Frequently, companies claim (and often believe) that they have successfully executed digital transformation. But if you looked at their bottom line and their actual integration and implementation of new technology compared to other companies, it quickly becomes clear that they are overestimating their progress.
In previous blogs, we’ve examined keys to digital transformation, from investing in the people side of the equation to the need for a fully elucidated strategy. In this blog, we take a different angle, and show how you can tell the companies that are really succeeding at digital transformation from the posers. Businesses that are truly committed to achieving digital transformation can learn what financially prosperous companies are doing and emulate those lessons.
A Full Embrace of Digital
Recently, PwC surveyed business leaders and employees across the world to assess what companies are getting right and wrong with their digital transformation efforts. That research provides valuable insight into how to distinguish the champions from the posers.
PwC surveyed a variety of companies across industries, but singled out top financial performers as the businesses from which the most lessons could be gleaned. The report classified 8 percent of respondents as top financial performers based on revenue growth and profit margin increases of 5 percent or more over the past 3 years and expected revenue growth of 5 percent or more over the next 3 years. What did an examination of how those thriving companies are approaching digital transformation reveal?
Perhaps, most importantly, a supermajority of top performers had digital transformation strategies that were set from the C-suite on down. The majority of those companies embraced the most advanced definition of digital transformation that they could, making digital a core part of their overall corporate strategy.
More than three-quarters (77 percent) of financially successful companies say the executives guiding digital are integral to creating the larger high-level business strategy. Their leadership also had extensive experience in digital. Thus, the financially successful companies had leadership who prioritized digital from the top down, rather than relegating it to the fringes.
Crucially, though, the report also found that as part of the larger corporate strategy that integrated digital, successful companies had highly delineated roles for leadership. For instance, 91 percent had executives in charge of the employee experience, and 82 percent had executives in charge of the customer experience.
CEOs Should Set Digital Agendas
This resonated with themes gathered from all survey respondents. Overall, companies stated that to be successful with digital transformation, the CEO should set the digital agenda, but the CFO should prioritize digital investments. Additionally, a role that many companies do not even have, a chief experience officer, should own the customer experience.
Leadership, a coherent strategy, and corporate structure that prioritizes digital differentiate the digital transformation leaders from those who are just talking a good game. But the best companies were also focused on generating buy-in throughout the business and bringing all employees into the digital transformation process.
For instance, 71 percent of financially successful companies used design thinking and agile management to speed innovation. This includes marrying small transformation projects with large ones, rather than only focusing on massive overhauls.
Additionally, 64 percent of thriving companies regularly exposed their employees to new skills and 63 percent fostered cross-team collaboration so employees could gain new skills.
Financially successful companies have also changed their recruitment practices, with 71 percent actively seeking more digitally savvy employees.
Firms Should Invest in Digital Transformation Success
These businesses are also putting their money where their mouths are. The top financial performers invested in digital at a far higher rate than their peers, with 66 percent spending 10.1 percent or more of their revenue on digital; only 26 percent of other businesses made that level of investment.
Thanks to ensuring their digital transformation strategy is more than just words on a page, these top financial performing companies are seeing results, such as:
- Better decision making using data (68 percent compared with 41 percent of all other respondents)
- Improved customer experiences (65 percent, more than double the rate of other companies)
- Increased profits (54 percent of top performers, more than double the rate of other companies)
Success is no accident: Companies are succeeding with digital transformation through proactive leadership, engaged workforces, and investments in both people and technology.
Not Hitting the Mark
And what about the themes common to businesses that aren’t progressing as well?
In many ways, they’re doing the opposite of the top performers. In most cases, their digital transformation efforts were more talk than reality. For instance, there’s a clear leadership gap. While 73 percent of all respondents said their CEO was a champion for digital, only 44 percent believed their companies were actually integrating their digital and corporate strategies. Only 43 percent of all respondents think their leaders assist the workforce to be digitally savvy and think about digital in new ways.
The posers are not getting buy-in throughout the business. An additional 40 percent of respondents cited lack of ownership by those tasked with spearheading digital transformation as either the first or second most important reason for problems stemming from employee experience with the transformation process, as well as the customer experience. The posers also often lacked a clear ROI for their digital transformation efforts.
A majority of the executives from the least successful businesses blamed factors that should be under their control, such as a lack of time, a lack of ability to deliver training, and a lack of in-house knowledge, rather than budgetary issues, for digital transformation problems.
With the right leadership and vision, and a commitment to transformation, all of these issues could be overcome. If executives cannot recognize their own culpability and responsibility for pushing forward digital transformation, they will likely be mired in mediocrity.
Ultimately, digital transformation success isn’t about buying a few pieces of new software, or talking a big game about technology — it’s about instituting a coherent strategy for transformation and integrating technology that incorporates staff into the process and changes the entire culture of the business.
Contact us today to learn how Lucidworks can help your team create powerful search and discovery applications for your customers and employees.