The Basic Guide to Digital Transformation

International Data Corporation (IDC), a global market intelligence and technology advisory provider, reported that, despite the rapid growth of digital transformation investment in the past few years, most organizations were stuck in a digital deadlock. Based on a chart they released, 59% organizations are stuck in the role of Digital Explorers and Digital Players, while only 20% have successfully turned themselves into Digital Transformers. The fact leads to the question of what digital transformation actually means.

What is Digital Transformation?

Digital transformation, or DX, is integrating digital technologies into all business areas including culture and processes — fundamentally changing the way an organization operates and delivers value to customers — to meet changing business and market requirements.

However, digital transformation is more than just technology adoption. Digital transformation means orchestrating four aspects: technology, data, process, and organizational change capability into a whole system. Quoting an article in Harvard Business Review titled Digital Transformation Comes Down to Talent in 4 Key Areas, “technology is the engine of digital transformation, data is the fuel, process is the guidance system, and organizational change capability is the landing gear.” For a successful digital transformation, an organization needs them all, and they must function well together.

Moreover, according to the article, transformation requires an end-to-end mindset, a rethinking of ways to meet customer needs, seamless connection of work activities, and the ability to manage across silos going forward. Without this kind of mindset, transformation is reduced to a series of improvements — important and helpful, but not truly transformative.

What Makes Digital Transformation Successful ?

In a McKinsey Global Survey, a number of respondents share their experience on the successful digital transformation in their organizations. Based on their experience, there are various factors that improve the chances of a successful transformation. These factors fall into five categories:

Having the right digital-savvy leaders in place

Based on the survey, organizations that have appointed a Chief Digital Officer (CDO) to support their transformations are 1.6 times more likely to report a successful digital transformation. However, to lead their transformation project, an organization also needs leaders with initiatives, leadership, and commitment. 

Building capabilities of the employees

The survey results confirm that developing talent and skills throughout the organization is one of the most important factors for successful digital change. It’s essential to help individuals redefine and clarify their roles, responsibilities, and capabilities so they align with the transformation’s goals. It’s also important to bridge potential gaps between the traditional and digital parts of the business.

Empowering people to work in new ways

The survey has shown that digital transformations require cultural and behavioral changes. Providing employees with opportunities to generate ideas of where digitization might support the business is important. It’s also critical to establish practices that are related to new ways of working (such as continuous learning, open physical and virtual work environments, and role mobility).

Upgrading day-to-day tools

For organizations to empower employees to work in new ways, the survey findings show how digitizing tools and processes can support success. There are various digital tools and technology upgrades involving automation, AI, and IoT that can be adopted to improve standard operating procedures and increase employees’ productivity.

Communicating frequently

Clear communication is critical during a digital transformation. One key to success is communicating a change story, which helps employees understand where the organization is headed, why it is changing, and why the changes are important.

The success of an organization’s digital transformation depends on various factors. However, it’s important for organizations to realize that digital transformation is more than just adopting technology. To ensure successful digital transformation, organizations should have the right mindset, create solid strategies, appoint the right people, and conduct transformation as one extensive program.