If your business can’t transform with technology, it will be transformed by technology. In the first part of our series on a successful digital business transformation, we looked at how Quicken’s Rocket Mortgage turned an entire industry on its head. That’s the power of a successful digital transformation. But, it can’t happen without a digital transformation strategy.
In the first part of this series, we looked at how to sell the idea of a digital transformation for your business. We explored how to identify roadblocks to transformation, gather allies, dig deep for data, run small tests, and pitch the big idea.
Well big ideas just remain big wishes if you don’t have a strategy. In part two of our series, we’ll look at how to form your digital transformation strategy by creating a digital transformation roadmap that assesses your current situation, creates key performance indicators (KPIs) for a successful transformation, looks at the resources you have and the resources you need, set priorities and lays milestones as guideposts on the path.
As with the first installment, there’s a wealth of information, so you might want to bookmark this article for easy reference.
You Need a Digital Transformation Strategy Before a Plan
If your transformation is going to be successful, you’ve got to have a strategy before you develop a plan. Your digital transformation strategy must speak to the “why” of the transformation not just the “how”. In part one, we looked at the abject failure of Proctor & Gamble to pull off their own digital transformation. They never developed a “why” so how could they develop a “how”? Failure was almost inevitable.
Contrast that with BestBuy who saw their entire operation threatened by Amazon and began their transformation process by recognizing that the “why” they were in business had to change. Their business digitalization strategy recognized the need to serve their customers in a whole new way. Enter the Geek Squad and in-home consultations and exit the stock analysts that had already sounded the death toll for BestBuy.
Abraham Lincoln is credited with saying, “Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” Now that’s dedication to developing a strategy and a plan for execution.
Assess the Ecosystem
No business exists in a vacuum. You need to look at your business ecosystem. It’s time to take a good hard look at:
- Current company performance
- State of the market
- Your market share
- Your competitor’s performance and their market share
In a recent interview with Forbes, Michael Gale, an industry expert in integrated technology marketing, explained that a successful digital transformation strategy had to include the internal ecosystem as well. His research found that a successful digital transformation ‘is a fundamental shift in how people had to think about how they interact, how they collaborate and work and if you don’t spend time changing people’s behaviors, you don’t spend time changing culture and how people make decisions, all of this falls flat.” So, make sure you include a look at the inner ecosystem as well as the external environment. Whether you are a disruptor or reacting to disruptions in your market has an impact on your strategy. After all, many a bankruptcy started because business leaders didn’t understand a market disruption or the impact change would have on their company.
Complete a SWOT Analysis
Next step in creating your business digitalization strategy is to bring in members from all departments to complete a SWOT analysis. And not just leadership. By providing a seat at the table at various levels, you’ll get an analysis with much deeper insights.
The purpose of this specific SWOT analysis is to identify your current digital Strengths, Weaknesses, Opportunities, and Threats. This analysis is crucial to begin charting your digital transformation roadmap.
Where does technology currently fall in your analysis? Is it a strength or a weakness? Does the office use the latest workplace technology or do employees grumble about finally letting go of WindowsXP?
Are you threatened by a competitor that recently launched a new website complete with online ordering and custom catalogs? Are you fully exploiting the capabilities of your CRM or is it just a glorified spreadsheet?
What untapped digital opportunities do you have? Is your current IT structure easily scalable? Are cloud-based options available? How many apps and platforms do employees interact with over the course of a day. Are integrations seamless?
These questions will shed light on the areas to improve, build upon and innovate.
When DevOps took a look at how a digital transformation strategy might have saved Toys R Us, the SWOT analysis looked like this:
Note that Amazon existed as both a threat and opportunity. But the real opportunity that Toys R Us missed was the explosive growth in the Toys 2.0 market. Had the opportunity been identified as a life-saver (a la Best Buy), a complete digital transformation might have resulted in a fresh Toys R Us that operated as a gaming service in addition to a toy seller. Alas, they did not and parents all over the world will be shopping elsewhere for toys this Christmas.
Define Goals and KPIs for Your Digital Transformation Roadmap
Goals are how you will execute your digital transformation strategy. Key performance indicators (KPIs) are going to measure your success or failure. So, defining your goals and KPIs go hand in hand. For example, if the business digitalization strategy includes a new website, you may have goals that target increasing revenue, decreasing costs, and enlarging your market share. In that case your KPI’s might be something like: increasing visits to contact page, decrease in support tickets, and improving search engine visibility.
These suggested KPIs for a website hit the key areas of usability, engagement, and conversions. If your digital transformation strategy involves the addition of chatbots, your KPIs might focus on number of conversations, length of conversation, and the rate at which customers are engaging the bot versus phone or email. If your new offerings include an app, keep an eye on the app’s ratings at the Apple App store and Google Play.
By agreeing in advance on goals and KPIs, stakeholders can stay focused on the desired outcomes and less on those day-to-day alligators snapping at their backsides. You have both a measuring stick and the measurements in place to assess success.
Identify Roles and Responsibilities
As discussed in Part One, Selling the Idea, a successful digital transformation strategy touches almost every part of the organization. So, every part of the organization must be a part of the project.
It’s not enough to identify the areas involved, you’ve got to identify who within each area will be the point of contact. Identify those people and give them the responsibility for a portion of the success of executing your digital transformation strategy. Don’t forget, along with responsibility they should be given the authority necessary to carry out their assigned role.
Team members will need to be relieved of normal duties to focus on the project full-time or you may have them working part-time on an “as needed” basis. Just be mindful not to pile on so much work that your inspired and motivated team members are worn ragged. Don’t forget your forward-facing team includes more than just sales. The Department of Planning and Development in Santa Clara County, California discovered that it was their customer-facing staff that was ideally suited to identify the best workflows for the permitting process and not their outside consultant. But that doesn’t mean that consultants and advisors won’t have a place.
In fact, don’t feel that you need to do it all on your own. More often than not, a digital transformation strategy includes players that aren’t under your roof. Even if you have a strong IT team, you will find that consultants and tech advisors that aren’t part of the company provide valuable insight. Their expertise can be as domain experts, tech experts, software experts, or data aficionados.
These outsourced resources can be so valuable that in part 3 of this series we’ll look at how to decide what you can do in-house and where you should outsource. So, leverage your insiders while outsourcing to fill in knowledge and skill gaps.
Prioritize, Strategize and Monetize Your Plan
Now that you know where you’re going and who is along for the ride, it’s time to get down to details. You need to prioritize your goals and technologies, build a digital transformation roadmap to implement your strategy, and allocate a budget for the entire process.
Even in the largest companies, resources aren’t unlimited. So, you must make the most of the resources you have available. That means you must prioritize the digital tools that will be part of your transformation. Will this include a website, chatbots, or real-time data tracking systems? Which areas of business will benefit the most from your digital transformation? Tech start-ups are known for their flat structures, agile decision making, and rapid prototyping. Follow their lead as you develop your roadmap for implementing the technologies you select for your digital transformation. Build in an iterative process and allocate resources accordingly.
And speaking of resources, if you aren’t prepared to allocate the monetary and human resources to implement your digital transformation strategy then you should stop reading now. Be prepared to commit money, time, and human assets to selecting and implementing the right technology. Fortunately, if you follow the tech start-up model, you’ll get the most out of the resources you do allocate. By spending more time testing solutions and less time navigating bureaucracy for approvals, cross-functional teams can make agile decisions and present ideas to management using the smallest amount of resources possible. The iterative process allows successes and failures to be quickly identified.
Set Milestones and Mark Progress
Just as mile markers guide you on the interstate highways, your digital transformation roadmap should include milestone to measure and mark your progress. These keep the implementation on track and keep stakeholders energized and excited about the transformation that’s occurring. It’s okay to celebrate the key milestones. In fact, we encourage it. Milestones often coincide with major decisions, so if you are unsure what to consider a milestone, look at the major decisions that must be made along the way.
Also, remember to measure your progress in terms of customer journey. Your digital transformation strategy must be customer centric. So, it only makes sense that along the way you continue to measure progress in terms of the customer journey and not just improvements to your business systems. How is your transformation improving your customer experience? How are you better able to identify customer needs and role out products and services to meet those needs?
Now that we have a strategy, goals, KPIs, a roadmap complete with budget and milestones in place it’s time to decide what will be done in house and where consultants, contract workers, and business advisors can keep your transformation on track. Stay tuned. In the third and fourth installments of this series we’ll look at inhouse versus contract talent and implementing your strategy.