In many companies, digitization is driven by the need to keep up with competitors and, just as importantly, to forestall as yet unknown competitors.
There are many companies that have already failed with their digital transformation. The reason for their failure is often that they set no concrete long-term goal or tried to stick to a project plan that was simply too inflexible. Digital transformation should be applied as a holistic change project to ensure the right balance between innovation and maintaining ongoing business operations, but still retain enough scope for preserving agility.
Instead of working out an excessively detailed long-range plan, which can be outdated after as little as a year due to the short cycles in modern business, it is better to move ahead with small steps and to keep things in ‘motion’.
Change in all business areas
Digital transformation in companies work according to different rules than classic innovations. In the process, profound changes affecting several areas at the same time – such as technology, products, services, customer experience, business processes and business models – must be included and project managers needs to be able to respond at short notice as well as flexibly as demand requires. Also, a successful digital transformation without the support and understanding of top management is difficult to impossible.
Large organisations rely heavily on standardised and efficient procedures and processes, which often leads to a greater specialisation and focus for entrepreneurial innovation. However, the disadvantage of this typical set-up is that – due to the size of the company and the level of standardisation – there is less flexibility and scope than, for example, in less hierarchically networked start-ups. A large number of short-term and fast agreements and decisions are required to be able to act at the pace that digitization brings with it. This agility is difficult to integrate into everyday working life in many large companies.
Proven concepts suddenly diminish in importance in the wake of the digital transformation
Instead of formulating comprehensive digitization strategies and creating long-term projects, the focus should rather be on agility when it comes to strategic digitization. The prerequisite is that new processes are defined and also implemented; however, the classic project launch and the scheduled end is initially outlined rather as a provisional project charter. Creating a rigid, irrevocable time frame runs contrary to the logic of an agile digitization. The development of new business areas should be planned in short cycles. Individual project phases, which can also be subject to adjustments based on customer feedback, are easier to change than large-scale plans. An excessively long timescale often restricts those responsible for achieving the set goals. For example, prototypes used as interim results (in order to benefit from feedback loops and customise project phases) can be much more promising and motivating than rigid project plans. Benchmarks often lead to a bottlenecking of investment and build up ‘debts’ for the future. In the worst case, companies delay investments that have been necessary for a long time just so they can meet benchmarks. Due to the high rate of change of asymmetric growth in changing markets and the impacts of digitization, conventional decision-making processes are losing their validity.
More agile structures required in the company
In a highly volatile and dynamic environment, increasing the agility of the organisation is a critical success factor for companies. For an accelerated and successful introduction of new products and services in the market, motivated and dedicated teams using efficient and simplified processes are a decisive prerequisite.
Companies should focus on encouraging their employees to think and act in an even more entrepreneurial manner, and extend the individual scope for decision-making. Also, the willingness for permanent changes should be increased. All of this is supported by a pronounced performance-oriented culture, based on open feedback and the recognition and rewarding of outstanding results.
The most important basics in every company undergoing digitization are a clear overall strategy as well as well-networked measures and permanent responsibilities within the organisation. On the other hand, it also crucial to ensure that sufficient flexibility and freedom remain for responding to and accommodating short-term considerations.
In summary: The complexity of the topic of digitization and its possible, and sometimes inevitable, results mean that implementation cannot be based on rigid, long-term projects. For a successful implementation of digital transformation, it is essential to define a holistic approach that runs like a common thread throughout the corporate realignment, to stay agile and not to integrate corporate strategy in slavishly defined project phases. Moreover, during change processes it is important to involve, educate and qualify staff. Without the support of senior management, any transformation of the company is difficult, if not impossible.
Digital transformation works according to different rules, in which classical decision-making mechanisms often simply do not work.