The phrase “digital transformation” refers to how organisations adapt to the digital era by integrating digital technologies and the accompanying mindset. In certain circumstances, modernising tools and boosting productivity in various departments will suffice. Other businesses may need to establish entirely new departments or launch new enterprises founded on cutting-edge digital commerce concepts in order to complete their digital transformation.
It may seem contradictory for a technology company to state this, but the technology enabling digital transformation is more thrilling than the digital aspect itself. Clinchworthy software and high-speed networks are among the remarkable technologies that have revolutionised the sector, offering the potential for real-time global collaboration and access to both contracted and uncontracted global talent.
Numerous enterprises incorrectly perceive digital transformation as a time-bound endeavour, similar to implementing enterprise software or establishing an online store. However, they fail to realise that this process is ongoing and the significance of continually assessing and refining it is overlooked.
That’s alright, since authentic transformation is a continuous journey.
As humans, we have a tendency to seek closure in circumstances that are actually continuous. We commemorate important occasions in our lives and relationships, such as birthdays and anniversaries, as if they were the concluding chapter or a fresh start. It would seem that we have a natural urge to complete a task and swiftly move on to the next.
Concentrating and maintaining productivity towards a particular goal is a useful technique for accomplishing tasks. A product launch that employs new technology is highly unlikely to be successful without a specific goal or deadline. Since digital transformation is an ongoing journey, it’s likely that the goals set currently will have evolved in a span of 6-18 months.
As transformation is a constant process, how can success be measured? Internal and external benchmarking prove to be two of the most successful approaches.
When establishing internal performance benchmarks, it is crucial to identify a few critical success factors. Your chosen performance indicators may alter over time, but it’s important to avoid collecting an overwhelming number. Even though an aesthetically pleasing dashboard report with multiple metrics may help you gauge a good indicator at a given moment, too many metrics can result in a lack of direction and ultimately make them unproductive.
While selecting which qualitative metrics to monitor in your digital transformation initiatives, it’s crucial to evaluate their quantitative significance. In case you intend to enhance employee engagement, you may track the progress by examining retention rates or offer acceptance rates. If you want to encourage creative thinking, why not evaluate how many non-traditional sectors beyond your core competence are contributing to your company’s earnings or how many new products are being launched into the market?
Through my running experiences, I have come to appreciate the significance of analogies when it comes to fitness. For instance, if I aim to ‘boost my speed,’ a quantifiable metric could be my mile time. To improve my speed and endurance, I could observe how quickly individuals run the final five kilometres of a marathon. These uncomplicated, concise and measurable Key Performance Indicators (KPIs) reflect an array of intricate factors such as sleep, diet and training. With a little imagination and exploration, I can identify a qualitative KPI that encompasses several aspects of my progress.
It’s crucial to review and modify the metrics throughout the transformation process. Having gone through my own ‘running makeover,’ I have witnessed significant improvements in my running performance. For effective digital transformation, the objectives should be evaluated every year, similar to how I monitor my progress.
Evaluate Competitors Thoughtfully
External benchmarking has proven to be a dependable way of evaluating the accomplishments of transformation initiatives and establishing future objectives, which in turn enhances digital transformation. While assessing performance through external benchmarking, it’s essential to avoid the error of comparing one’s performance to that of digital natives since this approach may not always be precise.
Comparing its digital capabilities directly with those of Meta (Facebook) is not a wise approach for the oil company as it would be impractical to assess the oil corporation’s capacity to perform oil and gas exploration against that of a social media giant.
To comprehend the approaches adopted by other sectors akin to your own in their digital transformation, it’s advisable to study their processes. Suppose there is a significant overlap between the two industries. In that case, it’s reasonable to compare, for instance, a medical equipment manufacturer with an automotive producer. Rather than assessing your company’s efforts with those of ‘digital natives,’ who have a lead of several years, it’s recommended to identify companies and industries that are 6-24 months ahead in their digital transformation efforts.
Learning from the strategies of experts can be advantageous in enhancing one’s skills, and this holds true for businesses as well; they can offer valuable guidance on how to succeed. While benchmarking, it’s essential to bear in mind that digital natives should not be considered as equivalent peers, similar to how a novice golfer should not compare their swing with a professional’s.
Regularly reviewing and updating external criteria, such as key performance indicators, is vital. As the current peer group reaches its zenith or becomes mature, it’s essential to keep an eye on any revolutionary changes occurring in emerging industries.
You might exceed your initial comparison group and find it necessary to select a new set of peers to assess your progress.
Realign and Make Another Attempt
Thriving digitally transformed businesses prioritize the development of digital capabilities that promote swift adaptation and effective utilization of emerging technologies, not the utilization of any specific technology. As your digital transformation journey moves forward, your organization’s ability to identify and efficiently implement digital technologies and processes will improve.
Initially, your digital transformation objectives might have been geared towards cost savings and operational efficiencies. As your capabilities evolved, your focus shifted towards broader objectives like promoting innovation and aligning with your company’s strategy. Rather than treating digital transformation as a one-off project, it’s more advantageous to perceive it as a continuous process that enhances skillsets applicable across the organization, instead of just a singular technological innovation.