Blog. Accelerate the digital transformation

Speedometer scoring the fastest speed. Depth of field in 400.


This summer MIT Sloan Management Review and Deloitte published an interesting research report on the extent to which companies are prepared for a digital future[1]. More and more people are starting to realize that the digitization has a significant business impact. Close to 90% of all respondents expect that the industry in which they work will be disrupted as a result of digital trends. On the other hand, only 44% say that their organizations are adequately preparing themselves for what is coming.

The researchers observe that companies which are the most digitally mature have a few characteristics in common. They are more willing to take risks, are quick to experiment, invest in digital talent and put an emphasis on the so-called soft skills when recruiting and developing leaders. A clear vision on the transformation, a willingness to change, thinking forward and collaborative skills are considered to be more important for a leader than being technologically savvy.

Digitization is hard work

Creating an effective digital company is hard work and requires explicit involvement and effort from the people at the top. And as I wrote in an earlier blog (A little bit digital is like a little bit pregnant, March 3rd 2016) a successful digital transformation is disruptive and needs an integral approach. Major adjustments to both structure and culture in every part of the business are necessary to effectively deploy a digital strategy in a rapidly changing environment.

If less than half of the respondents claim that the preparations for the digitization are sufficient, there is still a lot of ground to be covered. The speed of the digital transformation has to drastically increase if those companies want to survive.

Strategic planning needs to anticipate exponential developments

Executives that want to increase the pace within their organization, while preventing disruptions or at least keeping them manageable, take the exponential growth of technological developments into account in their strategic planning process. The impact of robotics, artificial intelligence, the internet of things, self-driving cars, 3D/4D printing, nano- and biotechnology and quantum computing comes much faster than we can imagine. Strategic planning based on the historical development of technology will inevitably lead to an underestimation of the outcome and will always be a few steps behind. Moreover, it will create space for new entrants who are embracing the latest technological possibilities.

For companies that operate in a turbulent environment, annual planning is no longer enough. Assessing the environment and formulating new plans only once a year is simply not sufficient. Planning ahead for the coming three or even five years is mostly guesswork and therefore pointless. Strategic planning has to be a much more continuous process with quarterly updates and no more than five quarters forward. I understand that such an approach may be difficult for companies with shareholders who are expecting stable results. However, it will increase the chances of long term success, thus making the company more sustainable.

What would you do if you could start over?

It is essential to incorporate an outsider’s perspective on your own company when determining the strategy. This can be achieved by involving consultants, independent experts or newly recruited (temporary) employees. It is also a good idea to create multiple scenarios and consider their impact. Not just one base case scenario with an optimistic and a pessimistic version, but really fundamentally different takes on the future.

One of the scenarios should be what a newcomer, a greenfield, would do; a new company that is not being held back by established interests, legacy systems and old ideas about how things should be.

Accelerated innovation and operational management through external collaboration

The pace has to increase at the tactical and operational level, too. If you acknowledge that there are more people outside of your own organization with specialized knowledge than there are within, you opt for open innovation and involve external parties in for example product development. Collaborations can be set up with suppliers, costumers, universities or consultants. There are also many different platforms where you can organize competitions and reach out to complete strangers to help you solve your problem.

Also by not filling every position in your organization with permanent staff and reserving a few flexible spots for external employees you can assure a continuous stream of external input. For practically every position a suitable candidate can be found on a crowdsourcing platform.

And of course you should opt for agile working methods for your projects, which will enable you to test results on an interim basis with end-users and adjust the final product to the most recent demands which may have changed since starting the project.

Taking risks responsibly and making mistakes

Speeding up the digital transformation means that you have to keep yourself informed of technological developments, the applications of technology in your industry and the moves of existing competitors as well as newcomers. Even if you decide not to lead the pack you need to have a plan for reacting quickly. At least that will prevent you from being caught off guard.

Taking risks is inevitable in uncharted territory and you can do so in a calculated and responsible manner. By experimenting, for example. Mistakes and failures are valuable if they contribute to the learning process leading to a decision regarding what is possible and useful, and what is not. This way the future will not catch up with you, but you will catch the future.

[1] MIT Sloan Management Review, Aligning the Organization for Its Digital Future, Summer 2016

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