Complex Made Simple

The 4 practical steps a business needs to follow to implement digital transformation – Part 1

University of Michigan's Ross School of Business shares the first in a 4-part article series on digital transformation, detailing the four practical steps companies can take to implement digital transformation – to successfully “make the leap” across the digital divide.

When organizations attend to these four steps, technology adoption happens smoothly – a state of things we call “Technology Cohesion" When they are not happening as they should, technology initiatives stall, or fail Let’s explore the first of these four steps

Authors: Mary Hinesly, Professor of Executive Education, University of Michigan Ross School of Business; and Jay Srage, Head of Operations – MEA, University of Michigan Ross School of Business.

Welcome to the first in a series of four articles on practical steps companies can take to implement digital transformation – to successfully “make the leap” across the digital divide. These articles will be published over the coming days, so stay tuned for the latest articles in this series.

These four steps include:

  1. Conducting a digital audit to more fully understand the current state of technology and cultural readiness in the firm; 
  2. Providing education to raise the skill level of employees; 
  3. Selecting technology based on a rational framework; 
  4. Applying and implementing technology through collaborative communication.  

When organizations attend to these four steps, technology adoption happens smoothly – a state of things we call “Technology Cohesion.”  And when they are not happening as they should, technology initiatives stall, or fail.  To get the conversation started, let’s explore the first of these four steps.

We received a call from an executive at one of the world’s largest enterprises. They were looking for help for their leaders to progress and prepare for digital transformation. 

Here is what they asked for in scope: 

We want an internal assessment of the current state, critical benchmarking on what technologies our peers and competitors may be using, provide research and information on available tools along with the pros and cons of each, and help two internal groups identify the best way to engage social media for internal use to support change management requirements during an important HR systems roll-out and identify potential usage options for employee engagement purposes.

Read: Middle Eastern Family Businesses’ main concerns are cash flow and digital transformation- Survey

Of course, this request exceeded anything remotely realistic within the limitations of a six-week multidisciplinary action learning team from the university. They needed more than a project –  they needed a company-wide digital strategy. What really struck us was how much this organization didn’t know.  They didn’t know:

  • What systems they owned, how or if each was being used, or the benefits of those assets
  • If there were redundancies in their existing human and IT infrastructure
  • What was available on the market that might meet their needs
  • What off-the-shelf solutions could be customized
  • What their users’ needs were 
  • What tasks were involved that technology make more efficient
  • What processes would most benefit from digital transformation
  • What new opportunities or new business models could be created through digital tools
  • How to rollout the technology in a way that would work in their unique culture 

Unlike the players in this example, smart executives who have successfully crossed the “digital divide” have realized that digital transformation is not a one-time project, but an ongoing evolution of company culture, organizational structure, and operational processes.  For the ones who get it right, this kind of change aims lofty results – delivering the best possible integrated customer journey in a way that is cost-effective, and frees up funds to invest in innovation.  So our first step helps ground the effort with a clear picture of “what is” before seeking out “what could be.”

Read: HR departments have a key role to play in digital transformation

Step 1: Comprehending the Technology Landscape 
Many business today are trying to implement a smorgasbord of digital platforms through multiple internal organizations and individuals within the company.  Without creating awareness of all these existing corporate digital initiatives, the result is redundancy and wasted effort.  

Companies embarking on digital transformation can avoid these problems by starting with a full digital audit. A digital audit is best completed by an outside entity allowing an unbiased look at the digital systems and how those are being used. A digital audit does not look at content. Instead it uncovers where to consolidate (or procure) platforms based on relevance and use, common needs, and areas where teams can join forces to find solutions that will address multiple issues across the firm. One outcome of the audit that executives find particularly compelling is an infographic describing the platforms, processes and operations in use today, and the gaps and opportunities for tomorrow.

The most critical factors, and most challenging, are the humans using the technology. We need to understand the users who are trying to apply the  in their daily work lives. Some of the questions companies can answer in a digital audit are: “How does each technology fit into the users work tasks?”, “Does it simplify or reduce workload?”, “Does it replace an existing step?”, “Does it make collaboration or information gathering easier?”, and “Does it provide access to information by the right people when they need it?”.  Organizations can also assess the cultural readiness to embrace new technologies.  Are their “islands of excellence” that have quickly adopted new technologies and generated value from those?  Are there functions or sectors that stubbornly resist digital transformation?  What are the underlying motivational or structural factors getting in the way?  Are reward systems aligned with the goals for the implementations?  Is the organization flexible, understanding that there are always risks with new systems, and they take time to get right.  Managers and employees need to feel safe trying things out and experimenting along the path to a fully functional solution.

When organizations understand what they own, how it is used and how often it is used, and recognize where they are in their own readiness for digital transformation, they can then take the right steps to upskill the organization to fully embrace these initiatives.  In our next installment, we will get into educational challenge in more detail.

Read: Saudi companies are leading the adoption of 5G for digital transformation