Digital transformation (DT)—the application of digital capabilities to organizations—promises to enhance efficiency, increase customer satisfaction, and uncover opportunities for growth. From big data, AI, blockchain technology, to the Cloud, many hail DT as the panacea for all organizational problems. Yet, 70 percent of all DT initiatives do not reach their goals. Of the $1.3 trillion that was spent on DT in 2018, $900 billion potentially went to waste. So, why do some DT efforts succeed and others fail? Our experience in very different contexts suggests that, fundamentally, most digital technologies provide possibilities for efficiency gains through increasing the scale or pace of existing organizational practices. But if people lack the right mindset to change and the current practices are flawed, DT will magnify those flaws and amplify their debilitating impact on the organization. To make digital transformation work for your organization, here are five key lessons that have helped us:
Lesson 1: Give the authorship to insiders
Organizations that seek business transformation frequently bring in an army of outside consultants who tend to apply one-size-fits-all solutions in the name of “best practices.” Our approach to transforming organizations relies on insiders: staff who have intimate knowledge about what works and what doesn’t in their daily operations. We involved a significant portion of staff members throughout the transformation process, from pre-transformation planning to implementation.
At Li & Fung, over 500 members of cross-functional teams were formed to remake the finance department from one that served as a back office to one that serves as a co-pilot to drive business performance through insights and analytics.
At CenturyLink, 60 percent of the organization partook in the transformation process.
At the Department of Planning and Development in California’s Santa Clara County, staff insight fundamentally changed the course of the department’s transition to e-government. Initially, external consultants recommended workflows based on work they themselves had done for other jurisdictions, which tended to take a decentralized approach toward permit approval. Yet, based on staff interactions with customers in Santa Clara County, they understood that customers far prefer a unified process. Therefore, Kirk Girard and his team redesigned the workflow and heavily adapted tools, processes, diagrams, and key elements of the core software originally prescribed by external consultants to fit the new process.
Often, new technologies fail to improve organizational productivity not because of fundamental flaws in the technology but because of a lack of intimate insider knowledge.
Lesson 2: Design customer experience from the outside in.
If the goal of organizations is to improve customer satisfaction and intimacy, then any effort must be preceded by a diagnostic phase with in-depth input from customers. From the outset of the transformation process, the staff of Santa Clara County’s Department of Planning and Development carried out over 90 individual interviews with customers in which they asked each customer to describe the department’s strengths and weaknesses in their own words. Furthermore, the department held focus groups that asked various stakeholders—including agents, developers, builders, agriculturalists, and crucial local institutions like Stanford University—to identify their needs, establish their priorities, and grade the department’s performance.
The department then designed its digital transformation based on this input. To respond to customer requests for greater transparency about the permit approval process, the department broke down the process into phases and altered the customer portal so customers can now track the progress of their applications as they move from one phase to the next. To shorten processing time, the department configured staff software so that it would automatically identify stalled applications. To enable personalized help, the department gave Permit Center staff dashboard control of the permit workflow. Digital tools can absolutely enhance customer satisfaction, but the solution does not lie in one single piece of software. Depending on customer needs, it might require changes in multiple digital tools.
Lesson 3: Design employee experience from the inside out
Organizations implement digital transformation to increase efficiency, but one of the greatest impediments to organizational high performance is low employee motivation. According to Gallup, 85 percent of employees report that they are disengaged at work. This results in $7 trillion of lost productivity globally. This is not an issue that can be solved by digitization.
To solve the issue at its root, we have to first transform the mindset of employees. At CenturyLink, and at Li & Fung’s offices in Hong Kong, Britain, Germany, and the US, Behnam Tabrizi coached several thousand key transformation stakeholders—from executives to individual contributors —on the “Inside-Out” process. Tabrizi guided groups of 60–70 people to compose vision statements about what the transformation process would mean to them personally. He asked employees to reflect on their personal experience to find out what they felt to be their strengths, what brought them joy, and what gave them meaning. Then, he supported employees to take charge of the parts in the transformation process that best suited their strengths and interests. By aligning the personal with the organizational, all of us observed an increased level of employee engagement, which in turn led to higher organizational output.
How can we help you accelerate your growth?
In the face of disruption, most business leaders need to evolve fast but don’t have a process to unlock growth and enable change. Vision Platform offers a game-changing framework that equips your team to unify its vision, build a culture of innovation, and reinvent your future through transformation.