Digital transformation is quickly becoming a vital cornerstone of business development. According to the World Economic Forum, while it once took the average Fortune 500 company approximately two decades to achieve a billion dollar valuation, modern digital start-ups are reaching this goal in just four years.
As most digitally empowered business leaders know, digital transformation is about far more than simply adopting new technologies. Rather, it requires identifying areas in which digital change can improve operational efficiency and enhance the customer experience, having a measurable positive impact on an organization’s bottom line. As technology and business become more closely intertwined, digital innovation has streamlined many aspects of business operations. However, business leaders must strike a balance between encouraging innovation and experimentation among all team members while carefully managing and prioritizing their organizations’ digital initiatives.
Prioritizing a digital transformation requires a great deal of discipline, as well as a holistic understanding of the challenges and opportunities currently facing your company and industry. The following tips provide some guidance for business leaders as they determine which digital changes present the greatest potential value to their companies.
Determine the Areas Most in Need of Change
When seeking to set their digital transformation priorities, business leaders should begin by identifying the areas of their organizations that most stand to benefit from digitization. In most cases, emerging technologies present benefits in the realms of customer engagement, operational performance (which can include employee engagement), business model development, and products and services. After pinpointing digital opportunities and challenges in each of these core areas, executives should dig a bit deeper to identify the specific metrics within each category that they wish to increase—such as sales, brand awareness, or shareholder value—or reduce, in the case of metrics such as IT costs or employee turnover.
While mobile, social media, and big data are currently among the most popular platforms for digital transformation, companies seeking to expand their digital footprints should look beyond the basic implementation of these technologies to find true opportunities for innovation. By examining broader market trends, CEOs can gain insight into how other companies in their sector are leveraging digital tools to create new value and approach emerging challenges. Likewise, business leaders should encourage their entire organizations to be digitally aware. Working together with digitization as a core component of company culture, companies can more easily remain on the pulse of industry trends that could eventually impact their business, in many cases anticipating digital disruption before it reaches their doors.
Analyze Return on Investment
The rapidly changing nature of technology is a crucial factor to consider when attempting to prioritize a large-scale digital transformation. Because industry trends and technological standards may fluctuate before a company can fully reap the rewards of a digital project, a digital opportunity that presents a great deal of value, but at a significant cost of money or time, may not offer the best ROI.
Business leaders should instead seek out “low-hanging fruit” digital projects that improve key metrics, but are relatively quick and inexpensive to implement, thus ensuring an attractive return on the company’s initial investment. To do so, they must be able to quantify and compare the respective costs and benefits of various digital opportunities, leveraging research to determine whether the project’s goals can be accomplished using the firm’s existing IT resources, whether a given project’s success relies on additional digital initiatives, whether it will generate any ongoing expenses, and other key considerations.
Develop a Framework for Digital Change
Business leaders will likely need to make a number of cultural and operational adjustments when launching a digital transformation. In addition to preparing the organization’s stakeholders to adjust to and support digital change, business leaders must also ensure that they have the necessary resources to support digital innovation. IT departments may require significant restructuring or changes in protocols in order to support digital transformations, which often involve bolstering data analytics capabilities to accommodate the influx of information brought about by digital change.
In order to guide an effective digital transformation, business leaders must also ensure that their organizational structure allows for collaboration. They may need to make a concentrated effort to break down silos to allow employees to work across departmental boundaries to implement digital change and take full advantage of the data that it often provides. They may also discover the need to recruit new talent and create new roles within their organizations to help guide digital initiatives. This may involve the creation of a new C-level executive role, such as chief digital officer, or simply the creation of departmental digital working groups to spearhead change throughout the organization.
In addition to creating the necessary infrastructure for digital change, CEOs should also develop a visual roadmap for individual digital projects and long-term digital goals. This process will help to integrate factors such as budget, digital interdependencies, and both internal and external resources into a single comprehensive strategy. It can also be helpful in highlighting potential challenges before they arise, and a visual roadmap can be a valuable tool in communicating a digital vision to company stakeholders.