Several years before the age of COVID, many customers I encountered were asking me about digital transformation and how to initiate change within their organisations. At that time, they shared a common challenge: Where to begin?
Five years later, most of them are still stuck in this same place. The journey is different for everyone, and there is no universal starting point. However, over the years, my experience working within a digitally transformed manufacturer and technology company has convinced me that some basic guidelines need to be followed to achieve success.
Digital transformation is more than just technology, it must be people-led
Successful digital transformation helps a company achieve its vision for where it wants to be by developing organisational, cultural, and technological frameworks that support this aim. It is not just about technology. It is easy to get swept up in the industry techno-babble with buzzwords such as cloud computing, Software-as-a-Service (SaaS), IoT, and connected devices being bandied around. In my experience, the companies making the most of their digital transformation remain focused on identifying the problem they are trying to solve before considering any individual solution.
A digital transformation journey is guided by the ultimate destination
With so much importance placed on developing a digital strategy, I thought it might be helpful to explore how laying out a vision can be done more easily. First, save yourself time and money by avoiding point solutions that don’t fit into an overarching strategy. Start by visualising where you want to be at the journey’s end. What do you want your business to look like? Do you want it to be more agile and flexible? Do you want it to be more consumer-driven? Decide the vision for your business and set that as the goal. That goal could be ten or twenty years away. However, identifying the end of the journey will help you develop incremental steps that align with that vision and keep you on the path toward the final goal.
By knowing what will come next, a company can future-proof its investments. But again, the vision is not about new technology; it’s about how to run your business better. In this way, technology remains an enabler, always supporting the vision and never becoming the vision.
Breaking down organisational silos to achieve digital transformation
A company’s vision tends to start in the mind of the CEO, but it can be a significant challenge to move from that vision to practical implementation. This is because the CEO is the only person whose responsibilities span all company functional areas and across the entire value chain. Even while the CEO’s vision may include every functional discipline of the company, it will almost certainly face implementation barriers as soon as siloed functions such as manufacturing, quality, sales and marketing, purchasing, HR, etc., with separate budgets begin to impose somewhat narrow priorities. This challenge becomes more of an issue as you delve deeper into an organisation.
Achieving the vision requires horizontal integration. This requires convincing people to think about the responsibilities of co-workers who sit to the right and left or consider interacting with groups who work either upstream or downstream within the operation. For example, when a factory changes a manufacturing line for a new product, it is an opportunity to involve plant operations and let them know why marketing is expanding or changing the portfolio and how purchasing or supply chain may wish to switch to alternative raw materials. Understanding the goals driving the change may help the plant implement better solutions to address this need, simplifying it in the future and making the process more agile and more repeatable. Culturally inside companies, the organisational structure is one of the most significant barriers to overcome. The companies that best manage this cultural transformation often have a chief digital officer. Like the CEO, this person can take a holistic view of the organisation.
After the vision, what comes next?
Once the long-range digital transformation goals are established, the next step is to assess corporate culture. This step enables you to proactively ensure that transformation-driven changes are accepted and implemented. If the workforce rejects the process or technology changes that result from the transformation journey, it becomes impossible to move forward. Success is ensured only when the organisational culture is set up to accept the changes. Many companies now recognise that corporate culture resistance is a significant barrier to overcome.
We can draw lessons from the third industrial revolution when automation and data systems were the trends. The introduction of automation systems should have led to the codification of workforce knowledge, but instead, fear for jobs meant control systems did not take over processes fully. Although organizations automated their processes, they were still heavily reliant on the human factor to keep them ticking over effectively. Likewise, many organisations invested in overall equipment effectiveness (OEE) systems to measure production efficiency. These systems delivered excellent reports, highlighting when something was not working correctly. However, these reports seldom led to actions remedying the root causes of problems. Companies with strong discipline around total productive maintenance (TPM) or total quality management (TQM) often had greater success, as continuous improvement was already part of the organisation’s culture and DNA. However, it is a fact
that many organisations did not receive the full benefit from their investment in technology due to this cultural gap. Organisations should learn from the past and avoid such a problem when undergoing digital transformation initiatives within this fourth revolution.
Digital transformation offers a massive opportunity to control your business better and establish a clear path for future growth and development. Achieving this transformation is challenging, but the odds for success improve when you start with your end goal in mind and focus on people over technology.
