The 5 D’s of Digital Business Transformation
Digital business transformation has become a common theme in today’s economy, driving the majority of organizational change efforts.
In one study by McKinsey, more than half their respondents’ business transformations involved digital implementations.
Harvard Business Review also cited a study that said 80% of CEOs had transformations designed to make their organizations more digital.
Yet digital transformations are challenging and not always successful. More research from McKinsey suggested that less than 20% of digital business transformations improved performance both in the short- and the long-term.
McKinsey and others have suggested several ways to overcome the roadblocks to digital transformation, which we’ll look at below.
The 5 D’s: A framework for digital business transformation
Digital business transformations are complex initiatives that often impact the entire organization. Given that complexity, many such endeavors are not wholly successful.
By focusing on the five areas below, business leaders will stand a greater chance of driving successful transformations.
Digital maturity refers to an organization’s overall digital capabilities.
There is no one right way to gauge how “digitally mature” an organization is – like most business models, there are different viewpoints on the matter.
According to research from Deloitte, however, there are several characteristics that characterize digitally mature companies, such as:
- Strategic planning horizons that extend over the long term
- Systemic shifts in how workplaces are organized and workforces collaborate
- Continuously experimenting and scaling innovations
- Providing employees with an opportunity to learn new digital skills
- Attracting leaders with the vision and the ability to lead digital strategies
Digital maturity is a worthwhile goal to set for digital business transformations, yet the path to achieving full digital maturity is not easy and it takes effort.
A digital transformation roadmap outlines the steps an organization must take to achieve digital maturity.
There are naturally a number of frameworks and models that describe this process.
One useful framework for digital transformation also comes from Deloitte, who suggests that digital transformations follow five stages:
- Business model
- Operating model
- People processes and technology
To successfully fuel transformation, Deloitte points out the need to focus on three other areas: an agile mindset, digital adoption, and customer success.
This framework for digital transformation, as mentioned, is among many. However, it is crucial to leverage a roadmap such as this one, since it can help transformation initiatives stay organized and on track.
In the Harvard article mentioned above, the authors pointed out that it’s impossible to “short-cut” your way to a digital-first operating model.
If the organization’s strategy is not aligned with that operating model, then the implementation may run into resistance from employees or even negatively impact business value.
To ensure that digital transformations remain aligned with the organization’s strategy, the authors suggest that it is important to:
- Identify the capabilities needed to fulfill the organizations’ strategic goals
- Find or develop sources for those capabilities
- Allocate resources to the most efficient parts of the organization
- Learn how to drive better outcomes from customers and employees
In short, it is necessary to wed the organization’s overall strategy with the digital transformation agenda and ensure that digital changes completely support that agenda.
New digital initiatives inevitably require the implementation of new processes, new tools, new strategies, and new ways of thinking.
Employees, therefore, must have the right skill set to keep up with those changes.
The digital skills gap, however, is widening, and if organizations don’t properly account for that gap when designing digital transformation initiatives, employees won’t have the capabilities to drive those programs forward.
Training not only enables employees to implement digital transformation efforts, it also:
- Improves day-to-day productivity
- Enhances the workplace experience
- Attracts and retains more talented workers
Since the digital revolution is far from over, digital training will become even more necessary in the years to come.
Digital adoption means achieving a state in which users gain the ability to use digital tools as they are intended and to their fullest extent.
As Deloitte’s model of digital transformation noted, digital adoption is fundamental to successful transformation.
Skills training, mentioned above, is one necessary component to successful digital adoption.
However, adoption depends on more than just training.
Successful adoption also means:
- Adopting new tools, workflows, and processes
- Adopting a digital-first mindset, attitude, and culture
- Adopting digital-centric operating models and business models
Digital business transformation and digital adoption go hand-in-hand – enabling digital transformation efforts, after all, depends on having a capable, engaged workforce.
To ensure the best outcomes from a transformation effort, it is important to implement a digital adoption strategy and to leverage the right digital adoption platform (DAP).