Successful Digital Transformation: A survival guide for managers and executives

1Digital revolution in the 21st century

∎1.1 CHALLENGES FACING ORGANIZATIONS

The world is changing rapidly. Organizations from all sectors are facing enormous challenges. Whether it’s retail, healthcare, financial services, transportation or government, radical changes are occurring everywhere. The needs and behavior of consumers are fundamentally changing. They demand faster response times, transparency, excellent value for money and 24-hour service. Customers are increasingly organizing themselves, becoming more assertive and less loyal to suppliers and service providers. And customers want to be sure that doing business is safe.

New organizations are appearing on the market with new business models, positioning themselves ahead of the original service provider in customer contact. They steal your customer contact and push you into a supplier role with marginal revenues. Your position as the original service provider is lost forever! How will you respond to all this?

At the same time, technological advances are accelerating at a dizzying rate for organizations. This in turn raises new questions. What gives value to customers, employees, society and shareholders? What should you keep doing and what should you say goodbye to? What opportunities are you going to take advantage of in terms of market approach, business models, efficiencies and technology? What choices do you need to make?

The speed of change in society and technology means that organizations need to dramatically increase their flexibility, resilience and pace. An agile way of working certainly contributes to this but more is needed. The biggest obstacles for corporates, who have been in the market for a long time, are legacy problems. Not only of outdated systems and technology but also of associated processes, organization, practices, even culture. How do you ensure that this legacy does not block your strategy? How do you create overview and insight into which measures you need to take; which projects can continue or where you need to take drastic action?

The Greek philosopher Heraclitus proclaimed it long ago: panta rhei. This means, everything is in motion, freely translated, change is the only constant. This requires a trade-off between renovation and improvement of the existing, often side-by-side. So, renovate with the store open. How do you ensure that your organization smoothly transitions to the intended situation? In such a way that customers do not experience any negative effects and the organization retains control? And do you ever reach that intended situation, or is it an ongoing journey to Utopia?

∎1.2 ASSIGNMENT FOR MANAGERS AND EXECUTIVES

In today’s society, digitization is an important factor to stay in business. More than ever, organizations will have to think and make choices about how digitization can create and contribute value to product offerings, services, chain collaboration and business operations. Optimal use of modern information technology can make the difference between decisive competitive advantage, survival and loss. In addition to focusing on the short term, one must also look to the future: what structural changes can you expect and how do you respond to them? Which (new) technology offers value to stakeholders? What opportunities do you seize in market approach, efficiency improvement and technology? Is what you want feasible? And how should you organize digital innovation?

Dependence on digital technology is increasing daily. If online banking is not available, the world quickly comes to a standstill. A failed ERP implementation can mean the end of your business. Developing digital channels too late can result in your customers switching to competitors. Investments in digital technology are, therefore, a significant part of the budget. Digital innovation is no longer a priority, it is a necessity. So, it requires structural attention from, and control by, managers. Every manager and director must therefore have the necessary knowledge, insight and decisiveness regarding digital technology. You can’t leave this to specialists in your organization, or outsource it to a supplier or consultant.

Managers and executives need to know and understand the world of robotics, IoT, big data, blockchain, machine learning and artificial intelligence. Make the right choices from a sharp view of market developments, technological possibilities and business perspective. And having a clear picture of how to organize and manage this transition successfully. This is called digital transformation: an integral business transformation in which digital technology plays a dominant role. The goal is to create an agile organization and to use the opportunities, possibilities and expectations of digital technology in the utilization of data, the optimization of processes and with the focus on the customer. Digital transformation starts with the formulation of a resistant and successful digital strategy, a strategy in which digital technology is the main driver of change.

Literature on digital transformation has appeared with regularity in recent years. Often with promises and (often recurring) success stories about disruptive business models, for example in tourism (Airbnb, Booking.com), transport (Uber), media (Spotify, Netflix) and retail (Amazon, Alibaba). While we can indeed learn a lot from this, in practice it appears that organizations are struggling immensely with digital transformation. Research firms such as IDC predict that global spending on digital transformation is expected to reach around $2,300 billion by 2023. However, several studies show that only a minority of all initiatives will succeed. Why is it so much harder than described? What are the reasons for