Digital Transformation (DX) has been underway for more than a decade now. With a significant amount of time under our collective belt, it feels like a good time to evaluate a couple things.
Maybe not so surprisingly, many companies are stuck in their DX or struggling to make sense of the opportunity it presents. I’ve spoken to plenty of CIOs and business leaders in this situation and offer a few observations:
- Many companies remain skeptical of DX and will miss out on the rewards.
- Other companies are either taking a short-sighted approach or they are trapped by the digital hype cycle. Neither are winning.
- Some business leaders see DX as a technical problem leaving CIOs without a method to strategically partner with the business, where DX can make the most impact.
Still Skeptical of DX?
Here at StrataFusion, we’re more than a little allergic to consulting hype. But the “big hairy beast” that DX represents is clearly making history and is much more than simply moving your data centers to the cloud. It’s also about embracing technology to:
- Create new business models and growth trajectories
- Shape customer-obsessed companies
- Build products that have a relationship with their users
- Move at faster and more agile speeds
- Win the talent war
It’s been said that every company is now a technology company – like it or not. While IDC reports that 75 percent of companies are in a DX deadlock (2), it’s crucial to operate as if your competitive threats are not deadlocked. Consider Kroger CEO McMullen who recently justified a $2.5B acquisition to accelerate the company’s digital technology position saying, “We assumed that, at some point, Amazon was going to do something in the physical world.”
If Amazon isn’t on your radar, then start-ups likely are. Are you ready? Here are two questions you should be asking:
Do you have a clear understanding of your strategic digital opportunities and threats?
We’ve seen an industry leader wish to become the “Amazon of Information” when it was struggling to deliver basic services. We’ve seen another leader squeeze technology spend to less than a percent of revenue while largely missing out on the biggest product leap in a century. Another leader has been in the process of transformation for an entire decade but created more re-orgs than business results.
In many ways, industry-leading CIOs have a greater challenge to face: the business. Your executive partners often lack a way to focus and almost never a mechanism to measure progress and work together. And DX is more than a series of initiatives. You can’t simply keep up, playing like a football team moving the chains when the game is becoming more like soccer. Your strategy may rely on leadership off-sites and benefit from strategic roadmaps, but alignment and executive teaming must be supported continually along the way.
Is your DX strategy both focused and truly transformational?
You’ve got to measure to see the progress. Companies are awash in data but still not yet measuring their Digital Transformation. Most are managing operational KPIs and some are measuring their DX strategy or strategic initiatives. Who is measuring the company’s transformation? Yes, there is a difference.
Consider fitness goals. Let’s say you’ve signed up for a race to serve as a motivation for getting in better shape. You’re going to measure your practice split and completion times, but those are like operational KPIs – lagging indicators. You hit a plateau, so you get a trainer. They’ll probably ask how much sleep you get, grill you about your diet and want details on past injuries. Those are the leading indicators that measure your fitness transformation and eventual success.
Business results are the outcome of your transformation, but that’s not how companies are measuring. According to IDG, only 15 percent of companies are measuring DX success, and virtually none are measuring the transformation of the company (1). To address this problem, StrataFusion developed a simple DX measurement system that elevates the leadership conversation, focuses on partner alignment and helps regain forward momentum.
Do you have an easy way to talk with your executive business partners and CEO about Digital Transformation? StrataFusion partners have led companies through Digital Transformation and the technology waves that came before; in other words, sat in your seat and walked many a mile in your shoes. I invite you to learn how you can use DX measures to build momentum, alignment and stronger relationships with your senior executive partners.
(1) 2018 IDG State of Digital Business Transformation
(2) IDC Using IT Metrics and KPIs to Fast Forward Digital Transformation, 2018