Flipping the Odds of Digital Transformation Success
Given that the executive attention, costs, and elapsed time can often be similar for narrow and broad transformations, the implications of this finding should not be overlooked: companies should take the time to configure for success, and then go big with an aggressive scope and bold aspiration.
Create Successful Lighthouses on the Path to Scaling
Even with a bold, company-wide aspiration, however, companies should focus and prioritize their efforts. Transformations that successfully scale up often start by picking one or two major use cases or “lighthouse” opportunities, building a minimum viable solution, and testing and iterating until that solution works in the market and can be scaled. The company then moves to another use case or deploys the initial use case in a second country or business, and works backward to solve for the platforms, infrastructure, and support required to scale up the solutions. This is radically different from assuming that if you build the platform, the businesses will figure out how to get value from it.
Go Beyond Done
Success in business is transitory. Companies need to continue proving themselves to investors and other stakeholders quarter after quarter, year after year; and for every starting point, there is a value-creating road forward. Digital transformations are no different. The point at which success is declared (for example, the organization has transitioned to agile ways of working, or the last workload has shifted to the cloud, or customers have migrated to the new stack), is actually a beginning rather than an end. The success of the digital transformation is the start of a fresh chapter for the business as it learns how to leverage the new capabilities and to drive continuous innovation in new digital technologies, such as AI, augmented reality and mixed reality, and edge computing. Companies that succeed in industrializing continuous innovation as part of their new operating models have become bionic. They will never have to do another transformation program because the digital capabilities and mindset become part of their new way of working.
Know Whether You Are Succeeding
One of the hardest questions—and one frequently asked by boards—is, “Is the transformation on track? What are the risks of spending all this time and effort and failing to achieve our objectives?”
We can provide both a quantitative and a qualitative answer on the basis of our research.
First, you can periodically score your transformation against the six success factors and adjust your action plan to close the gaps. One company is using the success factor framework to assess how well configured they are for the success of a technology stack replacement and agile operating-model transformation. Its initial score placed it in the worry zone, but the leadership team adopted a clear action plan to address this, and subsequent reevaluation showed progress toward the win zone.
Second, some threshold behaviors can provide good indications of whether the transformation program has critical momentum. An assessment of these behaviors will almost inevitably be negative at the outset, but many leadership teams nonetheless find it useful to calibrate progress in this way. Threshold behaviors include:
- How strong is the business pull for digital solutions versus the program push?
- How do the most talented individuals in the organization feel about joining the program? Are they wary of leaving a line role for a temporary position in a program that might fail, or are they excited to join the high-potential team that is shaping the future of the company?
- Are executives advocating diverting funding and resources to other initiatives, or are they defending the digitization budget and resourcing?
- Which are more common: comments that lower expectations (for example, “the plan benefits were overstated”) or upside observations (such as, “now that we have launched the new digital servicing capability, we can extend the use cases and achieve far more than planned”)?
The best leadership teams regularly step back from the detail to discuss the quantitative and qualitative ways to assess whether the transformation is configured for success.
The costs of failure are high. The rewards of success are great. In all industries, COVID-19 has accelerated the need for companies to transform their digital capabilities. There is no time for incremental outcomes. Putting in place the six success factors makes all the difference.
The authors are grateful to the following colleagues for their assistance with the development of this report: Ali Arsiwalla, Ramendra Awasthi, Tauseef Charanya, Olivier Laugeray Cleaver, Rano Diehm, Suzanne DSilva, Akshaya Mahesh, Tanya Mondal, and Albert Ngan. They also thank the members of the project’s steering committee: François Candelon, Kurt Hogan, Amanda Luther, Kelly Nelson, and Michael Rüßmann.
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