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Successful Digital Business Transformation – Part 1 Selling the Idea

November 5, 2019 | Oro Team

Everyone’s talking about the digitalization of business and has been for years now. So why hasn’t every business undergone a complete digital transformation by now? In this four-part series, we’ll look at why companies resist digitizing and how to sell the digital transformation idea; how to build a strategy for the digitalization of business; if and when you should enlist digital transformation consultants to help along the way; and finally what to expect at the end of the journey and how to determine if you have been successful.

Strap in tight. There is going to be a load of information coming at you quickly, you might want to bookmark this article and refer back to it as you follow the series and think about your own digital business transformation.

Why Digital Business Transformation is Lagging

Digital transformation isn’t easy. 70% of large-scale attempts at the digitalization of business fail according to McKinsey & Company research

Even in large companies with access to great resources the process takes time, but it does pay off in terms of an increase in stock prices and revenue.

Digital Transformation Time Frames


Technology giant Microsoft took 5 years for their own transformation but reaped a stock increase of 258%.  Best Buy escaped nearly certain death with its digital transformation. It took 7 years, a new CEO, a move from printed, mailed marketing to almost exclusively digital marketing, and a new service-driven perspective but Best Buy is now stronger than ever after its transformation.

So, what’s holding your company back? In B2B, there’s still an incredible amount of old-school thinking. Top management either doesn’t understand how the digitalization of business will give them data to make truly informed business decisions, thinks digitalization just means a shiny new website, or sees technology as a costly unknown that is to be feared.

Or, it might be that the day-to-day challenges of remaining competitive are so all consuming that there’s no big picture thinking. As the old saying goes “when you’re up to your backside in alligators, it’s hard to remember that your goal is to drain the swamp”. Slumping sales, overstock or lack of inventory, and marketing that isn’t yielding the desired results are the snapping alligators that management may deal with daily. Fighting those snapping alligators keeps management from seeing that a digital business transformation is the swamp-draining solution to their problem. So, where do you even start? You need allies.

Find Fellow Digital Transformation Advocates

Cultivate digital allies throughout your company. These allies will form your initial core team of digitalization advocates. Don’t necessarily think narrowly in terms of organizational hierarchy but more broadly in terms of functionality. How would digitalization help the purchasing function? Find an ally there. When Home Depot underwent the digitalization of their business, they uncovered customer data that helped them keep the right items and quantity in stock without losing money on excess inventory and reduced out of stocks by 24%.

So, when looking for allies, don’t overlook those in charge of your supply chain. Marketing and sales are the two obvious places to find digital allies. How would the digitalization of business transform their functions for the good of the company?

Digital advocates should be part of a team that:

  •       fosters employee engagement at all levels
  •       obtains management support and
  •       leads to cross-functional collaboration throughout the digital business transformation.

Addressing these three people-oriented areas of concern will help you avoid the pitfalls that McKinsey & Company found lack to be contributing factors to transformation failure. With this team of initial believers, start analyzing the reasons the company hasn’t undergone a digital business transformation.

It’s Not So Elementary

If your C-suite is occupied by living and breathing individuals, don’t think they haven’t heard of digitalization and its general long-term benefits. They have, the reason your company hasn’t started their journey or started and failed isn’t that elementary. You and your digital advocates must put on your detective hats to determine why this hasn’t happened. This is crucial for gathering the right data for your pitch.

So, ask again. What’s holding the digital transformation back? Are the root causes financial, logistical, or psychological?  Was there a prior attempt that ended badly? Does the cost hurdle seem unsurmountable? Is there a fear that the company doesn’t have the personnel resources or expertise to undertake a digital business transformation?

Or the answer might be elementary after all. If upper management consists of old school thinkers, it could be a combination of the fear of the unknown and the fear of admitting they are no longer in step with the latest business practices. After all, nobody likes to feel as if the world has changed and left them behind. If that’s the situation, then you must proceed with extreme caution. No one wants to feel old or left behind. In addition to data, some psychology might be in order. You’ve got to create in them a desire for the change.

Gathering Industry-Specific Data

Once you’ve identified the barriers to the digitalization of the business, it’s time to dig up the data that will be your ammunition.

Review your industry’s current ecosystem and look towards the future. In a true digital business transformation, you don’t just add technology on top of an existing model. That’s what GE tried to do with GE Digital and it failed. With GE, there were no game-changing innovations, just another subsidiary shackled by its P&L.

Instead, contrast this with Nike who embraced all things mobile to complete their digital transformation and saw Nike Digital grow 36% globally. Speaking about the SNKRS app, Mark Parker, Nike Chairman and CEO says the “SNKRS app to me is really a signal of the future potential of how we connect with consumers in a deeper way with storytelling as part of that effort,” and it’s an effort that pays. Traffic and revenue were up triple digits in the third quarter of 2019.

In addition, by simply digitizing its palette of 6,000 materials, Nike designers worldwide could easily build on each other’s work and adapt to consumer trends bringing products to market faster. Plans for implementing RFID technology to enable a connected inventory and demand sensing technology are on tap for 2020.

Also, as you gather data, consider how a digital business transformation can help your customers improve their business. Honeywell started their own internal digital transformation for manufacturing in 2016. As they streamlined their own internal processes and underwent a digitalization of the business, they began to see ways they could help their business customers on their own digital journey. While the digitalization of business continues, it continues to have a positive impact on their stock prices.

Honeywell Digital Transformation


Include estimates of the impact on your stock price where possible. This is the sort of hard financial data the C-suite needs to see if you are going to make the case for digitalization of business practices and embracing a complete digital strategy.

The data you collect should directly correlate to the fears and hurdles you identified in the prior step of this process.  Are the fears financial? Then come at them with not only estimates of costs (you don’t need a hard and fast budget at this point) but lost include opportunity costs. Show where you are compared to the competition. When Quicken Loans undertook their digitalization of business, they turned the entire mortgage industry on its head. The Rocket Mortgage changed how people can get home loans. Using an app and instant asset and credit checks, a mortgage is approved in mere seconds. It took 5 years and 450 people but Quicken is now the industry leader by being the industry disrupter. That’s the type of vision and data you need to present.

If the fear is that the company just doesn’t have the human assets to undergo the digitalization of business, be prepared to bring in your enthusiastic team of transformation promoters. Show how they can take the lead in key areas. Don’t be afraid to suggest using consultants and contract talent to fill in holes. Also, remember, most technology comes with implementation support. You’ll read more about that later in this series.

Finally, remember your data is making the case that the purpose of digitalization of business isn’t just to adopt the newest, slickest technology; it’s to provide additional value to the company by better serving its markets, customers, shareholders, and employees. According to research published in the Harvard Business Review, leaders of digitalization of business show improved performance across the areas of customer interaction and relationships; manufacturing, product and service delivery; the development and delivery of new products; and employee productivity. Make sure you use these stats as arrows in your data quiver:

Digital leaders are:

    • 2 1/2 times more likely to harness real-time data and analytics to deliver the tailored customer experiences buyers are demanding
    • 2 ½ times more likely to use analytics to develop actionable intelligence about customers
    • More than 2 ½ times more likely to use analytics to limit customer churn
    • 1 ½ times more likely to optimize production runs based on demand forecast
    • 1 ¾ times more likely to be able to predict equipment downtime using data
    • 2 1/3 times more likely to use predictive modeling to anticipate customer support requests
    • 2 1/3 times more likely to influencing their product designs based on data they capture about how their products are used
    • Almost twice as likely to remotely monitor products and drive customer support based on this data
    • About 2 times more likely to use data to benchmark customers and advise them on how to realize greater value
    • Over 2 1/2 time more likely to collect employee performance data and generate development recommendations based on the data
    • Almost 1 ¾ times more likely to allow employees to define and receive real-time alerts that allow them to more effectively manage changes in business.

After a digital business transformation, a business has access to the up-to-date data and insights needed to execute their strategy, improve decision-making, and make better predictions about their business.

Telling the Success and Failure Stories

Come prepared with digital transformation examples in manufacturing, or any other industry case studies, to showcase how it improved a company. Don’t be afraid to tell stories of digital business transformation gone wrong either. Just be prepared to share the lessons learned from the failure.

In addition to the success and failure stories we’ve already included, here are a few more hits and misses.

P&G.  Proctor & Gamble was an industry leader when they decided to undertake a complete digital transformation and become “the most digital company on the planet” in 2012. Such a broad goal was destined for failure. Their initiatives lacked purpose and pretty soon CEO Bob McDonald lacked a job. The lesson learned is to make sure goals have focus.

Allstate. This insurance giant realized that the computers in today’s vehicles hold a wealth of data about how people drive. For example, how often you slam on the brakes, how fast you accelerate, and the average length of your trips are all indicators of your driving habits. Allstate began to offer drivers insurance based on their individual driving habits gleaned from the onboard technology and not just actuarial data. Like the Rocket Mortgage, this disrupted the entire automotive insurance industry.

Amazon. Amazon changed shopping forever. This chart says it all.

Amazon business transformation


Don’t be Afraid to Pilot

You don’t have to suggest a complete digital transformation of the company to get the ball rolling. Don’t be afraid to run pilot projects. Start small and prove that a digitalization of business in one area is effective and should be scaled.

Grab a few of your colleagues and run an experiment. For example, grab an open source CRM or sign up for a free trial and replace those outdated spreadsheets with a digital solution. Use free survey software to collect insights on how customers are interacting with existing products.

Measure your results and share them. Generate some excitement. Lay the groundwork for the digital business transformation to come with quantifiable results. You know your business needs to be ready for the future. Start the ball rolling with these pilots, gather your like-minded coworkers, uncover what’s holding the digitalization of business back at your company, gather the data to remove roadblocks and allay fears and get ready to pitch some ideas.

Stay tuned. In the next part of this series, you’ll move from selling the idea to developing strategies for successful digital business transformation.

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