Last year, we noted that a significant market challenge was the lack of a clear digital transformation definition. On the surface, digital transformation simply means the transformation of a business to a more digital state. The problem we identified, however, lies in defining what exactly that state is and how a business should go about getting there. This problem persists, as studies from the current year show that a lack of a clear and consistent definition continue to slow digital transformation’s development in many corporations. In our compilation of definitions from top thought leaders last year, we found that most agreed that digital transformation was based around adjusting operations to meet customer expectations. What we found lacking in definitions overall was the role of leadership and culture, challenges that continues to plague digital transformation.
While the challenge persists, however, the best minds in the business are constantly working to shed light on what digital transformation constitutes. To help our readers formulate their own definition, we examined what some industry thought leaders had to say on the subject this year.
Accenture’s 2017 Digital Transformation Initiative collaboration with the World Economic Forum notes that in order to be successful, transformation must be all-encompassing. Businesses must become digital enterprises that rethink not just their operations but also their business models, talent acquisition, and metrics for defining success.
“Disruption may not be bankrupting incumbents, but to succeed in the digital era, they will need to become digital enterprises, rethinking every aspect of their business.”
World Economic Forum, “Digital Transformation Initiative in Collaboration with Accenture, 2017”
A study by Deloitte highlights the need for efforts towards culture transformation, risk taking, and intentional effort to transform.
“[P]rivate and mid-market companies need to explore new portfolio approaches, in which innovation is happening in a variety of different contexts and failure is encouraged provided it offers opportunities to learn.”
“[C]reating an effective digital culture takes an intentional effort. Digitally maturing companies are constantly cultivating their cultures, by engaging in efforts to bolster risk taking, agility and collaboration.”
Deloitte, “Digital Disruption in 2017”
Bain and Company
A study by Bain found that majority of companies are not achieving the payout they expected from their digital transformation efforts. As a result, leaders are often reluctant to fully embrace the transformation. Many end up underinvesting in the kind of broad changes necessary to truly transform.
“The true digital leaders pull away from the competition by linking a bold strategic ambition to the specific inner game capabilities and behaviors that they will need to achieve it. First they translate their strategy into a clear set of digital initiatives that point the organization toward a clear vision of full potential. Then they invest heavily in the fundamental changes to their ways of working and culture that allow them to develop those initiatives rapidly and execute them at scale.”
Bain & Company, “Orchestrating a Successful Digital Transformation”
Boston Consulting Group
According to a guide to digital transformation by the Boston Consulting Group, success in digital transformation starts at the top and must be organization-wide.
“The success of a transformation depends on an organization’s leaders, especially the CEO. In digital transformations, the CEO is even more critical because of the magnitude of change, the degree of disruption, and the power of inertia.”
Boston Consulting Group, “A CEO’s Guide to Digital Transformation”
Microsoft & Forrester
In a study commissioned by Microsoft, Forrester found that organizations that do not build out a full digital transformation strategy are unlikely to succeed. Silos are of the biggest barriers; transformation must be cross-functional and technology thoroughly integrated.
“Not taking the opportunity to fully embrace transformation presents challenges. Those pursuing a limited digital transformation strategy — Bolt-Ons — tend to focus on smaller, more tactical initiatives, seeing digital as a project. Meanwhile, those that embrace the full possibilities of digital transformation to reinvent their companies — Transformers — understand digital is more comprehensive, and they focus on shifting the entire business culture.”
Capgemini highlights the importance of culture transformation in digital transformation. Collaboration must be consistently encouraged, and creating a consistent mindset is key.
“Digital technologies can bring significant new value, but organizations will only unlock that potential if they have the right digital culture ingrained and in place.”
Capgemini, “The Digital Culture Journey:All On Board!”
Harvard Business Review
A recent Harvard Business Review article found that companies that have top-driven digital efforts are more successful.
“Overall, the companies that give CIOs a seat at the table, make IT a part of their strategy, and realize that the fate of their IT investments and business goals are intertwined will be most ready to face the challenges of tomorrow — and the next decade.”
Harvard Business Review, “How the Meaning of Digital Transformation Has Evolved”
According to Gartner, the key to digital transformation is building digital dexterity throughout the entire organization.
“[T]he key to speeding through the trough of disillusionment and creating value at scale is all about people.”
Institute for Digital Transformation
The Institute for Digital Transformation emphasizes the comprehensiveness and urgency of digital transformation. But the ultimate goal of digital transformation for every business is simple:to grow the business in a digitally evolving world.
“The ultimate goal of digital transformation is the growth and sustainability of your business. Plain and simple. Your company has to transform in order to survive. Your customers, your business ecosystem, your competitive landscape, and your employees are rapidly changing – and the pace of that change is accelerating. This isn’t about making slight adjustments. It requires a true, focused transformation affecting every aspect of your business.”
Institute for Digital Transformation, “Digital Transformation:It’s About the Business!”
In our Digital Transformation in the Consulting Industry Analysis of 2017, we found that top consulting firms agree that culture transformation is the key to true digital transformation.
“If firms are to truly digitally transform their business, it will be through transforming culture that they do it.”
In seeking a clearer digital transformation definition, we find that most experts agree that digital transformation is consumer-driven externally, but internally the drive must come from the top of the organization. Leaders must become comfortable with risk taking and invest in full transformation. This comprehensive transformation includes culture transformation, acquiring new digital talent, and ensuring that all employees receive digital training. Urgency is also a consistent theme; the time to act is now, and the change must be focused and all-encompassing. Only then will organizations investing in digital capabilities receive the full benefits that digital transformation offers.