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Preparing your Organization for Digital Transformation

Dave Stein< Dave Stein May 22, 2019

Your digitalization process will require transformational work. In my previous blog, I clarified the difference between internal and external digitalization. The combination of both done over a period of two years will likely require serious investment, buckets of sweat equity from top leadership, and a steroid-like dose of change leadership. Because digitalization and the connected productivity gains are essential to the renewal of your strategy, it is not a matter of if you do it but when you do it and how fast you can get it done.

In the good old days, companies had the luxury of doing large-scale business strategy redesign over a span of 5 to 10 years. The current speed of change and threat of disruption have shortened this time frame.

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With the emergence of new competitors and disruptive changes in business models, digital transformation and business transformation must be well on the way in a matter of 2 to 4 years. Remember that the rate and speed of disappearance of Dow Industrial companies have tremendously accelerated.

8 Foundational Steps

It is no longer business as usual. You have to prepare your teams and culture for an electro-shock. And you have to do all of this while maintaining your organization’s current state of affairs. Here are 8 steps to follow as you get started in your transformational work and scale more and more digital solutions.

  1. Inject system thinking and design into your digitalization. Digitalization is a transformational innovation. As we apply design thinking to products and solutions, we also embrace the concept of design and agile thinking to this transformational work. The additional dimension comes from the need to think about your journey as a complex system with multiple moving parts and multiple, simultaneous transformations. As a leader, you need to think about your system, what influences what, and at what stage. It might seem a bit chaotic at times but you need to rationalize chaos and stay on the edge of total uncontrollable chaos.
  2. Select the right sequence for transformational work. Your much-needed, accelerated digitalization will require several transformations. The common starting points are procurement, IT, marketing, sales, pricing, e-commerce and digital innovations. But not all of these can start at the same time.  You have to pace the sequence, rate, and intensity of change to avoid resource bottlenecks and severe change fatigue. Some of the projects can be done in parallel while others might be more sequential. The key is to avoid overlap and reinventing the wheel every time. Integration of all of this is also essential.
  3. Integrate all transformational activities into a single change management/leadership vision. Your complex system with multiple transformational initiatives is going to be gelled by a solid change management roadmap. Remember that the engine is change management but the fuel powering the engine is change leadership. For that, a member of the C-suite will have to lead the dance and use political capital to smooth things along the way.
  4. Remember that less is more: not everything has to be a transformation. We are in love with the word transformation. Count how many transformations are going on right now in your organization and your head will spin. But is everything a ‘transformation?’ Chances are no. Rather, you also have initiatives, programs, exercises, projects, and task forces. And this is a good thing.
  5. Properly fund all relevant investments with a proper data management ecosystem. In the end, hire a Chief Data Officer who is tasked with all digitalization efforts including collecting the proper data to feed the data lakes and complete the data puzzle. It needs to be managed like an eco-system that focuses on data availability, access, connectedness, and mining. Data is the new oil. The rest is just nice to have.
  6. Properly fund the softer side of the work. Along the way, don’t forget training, coaching, leading, motivating, incentivizing, and aligning. The softer side of digitalization is as important as the harder side. Remember the saying: “A fool with a tool is still a fool.”
  7. Don’t forget about your need for pricing science and software. Too many times, the transformational investments stop for lack of budget and pricing becomes a discretionary investment zone. Don’t let this happen. Pricing is an integral part of the digitalization process that includes analytics, optimization, deal guidance, and CPQ. It’s important to keep that budget line item alive.
  8. Beef up your transformational office. When you read points 1 through 7, can you really do this without a transformational office? Some large organizations combine project management teams, change management teams, and process experts under one team called the Transformation Office. They focus on process excellence and execution. This is worth the investment to make sure budgets and timelines are respected.

Remember, organizational transformation, is not an optional exercise. Many more technological tsunamis are headed for the business world. Either you get on board fast or Amazon and the likes will disrupt your markets. Jeff Bezos said it best: “Your margin is my opportunity”! Digitalization is here to stay. Self-disrupt before others disrupt you.

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