even companies who have the right strategy fail because of lack of cultural and organizational readiness to act.
Companies can no longer approach change with a “wait and see” mentality. There is a growing divide between the “winners” and the “losers”. Profit distribution in markets is becoming much more disproportional than it has ever been before. In fact, the negative effects of digital competition on a company’s growth in EBITDA are twice as large for the bottom three-quarters of companies as for those at the top quarter. Research has shown that some companies are earning outsized returns, while many others in the same industries are experiencing returns below the cost of capital.
Business leaders know digital transformation is essential but often don’t know what to do and where to start. Reports by industry analysts reveal the differences in understanding what digital transformation means. For some business leaders, it means “going paperless”. For some, it means automation and efficiency. For others, it means reimagining customer experience. Still, for others, it means product and service innovation. It’s no surprise that while 90% of companies are engaged in some form of digitization, only 16% have come up with a bold strategy at scale.
For incumbents to successfully adapt to digital, it’s important to focus on the core business to maintain current revenue streams, yet still transform it based on changing demands and future growth engines. Embracing such holistic transformation is what shifts traditional businesses into modern, digital businesses. But change of this magnitude is simply not possible by merely implementing new systems and processes. It requires a change in approach, culture and mindset. Lack of clarity, unwillingness to take risks, and inability to stay the course often become barriers that hold back companies from successful transformation.
Here are 5 essential elements to successful transformation:
1. Clear Purpose
The most effective digital transformation journeys start with clarity of purpose. When old models and methods are disrupted, we are presented with a blank slate to craft a compelling vision of the future. It’s an opportunity to define a new role for your organization and how it creates and contributes value to society. Digital inherently has global scale – you simply cannot ignore the impact your products and services will have in this context. Understand your customer, social, economic and cultural context to identify areas of impact. Connect your mission to these opportunity areas and clarify your purpose for transformation so that everyone in your organization is fully aligned. Brands without purpose are at risk of being irrelevant in a future where purpose differentiates more than profit. When you have a bigger purpose and a bold vision, your entire organization catapults forward.
2. Courageous Actions
Transformation is a contact sport. You have to be bold in being first or a fast follower to get results. No vision can come to life without courageous action. But fear of failure can cause inertia and nowhere is that more true than in adapting to digital. Solve big complex problems by making the problem smaller. To overcome the challenge of not knowing what to do or where to start, you must adopt an agile approach, that means relentlessly testing and learning, launching new prototypes, and refining results in real time. During this process, failure is quite common. After all, innovation is not possible without taking risks and trying new things. However, since failure is limited to smaller experiments, you can fail fast, learn immediately and pivot quickly. Adopting this iterative approach to delivering the right outcome not only ensures success, but it also ignites momentum within the organization when teams face their fears and learn from failures.
3. Continuous Learning
The strategies you define and the actions you take are only as good as the insights you have. Relying on outdated information leads you to the wrong strategy and is a recipe for obsolescence. The speed of translating data into insights into action and then learning from that loop is more valuable than any specific insight. Legacy organizations may have a cycle time of months or even years, while digital businesses may have cycle times of hours or minutes providing massive competitive advantage to capitalize on market opportunity. Digital gives businesses countless new opportunities to learn. Become a continuous learning organization is necessary to stay constantly relevant. When organizations shift from “all knowing” to “always learning”, they are well prepared to take on any challenge that comes their way.
4. Creative Spirit
Innovation is fueled by a spirit of creativity, diversity and openness. For creativity to occur there must be an open-minded culture that fosters ideas and encourages team members to evaluate the leader’s ideas. Engage employees in the innovation process to reimagine customer experience and explore new business ideas. Explore partnerships and collaborations that take you outside your norm, and bring in fresh ideas and new possibilities. Commit to diversity of people, ideas and perspectives. Support a creative culture where curiosity is nurtured, and new ideas are welcomed. Train employees on new techniques and technologies that break existing patterns. Encourage bold ideas and risk taking by recognizing the right behaviors.
5. Change Agents
Change is inherently painful and difficult, and even more so when the change is significant. That’s why innovating in large organizations is challenging. But when change is embraced, it has the power to unlock innovation and fuel growth, enabling any organization to turn obstacles into opportunities. Identify the people that are natural champions of change and social influencers. Empower them and share stories of their impact with others. When change agents are connected across the organization, change becomes inevitable.
Be the change!
Digital gives us an extraordinary platform for creating impact at scale. The real challenge of digital transformation is not technological; it’s cultural. How do you change mindset and behaviors? Whatever your role, you must be a change agent who can define the future and not just adapt to it. Are you ready to be the change?
Subscribe for more insights.
Digital transformation is more than simply ‘digitizing’ the organization – read more from Rich Kang, Chief Product Officer, about how we make elephants run.Read more
At BeyondCurious, our core values revolve around unlocking potential in people, organizations, and brands to help them become catalysts for digital change.Read more
In the past few weeks, news headlines have been dominated by stories of conflict across several dimensions. There is a desperate need for hope and optimism – and most importantly for bold leadership.Read more