July 11, 2018
Your Digital Transformation Will Fail If You Overlook These 2 Steps
- Gartner found that “two-thirds of all business leaders believe that their companies must pick up the pace of digitalization to remain competitive.”
- Forrester discovered that 56% of companies have official digital transformation projects underway.
- Accenture calculated that “companies that understand digital transformation earn 26% more profit than others.”
In addition, researchers have also shown that investment in digital transformation is booming. In 2017 alone, more than $1 trillion was spent worldwide on specific digital transformation projects and by 2021 that number is projected to double to about $2.1 trillion. Digital transformation — with its systematic call to digitize work — is without question the way of the future.
And Yet… Digital Transformation Projects Often Fail
Despite the fact that so much money is being poured into digital transformation, the process can still be enormously difficult. MIT researchers Thomas H. Davenport and George Westerman wrote an Harvard Business Review article about widespread failed digital transformation failures at many of the nation’s largest brands, and a poll from 400 senior-level executives found that only 50% of them said they’re successfully enacting digital transformation projects. What’s more, McKinsey says 70% of “complex, large-scale change programs don’t reach their stated goals.”
Put simply, digital transformation projects don’t have the best track record.
That said, what choice do you have? You can't sit on the sidelines, hoping digital transformation is just a trend.
After all, by 2025 75% of the workforce will consist of digital natives. In addition, 43% of employed Americans now say they spend “at least some time working remotely” and 20-30% engage in freelance or independent work — meaning “going to work is becoming ‘logging in to work’.”
Ready or not, change is coming.
So how do you prepare?
It all starts with two key steps.
1. Create a Digital-First Culture
Above all, digital transformation is about your people and your culture. And yet when it comes to digital transformation, people and culture often get overlooked. As a result, employee engagement drops, management support is inadequate, and accountability is lacking. That’s unfortunate because without a culture that actually wants digital transformation, it’s nearly impossible for digital transformation projects to succeed.
Perhaps you’ve seen it before. A handful of people in a company introduce a new technology, only to have lackluster adoption. If you’ve seen it firsthand, you know that people need to see exactly why a new technology will actually help them personally in their day-to-day work before they accept the idea they need it. As Thomas Davenport, research fellow at MIT says, “digital is not just a thing you can buy and plug into the organization.”
In practice, this means that you have to spell out the exact benefits of digital transformation before you introduce any specific technology. Gather case studies, data, and (most importantly) testimonials that show that digital transformation brings big results. If people hear directly from other people like them that a technology has made their work easier, they’ll be far more likely to sign on.
Getting this step right is crucial because, as Forrester says, “You will never be transformed. You will always be transforming.” Ongoing transformation is the goal, and that goal requires you to build a digital-first culture from top to bottom.
2. Embrace the DNA of Work
To jumpstart your digital transformation it’s not enough to get everyone on board. You also need a process that embraces the DNA of work, which, as Workfront CEO Alex Shootman shows, consists of tasks, collaboration, and content. These three components are the building blocks for work in any modern business.
The DNA of Work
Tasks: The daily, weekly, monthly, and quarterly to-do list for each person at your company, top to bottom.
Content: The work produced by your employees. May include writing, video, code, design, manufacturing, and more.
Collaboration: The conversations and contributions across (and within) departments.
Ideally, everything will be viewable across all departments within a single operational system of record (OSR), which preserves the context of all tasks, content, and collaboration together in one place so the DNA of work can be analyzed, reported, optimized, and automated.
Your OSR must complement your ERP (such as SAP), your HCM (such as Workday), and your CRM (such as Salesforce) and adapt to your team’s needs, all while effortlessly crossing silos. It’s also essential for the OSR to enable agile work management, since according to Deloitte, 94% of executives say that agility is critical to their organization’s success, but only 6% believe their organization is agile today. Above all, your OSR must be simple, flexible, and partner-oriented, so it can plug into the technological ecosystems you already have in place.
The challenge is that most organizations don’t have true visibility across siloes to truly understand the DNA of work across their entire organization. This is detrimental because while 60% of a company’s money is spent on labor, only 44% of an employee’s time is spent on the primary work they were hired to do. The analog and siloed nature of work ultimately wastes a majority of the human capital investment. That’s why an OSR is so powerful when it comes to helping you embrace the DNA of work.
Digital-First Culture + OSR
Once you have a digital-first culture coupled with an operational system of record, you’ll find you're on your way to successfully transform your work. You'll see widespread adoption of digital tools introduced at your company. You'll see that your team effectively collaborates to put those digital tools to use. You'll see that every employee has immediate visibility into what’s happening across departments, which enables them to understand how your digital tools fit into your company's overall mission.
With these two components as your foundation, you'll also likely find (as Accenture Research shows) that you're on your way to earning 26% more profits annually than your Luddite competitors. Year over year, that will make all difference, and you won't find yourself in the graveyard of digital transformation failures.