In today’s hyper-competitive business environment, the C-suite is always looking for innovative and cost-effective ways to grow the business. A successful digital transformation is an important journey and one of the most direct ways to positively impact the bottom line by providing value to the customer funnel. In fact, IT may at times run and sometimes ruin, businesses across the globe. You have heard about “digital transformation.” It sounds like a buzzword, the latest confusing techno-talk. But it is not. Let us break it down.
The key word is “transformation.” In fact, digital transformation is one of those once or twice in a century phenomena – along with the invention of the printing press, mass production, electricity, and mobile phones. Yes, it is just that big. Just think of what it has already brought us: the super-computer, the iPhone, the internet, to name only a few.
Think of what industries digital transformation has already transformed: communications, media, manufacturing, healthcare, e-commerce, global finance and etc. And here is the thing: the digital transformation tidal wave has only just begun. What does it mean for your company, and your industry?
To answer that question, it is essential to think about how to overcome 6 Pitfalls for Results Oriented Digital Transformation.
This article identifies six common pitfalls which if avoided can be game changers for leaders embarking on a digital transformation journey. This is a version of “All I needed to learn, I learned in kindergarten” for digital transformation organized around six pitfall points below.
Pitfall 1: Doing It Later Has Consequences
Sears filed for bankruptcy in Oct 2018 because they never doubled-down on digitalization. This is a perfect example of what happens when the wait is too long… the world passes by. While working with Fortune 500 companies and many small to medium-sized business, I noticed patterns in their implementation of agile product engineering and digitalization programs ranging from “Do It Later” to “Do What Works Now.” Those who wait, lose market share to new business models deployed by fast-moving start-ups that create new consumer behavior taking advantage of the latest technology. At the same time, growing companies miss opportunities to gain customers and further increase revenue due to lack of collaboration between internal and external IT development partners that delays digital transformation implementation plans.
With a “do it later” mindset the business may fail as many others have. Instead of waiting, companies should move now using an agile mindset to:
- Leverage existing IT platforms by exploring new business channels, new horizontals, and verticals.
- Maintain employee engagement and make sure good employees and partners are not lost.
- Be responsive to customers, using partners to support activities if staffed inadequately to manage client’s issues.
As the company starts to enter into the digital transformation plan, use long-term strategic thinking. It’s more than implementing bleeding edge technologies for the sake of being first. Leaders should ask the following questions with their “business hats” on:
- Will using this technology win more business?
- Will this improve customer engagement while providing efficiency?
- Am I taking better care of my customers?
- Am I gaining more insight into my customer and customers’ digital footprint?
- How will I use this data to serve my customers’ and prospects better?
Another example of what not to do is Kodak. They lost their market dominance and brand advantage by missing the digital revolution after spending $5 billion on digital technologies that did not deliver the intended results. Companies miss opportunities by not implementing genuine pretotyping, rapid experimentation, and not having the right team to speak up and do the right thing. Think about “iPhone moment” or “Kodak moment” when “do it later” comes to mind.
Companies invest heavily in R & D to deliver innovation and top line growth. Unfortunately, these investments are often made without addressing the “+1 step” of creating being agile culture that fosters innovation (see infographic below). Lean approach, agile culture and aggressive implementation of pretotyping techniques will help ensure smooth delivery of the desired innovation. Companies must adopt tools early to enable internal collaboration, create an MVP culture, encourage employees to think freely and test innovation related products periodically well ahead of the release to reduce risks.
The infographic below depicts the before and after effects of innovation in isolation vs. the recommended team environments, and digital workplaces for real-time access to information and improved transparency.
“The best results are achieved by being agile – not by just doing agile. Doing agile is implementing cutting-edge Agile tools and practices in theory. Being agile, on the other hand, is about the mindset and culture. Like the difference between giving a man a fish and teaching him to be a fisherman. The longer-term and more reliable results come from a mindset – create being agile culture.”
Pitfall 2: Missed Upfront Thinking
Executive leaders are charged with setting strategy and effective implementation. How efficiently the organization is growing and managed during these disruptive times, will define the future. For example, Toys R Us did not pursue their customers’ preferences, use technology in stores, add online enhancements or improve the customer experience with disastrous results. Walmart used the data collected online and in-store to build a weekly toy sale program which engaged customers.
Similarly, Amazon took advantage of its digital footprint data by designing marketing campaigns for toys appealing specifically to the decision making parents. In both instances, big data, AI, and digitalization played a crucial role. A critical first step is considering how digital transformation enables the business strategy. Many leaders jump into execution without first thinking through the essential aspects of how to best use technology to drive their business results.
To avoid this pitfall, consider what customer behaviors will drive the business. Make sure these outcomes are integrated into the plan and move quickly to implement. As the project progresses, develop the “secret sauce” insights that will provide a strategic advantage. Validate these so they can become an exclusive part of the business transformation. To establish these insights quickly, use upfront market research, study consumer behavior shifts, industry trends, competitor news, and observing how innovative start-ups are disrupting.
Some key questions to consider during upfront thinking include:
- Who can help the company to be proactive to see down the road for the next 3-5 years and determine what type of technology implementations, readiness and IT modernizations will be vital?
- How to gain independent perspectives from management consultants and IT domain experts offering cost-effective resources to support the transformation?
- What ideas and changes are needed to improve the culture to create alignment across the enterprise to ensure collaboration between all functions recognizing that the core digital transformation components will differ for each?
- What are the competitors doing and not doing? Are there aspects of their digital offerings that should be adopted or avoided?
To put this thinking into action, build an expert team composed of independent thinkers and doers. Challenge them to think critically about how to make the implementation successful. They should build on and enhance disruptive ideas in ways that bring C-level leaders and their boards of director’s visions to a business reality. Lack of expertise will be paid for, whether in market misreads, execution failures, or dollars spent to fix poor implementation. If in-house experience is lacking, find solid high quality outside partners to support the internal team. Make sure the right talented team is in place to dedicate to the effort right up front, rather than waiting and learning what is needed through a failed initiative.
A successful digital transformation expert who also possesses hands-on, multi-industry experience will help develop a smarter IT trajectory for the transformation efforts.
Pitfall Observation 3: Missing Straight Talk
Internal experts sometimes hit a wall. They know there must be a better way to create or enhance a program or product, but they can’t risk saying so because they know it’s not politically correct or fear they will somehow be blamed for the costs to make the needed changes. These experts feel that their job security might be at risk if they tell the truth. Rather than face this risk, they keep quiet. Instead of embracing an opportunity that could vault the company forward and perhaps create disruptive positive change, they opt for staying calm. The bottom line is that “straight talk” about the real situation sometimes is missed. For this reason, it is vitally essential to get an independent perspective, either from the internal team or external consultants.
Whether leadership decides to put the full power of an external consulting organization behind the work or to stay solely with internal experts, make sure the team believes in the principle of robust and authentic communication of the facts of the situation. It will be candid and hard-hitting at times. Public expression of the reality of the case will serve the company well despite the pain at the moment. Selecting and training the team to have this approach will help them well into the future. If external consultants are engaged, a common pitfall is working with consultants who recommend solutions based on their own product sales agenda rather than what works most cost-effectively. As an example, while working as a management consultant to a large-cap media company, I noticed that a mid-range consulting firm was hired to conduct a critical production issues analysis. Instead of a cost-effective fix of their most significant issues initially, followed by a root-cause analysis to determine if more work was needed? Within a few weeks, they convinced management that what they needed was a complete rebuild of their whole platform. Leadership did not go for “straight talk.” In evaluating the situation four years later, serious problems surfaced with the newly installed platform. Consequently, the teams were replaced twice in six years. Had the company created the “being agile” culture and embraced the straight talk early, this may have been avoided. Focusing specifically on critical issues at hand rather than opting for an entirely new platform the outcome may have significantly improved.
To avoid this pitfall, consider using independent experts to help leadership understand the actual situation and shape their requests for help with a clear results orientation. Encourage teams to use “pretotyping” approaches to identify critical needs and process feasibility before implementation. Be on the lookout for firms offering a quick “transaction grab” to implement their own systems rather than focusing on just the work that is needed to address the identified needs. Be candid. Upfront straight talk will help avoid problems and ensure a successful digital transformation.
Pitfall 4: Choosing The Wrong Partner (The Important Question)
Selecting an outside resource can be challenging. Looking for a true “partner” is essential. This is a firm or person that takes on the role of walking in customer shoes as a leader to make sure the benefits of the work are realized in business results. Sometimes digital transformation means improving operational efficiency, customer experience, or creating new business models. To achieve these objectives, the partner must have not only the skills but also the patience to “walk” in customer shoes, during both the ups and the downs of the business. If the needs and gaps in the skills of the internal team are assessed, use this information to make the right choice of an outside partner. So, the “important question” is: What makes for an excellent digital transformation expert?
So many digital transformation companies have broad experience in technology, but sometimes they create dependency on their technology experts with the host company. The responsibility of outside IT expert or “partner” is to share their expertise. They should provide tools such as infographics to help explain the current status and desired future state, along with cheat sheets and checklists to enable management to be as self-sufficient as possible in the future. The proverb “Give them a fish, and you feed them for a day, but teach them to fish, and you feed them for a lifetime” certainly applies here. Experts should teach leadership to “fish” in “productive business waters.” The best experts provide the long-term partnership with a trusted advisor-type attitude during the transformation journey. It is not a single milestone event. Some of these partners are often willing to get paid for results (outcome-based) and are not just interested in billable hours.
To find the right partner, consider the following 11 criteria and ask if the prospective partner has:
- Substantial exposure and experiences with SMAC3 (social, mobile, analytics, cloud, content, and commerce)?
- Ability to quickly analyze and visualize the customer’s customer, and understand their perspective?
- Strong product engineering roots?
- Prior investments in understanding the customer’s business model and have the ability to learn, unlearn and re-learn quickly?
- Experienced in design thinking, problem-solving, innovation, strategy, creating partnerships, proper sourcing both on and off-shore, and IT enablement and modernization?
- Awareness of opportunities, and pitfalls, what can go wrong and how to handle these?
- Ability to give a quick, short and straightforward cheat sheet or checklist of “Do’s and Don’ts” along with the rationale behind them?
- Has a “Lean” approach. Do they help to realize the vital 20% using 80/20 rule?
- Ability to help leverage existing investments, internal resources, employees, tools, and software?
- Have a proven methodology using frameworks combined with deep experience in digital transformation with a blend of roughly eight-plus years of solid business experience and eight-plus years of IT know-how.
- The right partner for transformation should be able to provide a positive response to these questions. The result will be the solid management of all five stages (1. Strategy, 2. Design & Planning, 3. Implementation, 4. Optimization, 5. “+ 1” step of creating being agile culture) of the process using agile and adaptive teams with appropriate skills required for each stage to deliver results at the “right time, at the right price.”
“Design thinking, innovation, and ‘out of the box thinking’ do not come from ‘blinding insights’ or from episodic training programs. They come from a culture of open communication of ideas, and from approaching problems and solutions from different perspectives over time.”
Pitfall 5: Getting Stuck In The Process
Organizational leaders are responsible for the strategy and performance of the team. Sometimes, even with good intentions and focus, it seems like the team is just not making the desired traction. When stuck, business leaders and their digital transformation partners should work together to execute the following three simple points:
1. Empower internal teams to identify what went wrong (or what is about to go wrong) and give them the freedom to bring on board the resources and skills needed to implement a fix and solve the issues. By bringing in the right independent experts to address the identified problems, it showcases the support for the internal team and have greater confidence that the job will be done correctly. Focus on the benefits of the outcome balanced with the undesirable cost. Results are what matter.
2. Challenge the team to implement fixes that solve short-term problems without affecting the long-term strategy or goals. Sometimes small changes can have significant and costly implications, so the choice of the right small steps (pretotyping) is an essential first step.
3. Identify internal experts that are familiar with systems and provide them the training. If needed, partner with external consultants to create a roadmap that paves the way for the action steps to move the organization forward toward meeting the goals.
In short, empowering internal teams and using outside support to get the job done right will ensure to get “unstuck” and keep moving toward the digital transformation goals.
Pitfall 6: Forgetting That Cost Matters
When problems surface or aggressive new strategies are developed, one of the first questions is “how much will this cost?” The good news is that stable partners working to implement a well thought out digital strategy will have tremendous rewards. These services don’t need to be exorbitantly priced as compared to the value created.
Some consultants call themselves “digital transformation experts,” offering world-class “solutions.” And maybe they are and they will, but once fully revealed, the “solution” sometimes offered may be a way to sell their software and services. If not careful, this can lead to soaring costs and limit the ability of internal teams to work cost-effectively without expensive additional new software implementations. Be on the lookout for consulting companies with conflicts of interest generated from providing software solutions, managed IT services and strategic consulting simultaneously. Consider the benefits of an independent perspective. The most valuable advice comes from recommendations that are 100% independent keeping client’s interests first and foremost.
Find partners and consultants who do excellent work at reasonable cost early in the process (few hints are listed above in pitfall # 4: finding the right partner section) who genuinely have the customer’s interests in mind. They are the ones who work quietly and relentlessly to solve the problems with passion rather than a desire to make the quick buck and take advantage of the situation to promote their “solution.”
The power of new technology continues to fuel results-oriented competitive advantage for companies and leaders around the globe. Businesses must try to avoid these six pitfalls while implementing digital transformation. They are (1) doing it later, (2) missing straight talk, (3) missed upfront thinking, (4) choosing the wrong partner, (5) getting stuck in the process and (6) forgetting that cost matters. As a business leader managing transformation, understanding and acting on these six observations will help ensure you harness the power of digital transformation to deliver exceptional results.
Digital Transformation is a long-term transition which includes a series of technological investments to improve profitability and long-term competitiveness to enable the corporate strategies by involving customers, vendors, employees and realizing the business transformation.
Digital transformation involves re-alignment of the long-term organizational strategy to better meet the increasing technology needs of the clients, employees, and organization. It includes all of the critical operations, such as, Marketing, Sales, Product innovation, Talent Acquisition, ERP, HR, SCM, etc. to maintain the digital edge while streamlining the operations and transform.
At TechVelocityPartners.com, we have captured the essence of digital transformation in the Medha™ Framework. The infographic below depicts both the 4 steps, and “+ 1” process and the tools for both internal and external digital transformation.
If you have found this article helpful, the tactics listed in the related article titled “5 Steps to Effectively Handle Digital Transformation and Business Disruption: A Framework for Digitalization”, initially published in Oct 2017, may also be helpful additional reading.
This article was written by Bala Guntipalli, Sr. VP of Technology & Operations at TechVelocityPartners.com, a Global Technology Services Company offering cost-effective, and independent IT consulting services focused on digital transformation and other game-changing strategies.
Bala’s expertise and two-plus decades of experience include broad innovation, strategy, project management, product development, cybersecurity, P&L management, business development, and operations. He creates smarter IT-enabled processes, supports strategic decision making around “partner or build” decisions, enables business strategies and digital transformation.
His passion for strategy drives his success, creative problem solving, use of design thinking, implementation of agile methodologies, ability to build partnerships with third-party providers guided by the “Rotary 4 Way Test.”
Thank you to Steve K. Snyder, [email protected]; CEO and founder of Third Meadow LLC, a corporate growth consulting firm, for his contributions to this article.
If you would like to solve business problems cost-effectively or thinking of transforming your business into an omnichannel digital enterprise for a better long-term marketplace position, please contact me. We would be delighted to partner with you to accelerate your business success.
612-322-2470 / [email protected]