September 21, 2022
6 minutes read
Statistically, 84% of digital transformation initiatives fail. The study by the Everest Group found that 73% of businesses failed when extracting business value from their digital transformation initiatives. Companies investing billions of dollars in digital transformation can lead to substantial financial losses. Everybody wants to avoid such a situation. The best strategy is to have a clear vision of the goals and create a well-thought-out digital transformation strategy. It will only happen if you know which areas to focus on the most.
Before developing a digital transformation strategy, it is necessary to take a step back and remember what digital transformation is and why there are already several prerequisites for its implementation. Mobile devices, digital services, and other available technologies radically change a wide range of interactions: companies with each other, companies and citizens, citizens, and the state. Algorithms play an increasingly important role in these interactions. The transition to algorithmic interaction in combination with network effects leads to a considerable increase in the efficiency of interaction between participants:
It is how the digital transformation looks like if qualitative, revolutionary changes in the economy’s structure are manifested, and value-added centers are moving to the area of building digital resources and end-to-end digital processes. As a result of digital transformation, there is a transition to a new technological and economic order, as well as the creation of new industry sectors.
Transformational logic requires rethinking both approaches to business and the performance of authorities, the implementation of control and supervisory activities, and the provision of public services.
Digital transformation is a profound reorganization of business processes with the widespread use of digital tools. It leads to a significant improvement in their characteristics (reduction of execution time, disappearance of entire groups of subprocesses, decrease in resources spent on executing processes) and/or the appearance of their fundamentally new qualities and properties.
A digital transformation strategy is a plan of action for a team with an excellent digital background. It is based on a deep analysis of industry and cross-industry practices in digital technologies, an understanding of the actual place of the company in digital development, and a vision of the digital future.
The optimal scheme of work is when consultants and a working group from the client’s side work together. The greater the involvement of client representatives during the strategy development phase, the more likely it is that real digital change will begin. Also, the company’s top officials, primarily the CEO, should be involved in the process.
The biggest problem in digital transformation strategy is not the technical implementation. In most cases, your technicians can create the solution you ask them to. But is that also the same one you need? It is where problems usually arise.
The process is unique for different companies, but if you simplify things, everything can be put into several key steps.
1) First, you need to investigate the current situation and understand what aspects of the company need improvements. Where are the prospects and opportunities for digital transformation? People, processes, platforms, applications, information used, and potential risks are evaluated. A crucial question is whether the game is worth the prize at all. What value will it bring to you and your customers? At this step of business process management, you must highlight several possible problems and difficulties you must overcome.
2) Think Big, Start Small. The first mistake companies make when embarking on their digital transformation journey is to reverse the formula. They initially invested a lot of money in digital transformation, leaving no room for retreat. Even worse, they usually have a narrow vision and understanding of digital transformation and what they want to achieve. Remember, always start small while thinking big. Test the situation by implementing digital transformation in one department and then try to scale from there. It will give you more room to experiment and more confidence. Never try to transform your entire organization at once digitally. You may have to deal with criticism and backlash, which can even waste resources. Once you start making quick gains, this will kick-start your digital transformation journey. It will help you focus on critical areas and enable your business to bring products and services to market faster.
3) Next, a holistic vision of digital transformation strategy is developed. You need to understand where the company is moving and compare the digital transformation plan with the accurate business results you want to achieve. You also need to understand precisely how to ensure that as a result of digital transformation, your product has a higher value, and the team can work more efficiently and achieve better results faster and at a lower cost.
4) Different perspectives and fresh perspectives. After analyzing your strengths and challenges, it’s time to take a closer look at your business model and value chain. Successful digital transformations are usually multifaceted. You can have several small steps, but all of them must align with the final goal.
5) But these are all initial preparations. Next, we move on to the most “delicious” to create a digital transformation map. At this stage, you need to write down the general steps you need to follow to achieve the desired result based on the analysis obtained in the previous actions and on your company’s core values and priorities.
6) The next step is to understand how you will follow the roadmap prepared in the previous step. Everything is individual here, but usually, everything is divided into 3-4 key strategic areas, which are gradually implemented over a year and a half to decrease the priority and increase the efficiency of implementation. What is very important, it is impossible to move on this map alone. Yes, the involvement of high-level leaders and managers is essential for the process, but the main tasks and priorities must be conveyed to each company employee. Everyone should understand what is happening, where everyone is moving, and why all this is necessary.
7) Finally, when each “segment” of the roadmap is clear, and everyone understands what needs to be done and in what order, it is necessary to prepare an implementation plan that will provide for specific areas of responsibility. It is essential to think about dividing the employees into different groups for implementing the transformation, measuring the results, the interaction process between these groups, and reporting. It is essential to avoid uncertainty. By following these steps, you can begin confidently implementing a digital strategy.
Digital transformation is not only about the use of technology. It is, first of all, the transformation of people and thinking. It uses insights from technology to transform business processes, models, and organizational culture.
Digital transformation is a relatively new phenomenon. But the experience of its implementation has already been accumulated. There are several approaches, differing in the speed of the introduction of digital technologies and the breadth of their application. These approaches depend on the size and industry of the company for which the strategy has been developed.
We have extensive experience in successfully implementing complex cross-functional transformation projects in developing and implementing a development strategy, implementing a digital transformation strategy, and creating new products and sales channels for the largest healthcare companies.
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