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A Successful Digital Transformation has 3 Stages

Posted by Marbenz Antonio on September 27, 2022

3 Steps to a More Successful Digital Transformation in the Supply Chain |  Supply and Demand Chain Executive

Digital transformations keep failing. The rate of digital transformations failing to achieve their initial objectives, according to different research from academics, consultants, and analysts, ranges from 70% to 95%, with an average of 87.5%. However, digital transformation has been at the top of business agendas for at least ten years and isn’t going anywhere. On the contrary, a lot of analysts have emphasized how quickly the Covid-19 period is affecting digital change.

There are three key reasons why digital revolutions fail, according to advising and teaching with hundreds of leaders.

First, when businesses set their goals (if they do so at all), they frequently have unrealistic expectations for the timing and breadth of the results. They believe it resembles using a magic wand.

Poor execution, including improper governance, prioritizing technology deployment over user engagement, choosing the incorrect KPIs, and similar issues, is the second factor contributing to failed digital transformation.

The third issue, which is often the least acknowledged, is also the most intriguing; it has to do with how quickly the old and new are replaced.

In short, there is a learning curve for digital technology; you must first learn to walk before you can run. Senior leaders must be aware of this learning curve’s three separate stages for a digital transformation to be successful.

Three stages of digital transformation

Different chances for organizational learning are presented over the three periods. Modernization and enterprise-wide transformation, the first two stages, are concerned with altering the current business. The final stage focuses on developing new businesses and finding fresh sources of value.

It’s difficult to avoid the school of hard knocks at every step, according to our experience. You run the risk of failing if you move on to steps 2 or 3 before completing step 1.

Modernization (step one) – is about streamlining and automating current procedures and tasks. Designing customer apps or creating additional self-service contact points can improve the customer experience. It may involve linking products and digitally re-engineering key business processes for operations. Automating HR procedures or giving staff members access to a self-service portal can improve the employee experience.

Do these digital initiatives change the company? Probably not. This stage is usually overlooked or even mocked, but that shouldn’t be the case. It strengthens and improves the organization’s digital capabilities, much like the foundation of a house. Additionally, it offers comparatively swift profits that can support more complicated digital ventures. Additionally, it is a great opportunity for the company to develop its digital skills.

Enterprise-wide transformation (step two) – is a difficult cross-value-chain change initiative. As an illustration, consider a shop wishing to offer a fully integrated customer experience across all of its physical and digital platforms. An internet-of-things application for operations might automate order-to-cash procedures or condition monitoring. It may involve institutionalizing agile working practices or creating a culture of ongoing learning and skill development for the benefit of the employee experience.

Are these initiatives transforming? Absolutely. Traditional organizational silos must be linked, correct governance models must be established, new talent must be added, and similar actions must be taken.

Enterprise-wide changes typically concentrate on enhancing current processes. But when they are successful, they frequently create new chances for value creation, for instance by reaching out to new customers or discovering more effective methods to conduct business. Cross-functional and complex, enterprise-wide transformations are necessary learning stages on the path to digital transformation maturity.

New business creation (step three) – is about adding new revenue streams or expanding the present pie. Moving from the sale of goods and services to new subscription-based business models can improve the consumer experience. The use of data and analytics to precisely estimate the operational performance of items or systems can be used in operations.

These are real transformations since they put the organization’s current capabilities, processes, and structures to the test and call for new modes of operation. Since this involves switching from the current model of operations to a new one, leadership is important. As the business switches from traditional linear supply chains to ecosystems, this phase frequently necessitates rethinking the boundaries of the organization. High levels of digital transformation maturity are necessary.

Are all three of these perspectives for digital transformation linear? Most organizations will manage a portfolio of programs that may address all three categories, thus the answer is probably no. For instance, they might implement a certain level of modernization to get immediate wins, while also implementing enterprise-wide global programs and/or creating new business models through controlled pilots and experiments.

However, from the standpoint of organizational learning, it is uncommon to discover instances of digital leaders in big businesses who have advanced through the initial stages. The secret to a more successful digital transition is to start with step one and give it your full attention and resources. Your chances of success will rise as your firm becomes more digitally mature over the corporate learning curve of digital transformation.

 


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