3 Stages of a Successful Digital Transformation
The majority of attempts at digital transformations are unsuccessful. Yet, digital transformation has been at the forefront of businesses’ minds for at least a decade, and its momentum shows no signs of slowing down. The three main reasons why digital transformations fail are over-optimistic expectations, poor execution, and the pace of leading and managing the transition between the old and the new. To succeed at digital transformation, senior business leaders must be aware of the three main stages of the digital learning curve. The objectives of the first two phases, modernization and enterprise-wide transformation, are to reshape the existing business. The third phase stage focuses on the development of new commercial endeavors and the identification of untapped potential. It is crucial to avoid proceeding to phases 2 and 3 before completing phase 1, since this can result in failure.
Modernization (phase 1) is about simplifying and digitizing existing processes and functions. It may involve automating HR procedures or providing a self-service platform for workers, as well as building apps for customers or introducing new self-service contact points, linking products, or re-engineering fundamental procedures. This phase is frequently underappreciated or despised, yet it strengthens and improves the organization’s digital capabilities, and it offers immediate returns that can support more sophisticated digital initiatives.
Enterprise-wide transformation (phase 2) requires extensive work to be done across multiple value chains where traditional organizational silos must be aligned, appropriate governance models established, new talents needs to be added, and a culture of continual learning and re-skilling must be established. Although its primary purpose is to enhance already existing activities, it can also create new value by allowing businesses to access previously untapped markets or improve the efficiency of existing processes. Transformations at the enterprise level are cross-functional and complicated, but they are necessary stepping stones on the road to digital-transformation maturity.
New business creation (third phase), new businesses are created with the goal of expanding existing markets or establishing new sources of income. For businesses to thrive in the age of the customer, it’s imperative that they transition their focus from traditional product-based i.e.one-time sales to more dynamic recurring revenue streams like subscriptions. Transitioning from the current model of operations to new ones is fundamental to operations. These alterations challenge the organization’s existing processes, structures, and capabilities and necessitate new methods of operation. Leadership is essential, as this phase also requires redefining the organization’s boundaries as it transitions from linear supply chains to ecosystems.
As a result of the nonlinear nature of these three stages of digital transformation, most companies will oversee a portfolio of initiatives that may encompass all three. It is unusual, however, to discover examples of digital leaders in established businesses who have skipped these steps. The key to a successful digital transformation is to take one step at a time and devote the necessary resources to ensure that the transition is completed successfully. An organization’s chances of success can be improved by climbing the digital transformation corporate learning curve and increasing the maturity of its digital infrastructure.
Source: hbr