The following document acts as a complete guide to digital transformation, including:
Why Trust This Digital Transformation Framework and Toolkit?
This guide and toolkit is based on research done for the CMI book of the year Building Digital Culture, and further research done as part of the Imperial College Digital Transformation Strategy Programme. It is based on qualitative and quantitative research on over 300 digital transformations that explored why these transformations succeeded or failed.
What is Digital Transformation?
Digital transformation is the process of using technology to re-imagine how businesses operate and deliver value to their customers. It involves using technology to innovate and create new ways of working, to become more agile, and to drive greater efficiency. Digital transformation has become increasingly important in today's competitive business landscape as organizations strive to stay ahead of the fast-changing operating environment in which they find themselves. Essentially we are asking 'Where are we now?' and 'Where do we need to be?' as an organisation to thrive in this fast-changing environment.
Digital transformation goes beyond digitisation. We are not just trying to carry out a one-off change (although this might be a starting point). We are trying to create organisations that can continuously innovate and change.
At its core, digital transformation is a process of continuous innovation where organisations leverage technology to create new products, services, and customer experiences. This requires a shift in mindset, where organisations move away from traditional approaches and embrace agile methods, new technologies and structured innovation. By leveraging digital transformation, organisations can unlock new growth opportunities and create a more efficient and effective operating model.
So what is digital transformation? An introductory video and discussion from the Digital Marketing Podcast team.
Creating Organisational Agility & Purposeful Culture
Digital transformation is not a destination. We can’t just go through a transformation, decide we are finished and then stop. If we do this, we will end up needing to transform again in a year or two when the environment we are operating in has changed, and we have stood still. Instead, what we are trying to do, is create an organisation that can continue to change.
The whole point of the transformation is to implement the various elements that create an agile organisation. That is, an organisation that has mechanisms in place to understand the changing environment and customer needs, to constantly feed these insights in, and then to create the changes needed in order to adapt, innovate and change.
This agility needs to be built across the organisation, from how we approach innovation, to how we use technology and adapt our processes. Agility is an easy topic to discuss, but really building it into an organisation takes purposeful action, and we need to develop a culture of agility.
The topic of culture is something that will come up again and again throughout the topic of digital transformation, but we need to consider the concept of purposeful culture. Rather than culture just being ‘how we do things around here’ and something that has developed organically and pretty much by accident, culture should be something that is planned and is ‘baked’ into everything we do. Only by developing a culture of agility can we make sure that our transformation will continue to enable our organisation to deal with change long into the future.
So what does a culture of agility look like in practice? It means having processes that bring market insights into our organisations in a structured way. It means constantly feeding customer insights into our planning. It means encouraging experimentation and testing in every area of our organisation. It means having measurement frameworks and dashboards in place which means we can constantly measure the impact of our new initiatives and experiments. The list goes on and on, but creating agility should be one of the key objectives of any digital transformation.
In this video we explore the concept of organisational culture and how we can shape it:
How Can We Create Organistional Culture Video? An introductory video and discussion from the Digital Marketing Podcast team.
Purposeful Culture
Defining ‘culture’ can be tricky, with the generally understood definition being ‘the ideas, customs, and social behaviour of a particular group or society’. The group we are concerned with for digital transformation are those people within an organisation, and essentially we are talking about ‘how we do things around here’.
The topic of culture is something that will come up again and again throughout the topic of digital transformation, but we need to consider the concept of purposeful culture. Rather than culture just being ‘how we do things around here’ and something that has developed organically and pretty much by accident, culture should be something that is planned and is ‘baked’ into everything we do. Only by developing a purposeful culture can we try to ensure that our transformation will be successful and not be side-lined or stalled by the numerous issues that can arise between teams, stakeholders and departments.
Organisations like Google are excellent examples of purposeful culture. Everything they do, from the design of their offices to their strategic principles, is there to reinforce their purposeful culture. For example, giving their engineers 20% of their time to work on their own projects is a great benefit, but it's really about giving permission to experiment and helps build a culture of innovation. Having free food is a great benefit, but it's really about bringing people together to foster communication and inter-team collaboration.
Purposeful culture can be delivered in everything from our communications to our processes and should be a consideration throughout our digital transformation.
Key Challenges of Digital Transformation
Digital transformation is a process of leveraging technology to better meet customer needs and create a competitive advantage. It's a journey of continuous improvement that requires an agile mindset and a focus on innovation.
The key challenges of digital transformation include the need to adapt rapidly to changing customer needs, the need to become familiar with new technologies quickly, and the need to stay ahead of the competition. It can be difficult to keep up with the ever-evolving digital landscape, and staying on top of the latest trends can be challenging.
However, these challenges are really just the tip of the iceberg. What is truly challenging is what lies beneath. It is the people, processes, systems and culture that enable this change that can cause the biggest challenges. If there is one area of digital transformation that is what differentiates success from failure, it is a focus on stakeholder mapping, management and communications. Getting buy-in from all stakeholders can be difficult, as digital transformation often requires significant investment, but more importantly requires change, and change can be uncomfortable.
Our Digital Transformation Toolkit Podcast explores many of the challenges in more detail:
Digital Transformation Toolkit Podcast. You can listen in Spotify, Apple Podcasts and access the full links and shownotes.
The Importance of Stakeholder Buy-in and Communications
True Stakeholder buy-in, across the full range of stakeholders can be hard to achieve. This is particularly true if we build a digital transformation plan and thrust it upon our stakeholders without consulting them from the outset. For this reason, the principle of 'early and often' in stakeholder communications is key.
One key method is to engage stakeholders from the very outset. By asking their opinions of how good (or bad) the organisation is in a range of capabilities, we can start to understand what they think, but also what the differences of opinion are across different teams and levels within te organisation.
The process of digital transformation essentially says, "Where are we now as an organisation and where do we need to be in order to operate effectively in a fast changing environment?" Where we are now and where we need to be can be measured by looking at our various different digital capabilities.
We’ve broken down those digital capabilities into 10 key areas. These 10 areas are a trimmed down were identified by interviewing hundreds of organisations and investigating why they succeeded or failed at digital transformation.
Essentially we can think of these 10 key capabilities as the things we need to be able to do well in order to be able to implement a digital transformation. You can also consider that if you can't do these ten things well, they're the things that can lead to organisations losing competitiveness and can even lead to eventual failure.
This quick and simple version includes ten core areas, there is also a more in-depth 14 area audit process that includes full audit statements. However the aim of this shorter version is for initial benchmarking and for using with stakeholders. The full 14 area audit process can be found later in this document.
The benchmarking process itself means working through each area and scoring ourselves out of 10. A score of 8-10 means we are doing well in this area. A score of 5-7 means there is room for improvement and a score of 4 or below is an area of serious concern.
As well as looking at the score for each individual area we can add up all ten scores in order to get an overall score. This allows to see how challenging our digital transformation is going to be and we can use this score to benchmark ourselves against our industry and competitors.
By asking a wide range of stakeholders, and then identifying differences in scores across departments, teams or levels of seniority, we can identify where we may find conflict later in our digital transformation. The average organistion scores 56 out of 100.
Our Digital Capability Benchmark Tool allows you to gather your stakeholder's opinions on ten key areas of organisational capability.
Who Should Lead a Digital Transformation?
The topic of who should lead a digital transformation is a contentious one, and a question to which there is not a single answer. However, there are some principles that have been learnt from studying hundreds of both successful and failed digital transformations that hold true.
Very often, the need for transformation leads to appointing a brand new Chief Digital Officer (CDO). Alternatively, someone else in the organisation is promoted or somehow moved into the role and tasked with implementing the digital transformation and making it a success. In other circumstances, a particular head of department is tasked with heading up the transformation. This typically is somebody in operations, technology or marketing. But it could be somebody from any part of the organisation. Both approaches can work, but both have big limitations that can lead to transformation failure, so we need to explore these potential challenges.
Firstly, the appointment of a CDO can lead to an offloading of responsibility and a single point of blame. The leadership team know there is a need for transformation but aren’t sure how to approach it, so they make it the responsibility of the CDO. Thsi makes them feel like they have carried out their responsibility to address the challenges the organisation is facing or may face in the future. If the transformation then stalls or fails, its easy to blame the CDO and to either get rid of the role or bring someone new in.
Alternatively, if a particular department is in charge, this can cause conflict and challenges between different areas of the business. If one team is seen as ‘inflicting’ the transformation on other parts of the organisation, or there are competing priorities between different areas of the organisation, it can lead to conflict and the stalling or failure of the initiative involved in the transformation.
The solution in both cases is to get the most senior leadership behind the transformation and to both take responsibility for and to figurehead the programme. By getting the CEO and board to clarify the importance of a digital transformation and making it ‘their’ programme, it means that the whole organisation needs to align to make it a success, and any roadblocks or impediments will be overcome. For this reason, it doesn’t matter who leads the transformation as long as leadership are aligned and behind the whole programme.
Agile Methodologies and Design Thinking in Digital Transformation
Innovation is at the heart of organisations that can thrive in a fast changing environment, but innovation doesn’t happen by accident (unless you get very lucky!). Instead, you need to build structure, processes and culture that enable an approach of ongoing innovation.
Design thinking is a methodology that provides a solution-based approach to solving problems and gives a structured approach to innovation. The process of design thinking begins with understanding our target audiences needs and then developing concepts that address those needs. The concepts are then prototyped and tested with users to get feedback and improve the design. This structured approach gives both the required process for driving innovation, as well as helping to develop a culture of test and learn.
Innovation and Design Thinking video. You can also access and podcast version.
Deep Dive Digital Transfromation Auditing and Planning Framework
Below you will find a link to our complete Digital Transfomation Framework. The framework has been built based on looking at over 300 organisations digital transformations and identifying the areas that helped them to succeed or caused difficulties.
There are 14 sections in total, and these are broken down into 3 areas, Essentials, Readiness and Performance. The framework itself provides a series of audit statements that we can judge our organistions against. If we can answer ‘yes we do this very well’ to each of the audit statements, then we don’t need to worry about this area too much. If we can’t answer positively to each of the statements, then we need to consider what we might need to do in order to be able to give a more positive response. What initiatives may be needed in order to improve the situation?
As we work through each of the audit statements for each of the 14 areas, we will come up with a long list of initiatives that need to be implemented in order to work toward being able to answer each of the audit statements positively. These initiatives essentially make up our digital transformation. The audit document below allows you to score your organisation against these audit statements and then allows you to record the initiatives that you feel will be necessary to improve your scores. The template allows you to score, record initiatives and then gives a space to plan out and prioritise the initiatives based on how expensive them will be to implement and how long they will take to implement.
Deep-Dive Digital Transformation Audit and Planning Framework
Please do get in contact if you have any feedback or any request for additions to this framework and toolkit.