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May 20, 2021

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Digital Transformation on the Spot

The COVID-19 crisis has seemingly provided a sudden glimpse into a future world. And with all the uncertainty about how the future will look like, it’s crystal clear that it will be digital. The response to the pandemic has fastforwarded digital adoption by five years (1). There is no doubt that the pandemic is amplifying the adoption of new technologies, such as chatbots, e-commerce, and advanced analytics, offering more groundbreaking application areas that could be implemented throughout the entire value chain. Yet, digital transformation is driven by business needs, hence, only companies that will identify and deploy the digital tools and approaches that offer the most value to their business will reap the full benefits. Though some companies might be reluctant to hit the go button on digital transformation, they are now forced to match the accelerating rate of digital change, or risk being washed away by pace of change. Digital transformation will not come without risks, but in the digital world, standing still is the biggest risk of all. But, first what is a digital transformation? That seems like a simple question, still there has always been a controversy on what it really means. Most of the hype around digital transformation is centered on the adoption of emerging technologies, but that’s only half the story. From where we stand, digital transformation is about embedding a digital DNA into your business, pushing everyone to think and act digitally and evolving all aspects of your data model and business model- mainly the way you get your revenue streams. In this article of LOGIC Insights, we have distilled companies’ best practices into 7 principles addressing how to achieve digital transformation on the spot along with highlighting the main blockers that can derail its effectiveness.

"The response to the pandemic has fast-forwarded digital adoption by five years"

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ROADBLOCKS TO A DIGITAL TRANSFORMATION

Digitally mature companies understand that to drive digital success, they need to sync talent, culture and organizational structures with digital environments. Each stage of the transformation, from its outset to the long haul of subsequent years, will undoubtedly present challenges. Yet, no rule book will solve them all. For this reason, we analyzed
some digital transformations’ initiatives to know the root causes of where they go wrong, and we came up with six main blockers that businesses usually face during a digital transformation.

  1. The Digital Talent Gap

It takes a combination of talent and technology to
undergo digital transformation. Still there aren’t enough people to fill all the gaps, especially with the development of new technologies- AI, Big Data, predictive analytics and others. To adapt to a more digital future, companies need to develop the next generation of skills. Technology skills now need to be marbled across all business functions, and not just centered in IT. According to Deloitte and MIT Sloan Management
Review, the No. 1 operational and cultural challenge organizations most commonly face in digital transformation is finding, training, and retaining the right talent. The evolving world of work created seismic shifts in skills set required to succeed in labor market; companies are now looking for adaptable skills that enable employees to transfer from one task to another. They are also still underestimating the time needed to build new capabilities in such turbulent times. According to a recent TalentNeuron survey, 53% of respondents said that the inability to identify needed skills was the No. 1 impediment to workforce transformation. Thus, companies need to identify the new capabilities that are required and prioritize a way to acquire them, for example should the organization build digital skills
internally through re-skilling at scale or leverage external digital ecosystem of talent and strategic digital partners? Leaders also need to work on retaining talents, as digitally talented employees are prone to move to another company if they feel their digital
skills are stagnating, especially in the middle management level. Ultimately, the biggest
determinant of digital success is your people; so while hunting for talent, focus on quality over quantity and work on retaining them since digital talents have an easy exit option with many job opportunities.

2. Wrong KPIs:

Having the wrong/outdated success metrics or KPIs to guide and measure
progress is a key deadlock in any digital transformation initiative. Finding the right metrics for any organization in today’s digital environment will require continued experimentation and tweaking over time. KPIs of digital age need to be tied to outcomes that encourage digital ways of working and adoption, such as digital capabilities or improvements in customer experience or the speed of product launches. Another common challenge is that some companies tend to solely rely on output-based and financial KPIs, such as digital revenues or reduction in CAPEX, that are too broad to take into account factors contributing to a given impact.

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