Last month the Harvard Review published an article that highlighted the disillusion of senior managers with the return they are getting on their transformation investment. Are you getting full-value from yours?
The truth is most transformations fail to some degree and many simply fall short of expectations. In fact, few organisations ever achieve full value from their transformation, but that’s to do with the way they are tackled not the principle of transformation. You may think you can’t afford to transform, but the reality is you simply can’t afford not to, so here are a few pointers to ensure you get the best possible value for your effort.
Understand why you are doing it.
You need to know transformation is uncomfortable, will take forever and is expensive. Of course, there is no point in any business investment that doesn’t produce a return, but in this case the pay-off is pretty significant – you’ll still be in business. A business that doesn’t transform simply won’t survive the arrival of digital disrupters, yet even digitisation doesn’t guarantee you a win, it’s just the only way you are going to be in the game.
You may be ticking along quite nicely right now, but it takes just one digital disrupter to arrive in your sector to change the game, radically, over-night and any business stuck with a traditional business model won’t stand a chance. In fact legacy organisations could have as little as twelve months of life left in them.
Transformation gives you the ability to compete in the long-term against other digital organisations. Today, customers in every sector are looking for better products, delivered more quickly at lower prices and a digital business is equipped to deliver just this. A traditional business that tries to compete is on a hiding to nothing. They simply don’t have the insights nor processes that facilitate the efficiency, products and prices that today’s customers demand whilst still delivering a margin.
Full Value transformation is not an IT project.
Many businesses make the mistake of approaching transformation by digitising existing models and work practices. We are not talking about another IT project here, it’s far more fundamental than this. The outcome, should you share this perspective, is predictable. Sure, you speed things up, but there’s no merit in greasing a pole that disappears into the abyss. The threat from start-ups has never been more real. When they arrive they do so with a model that is digital from the ground up, using digital tools and disintermediated processes. You won’t see them until the day they start eating into your market share, but they are lean and mean and gain traction faster than a SantaPod hot-rod. If you are still operating a traditional model you won’t know what’s hit you and it will be far too late to fix your problems. Digital transformation means re-building your business from the ground up. Tinkering with processes will only drain finances, it won’t fix the problem and can only speed up your demise.
A digital business, is faster, more responsive and theoretically has limitless capacity, but digital assets don’t just streamline your delivery process, they unlock new opportunities all over your business. Customers, for example, won’t just warm to your faster and improved service. Digital tools will give you insights that inform product innovation and can set your organisation on a new direction.
Know where the value of your business lies.
We should all know by now that the value of a business today is in its customer base. This understanding pays off for any business approaching transformation. Transformation is a process of re-thinking and re-building your business from scratch with the customer and your relationship at its core. The starting point for that is understanding your market. You need to determine end-user needs and which you can meet, viably, with the least investment and effort. This may even mean you’ll end up selling something different to what you have sold in the past. Many businesses have found this to be the case, but the constant will always be your customer base, because, if you have done your job in the past and made them love you, they’ll be the first to buy into your new proposition.
It’s all about efficiency
Efficiency is fundamental. The majority of your market are digital natives. They are calling the shots whether you like it or not and they want better, faster and cheaper – more for less. To compete in the digital paradigm you simply have to find a way to do more with less too and digital tools enable this if you embrace them. Jeff Bezos told traditional retailers “Your margin is my opportunity”, but in fact a traditional retailers’ Achilles heel is the overhead that determines their margin.
However, you still have to deliver your transformation before you can start operating in the digital marketplace and most organisations get this wrong. 70% of transformations are currently failing. What’s more, having wasted time and a great deal of money on the initiatives they may have undertaken, very few organisations can afford to go back and start again, even if there were time, which by now there isn’t. Your disrupter probably already has you in their sights, so there’s only one possible outcome to a failed transformation.
In fact the need for new levels of efficiency starts well before your new model is operational. Getting there requires an agility you’ll probably not have achieved before. I can’t emphasise enough the importance of executing your transformation efficiently and you won’t do that without outside help. Even if you can pull it off, it would take you far too long, to get your organisation into the right mind-set and another thing altogether to maintain that.
Stay focussed on your objective, but flexible in your approach to achieve full value.
There are many facets to this, but the fundamental one is to focus. You have to start with a clear plan and that is defined by your brand model. Any business that is on top of its branding will have a brand model that they know resonates with the market sectors that offer them the greatest opportunity for success. This will be supported by a strategy for building your brand community, which, if the person responsible for your brand strategy is up-to-date, will set the foundation of your transformation programme.
The Harvard article highlights that once they recognise the need to transform, senior executives, probably in a state of panic, tend to throw the kitchen sink at the problem. It’s very easy to waste a small fortune and a lot of time on initiatives, platforms and training that is unnecessary. There is always a software salesman ready to sell you solutions you don’t really need and initial costs, on-going licenses, training, development and service and support soon add up to a significant drain on your budget. As I said, digitisation is all about efficiency, so start as you mean to go on. Avoid the distraction of shiny stuff that’s nice to have and ask yourself what you really need. The measure of this is the promise represented in your brand model.
Don’t compromise, prioritise.
Your brand promise is the critical component of your brand model and as you start to build your new business model this is what you must focus on. Everything you do should take you closer to the delivery of this promise. Do nothing that doesn’t contribute to this central goal. In fact, despite what some people may lead you to believe, minimum viable product (MVP) doesn’t mean a lot of second-rate initiatives, quality does make a difference. The way to streamline is to prioritise initiatives. Do less, but well, rather than be an average performer across the board, but prioritise the projects that will deliver the fastest return.
A transformation project is really a combination of many smaller projects and when you are planning these you should build in a means to measure the success of each in taking you toward to your objective. The nature of the digital paradigm is that things change. While you are building a component, your competitors may take a new initiative, software developments emerge to offer new opportunities and you may find you need to re-focus your plans. Measurements should be taken periodically throughout the process to ensure that you don’t go too far off piste because of this. If you find one of your projects heading down a blind alley you may have to abandon it entirely. Be bold, don’t try to make do. Learn to take the hit, at least it won’t be as hard as it would be if you spent months or years running down a blind alley.
Above all, to bring your transformation over the line and take your new organisation forward once you have transformed you’ll need commitment. I don’t mean mere agreement, I mean everyone in your organisation, from top to bottom has to believe it’s the only way and commit to playing their part in the process. You don’t have to look far for evidence of how feint-heartedness buys you nothing. The UK retail scene is littered with bodies of retailers who made only half-hearted attempts to build digital businesses, by jumping on the e-commerce bandwagon. For a retailer these days setting up an e-commerce channel doesn’t mean you’ve transformed – ask House of Fraser, Carpetright, Debenhams, Maplin, Toys R Us, and the others currently writing redundancy cheques.
So, don’t make the same mistakes. If you aren’t excited by the future that digital transformation offers you, at least believe it’s the only future you have.
First published at thedigitaltransformationpeople.com May 2018
August 3, 2018