The words “digital” and “transformation” are so pervasive in the modern business vernacular as to have an almost anxiety-inducing effect. Collectively, the words bring to mind the new technologies that facilitate the disruption of entire industries. It seems imperative to consider the growing effect of digital on your organization, and yet paralyzing due to its wide-spread impact. How can I know if my business is doing enough in the way of digital transformation? Consider these 8 questions, derived from a recent McKinsey publication, as a way to benchmark yourself and your organization.
- Where is change happening? In spite of the fact that the impact of digital seems ubiquitous, it isn’t helpful to say that change is happening everywhere. To help bring structure to the chaos, it is useful to systematically review which of the core elements of your organization are being affected by digital change, and rank each of the elements based upon the implications for business.
- How is this impacting the customer journey? One of the highly popularized outcomes of the digital revolution is the impact it has on the customer journey. Going digital has upended the customer journey in multiple industries and has allowed all industries become more responsive due to the real time feedback digital technologies offer. Consider how your company can optimize the customer journey from beginning to end, to offer one coherent experience for the consumer.
- Has internal collaboration improved? Another highly useful result of the digital era is that the silo paradigm has been all but overthrown. Creating separate enclaves based upon function frequently results in a loss of important information. Digital has made it possible to share and collaborate on a continual basis, thereby allowing for a more dynamic operating model.
- Have you implemented a continuous testing cycle? Market research and planning cycles have a place in the modern business, but the digitial era is all about working iteratively. Digital has expanded upon and improved internal metrics to such an extent that it is often a better investment to implement a continuous testing cycle than it is to spend long planning cycles that could end up potentially producing something the customer doesn’t and didn’t want.
- How responsive is your budget? Consider venture capitalists. Their business model hinges upon return on investment, and therefore, they don’t hesitate to either invest more or pull the plug if the short-term milestones indicate it. While pulling the plug on your whole business based on a couple bad quarters may not be the most savvy idea, a responsive budget for internal initiatives can prove to be very cost-effective. The most important lesson to be learned from venture capitalists: investment should be linked to progress, not arbitrary budget cycles.
- Does your workforce feel empowered? The downfall of working in large groups is the free-rider phenomenon: if a project belongs to everyone, it belongs to no one. The lack of responsibility and authority afforded to middle-management can often be the thing that stalls innovation and new projects. Teams need the authority and willingness to lead in order to break through the old way of working.
- What is the state of your IT infrastructure? Almost all companies (with the exception of start-ups) face the problem of legacy IT infrastructure. With the rapid pace of technological advancement, it is nearly impossible to not feel like you are constantly lagging behind, and as a result, many organizations come to accept and expect an IT infrastructure that operates at two speeds. This isn’t necessary. The proper tool can help you establish what is and isn’t generating value for your larger organization. Implementing a cycle that makes you aware of what is driving business value is what digital transformation is all about.
- How do your coordinate your strategic initiatives? All transformations boil down to a portfolio of smaller change projects. While it is tempting to let the plethora of change projects mature independently, it is crucial to consider coordinating these initiatives if you want to effect considerable transformation across your business. In this stage, alignment with the overarching strategy is necessary. This allows you to prioritize projects and note the interdependencies among initiatives, which allows for the eventual coordination of resources.