Digital transformation is a vital part in the life of every company. Sooner or later, every organization must go through some changes, in order to keep up with the competition, to upgrade tools of production, to update software, to stay alive. In some cases, the change is anything short then of success – production time is reduced, the decision making process more efficient and revenue is rising. Sometimes it’s a catastrophe. What constitutes a good change and how to prepare for it?
Yes, you HAVE TO prepare for it. There is no shortcut, there is no magic wand with a ‘Do it’ spell attached to it. Managers have to think through every possible outcome. Organizing a new business unit - responsible for digital transformation – just for the sake of it, is never a good idea. A long list of companies who burned themselves on the topic can vouch for the idea, that not everything is golden if you’re not prepared.
Co-Op Bank, Nike, Lego, Ford, General Electric, Burberry, Procter & Gamble – these are all companies that have suffered because wrong decisions were made. On business operations and board level; each time leaving companies with a large hole in their pockets. When an ineffective process swallows up a company’s time and resources, the place for better prepared ideas and launches shrinks up. Lego closed up its Digital Designer program, Nike cut back on its digital department, dropping an activity monitor called Nike + Fuelband, Ford invested heavily in digital endeavours without remembering about quality and costs in other departments of daily operations. Even Procter & Gamble, a company that wanted to be ‘the most digital organisation in the world’ had to drop out the race, when faced with a negative backlash from the economic reality at the time. P&G’s CEO Bob McDonald was forced to resign, Mark Fields, the Ford’s CEO, soon followed. Lego’s CEO was moved to a less exposed position.
A fun fact about digital transformation is that it’s never a done deal – it’s a constant process with a need for constant monitoring the market, business environment, own company’s capabilities, etc. It’s a never-ending work and effort with vigilance every single week, agile sprint, etc. It requires investments in infrastructure, people, skills, projects and decision making based on a continuous supervision from the board.
Even with the most rational decision-making process and strategy, something might go wrong. An underperforming branch or a project inside the organisation can force cuts within personnel or funds. This can be viewed as a weakness or mismanagement by employees, investors, media and finally a company’s sector. The truth is quite different – change is good when it brings profit, tweaks processes, or broadens a company’s perspective (through rebranding, for example). But it’s also good, when it cuts loses and adjusts perspectives due to unforeseen market situations, etc. Some managers don’t necessary do good in these scenarios, believing in the previously taken path. They follow it blindly, without questioning it and adjusting to its surroundings. There’s also one critical, undervalued factor – fascination with the change itself. There’s a risk of giving so much trust into the process of upgrading the company and equipping it with the latest tech and software, that everything else falls into the background. Managers lose sight of what’s important, falling into the illusion that spending money on fancy computers will fix challenges and increase revenue. Let’s be clear: it’s not going to happen. Digitalisation is not a remedy, it’s simply a very important mean to an end.
There are some common mistakes that managers do and unfortunately repeat; all of them can be fairly easily avoided if you know of their existence:
The scope of changes (nature, budget, etc.) cannot be fully seen at the beginning, therefore planning for possible adjustments and a flexible approach is paramount
Communicating the importance of change and its scope has to be clear, backed with historical and current data, internal and external business context and needs. Do it right and the support and funding for the transformation will follow
Implementing new technologies and processes that can and have to follow, can and will create temporary chaos. Don’t panic, be prepared. Equip managers with answers and resources (IT personnel, training, internally distributed digital manuals and repositories) to contain the chaos and minimize losses in working hours and impact on projects
Establishing new metrics for performance under new conditions has to be early planned and implemented when individual company-wide training is completed
Crossover adjustments takes time. There are chances that people will make mistakes, the equipment will break down, configuration and adjustment to company’s specific needs will take time, crossing over what was previously planned. Don’t be discouraged, be prepared
Allocation of capital has to be foreseen and continuous. There’s no sense in spending money for the newest tech and software and then sit on your hands with the expectation that now the company will simply work like a Swiss watch. It won’t. You need to spend additional money on maintenance and upgrades/updates (yes, both of them). Don’t think about it in ‘spending’ categories, though. Treat it like an investment in your child’s future. It will pay off, especially long term
Adjusting a company’s structure to reflect the change can and sometimes will be an option. Don’t hesitate to hire internal IT crew or seek outside counsel, especially when it comes to software. Hardware can be replaced or upgraded, software has to evolve to follow trends and respond to company’s needs. Again – an investment, not spending.
Is digital transformation so hard to go through? We’ve already talked about cases in which companies struggled with it. Fortunately, there are some good examples on how to use the change to advance the company.
Walmart. Every small inventor, publisher, food grower or independent beer manufacturer fight to be on the giant’s shelf. The pitching process in Bentonville, Arkansas (company’s HQ) is a source of grey hair for many. What could have gone wrong? Competition, that’s what. Walmart had to reinvent its approach to the customer. When Amazon went after Target, Best Buy, Home Depot or Walmart, the Bentonville-based veterans made it clear they won’t tolerate this. When Amazon increased its membership price for Prime, Walmart hit back with ‘Ring My Bell’ ad:
The retail giant also diversified its clothing portfolio, booking brands like Jet and Mod Cloth or Lord & Taylor. Furthermore, the company invested more money in mobile app, significantly improving the customer experience in the process. Harvard Business Review even branded Walmart as the ‘digital winner’ – it speaks for itself.
Disney. When you think about this company, you associate the name with ‘magic’. There’s a lot of historical reasons to think that; Disney added new ones. With the RFID technology, Disney can not only update customers in Disney Parks about bus schedules, but also limit their free drink refills (you can read all about it via Capgemini Consulting’s report).
Starbucks. Have you ever heard of this little company that sells coffee? Maybe. Did you know that they launched a program called Starbucks Digital Ventures? It was back in 2008, when many of us thought that a coffee spot can’t be associated with a tech company. But they did something surprising – Starbucks wanted to, as quoting ZDNet, ‘expand reach into the digital space in a way that is profitable in the current business climate – organizationally nimble, small and focused on creating new revenue streams for the company’. And they did it. Today Starbuck’s mobile app provides a successfully working loyalty platform and is a key for maintaining already built community outreach program and digital ecosystem. Fun fact – Starbucks actually has a digital ecosystem. With millions of monthly users in U.S. alone, the organisation can think of itself as a nimble institution. By the way – back in 2017, 30% of Starbucks transactions were completed through Mobile Order & Pay service, earning the company $5.7 billion in revenue. Just saying…
There’s also one crucial element that we haven’t talked about yet. Virtual Reality (VR) and Augmented Reality (AM) as agents of change. Factories and traditional, service-based companies can significantly benefit from the implementation of the newest tech. Smoother work on an assembly line, better user experience, advanced systems? Look no further, there are means to an end. Knights of Unity got you covered, with advanced knowledge of Unity, fuelling most of today’s industrial and ‘civil’ commercial projects. If you don’t believe in technology often associated with video games, check this Forbes’s article on a spectacular IKEA’s digital transformation. It clearly shows how companies can benefit from advanced technology – both in image and revenue.
But that’s not all. Software is a synonym of a digital transformation, you need it to breathe. It’s at the very core of change, not only powering up communications but also improving production methods. Software development’s impact on digital transformation is invaluable, so it’s worth knowing how to choose the right software development partner.
If you want to know more, read this Capgemini Research Institute’s report on understanding digital mastery. It will give you perspective, expanding on topics underlined in this article.