How Digital Transformations Succeed

New technologies shift consumer expectations, challenge norms, and put pressure on organizations to respond. The pace can be bewildering. For organizations—from grocery chains to advertising agencies—hoping to remain viable, the litmus test is adaptivity, agility, and innovation. It’s not about bracing for a tidal wave, it’s learning how to surf.

本文为更好地理解数字化转型之旅和创建有效的数字化转型战略提供了一个起点. We’ll cover the following:

• What digital transformation is (and what it isn’t)
• Why talent is the core factor for digital transformation objectives
• How one company’s digital transformation initiative resulted in a stock rise of 35%
• Major trends driving digital transformation disruption in 2020 (and beyond)
• A cautionary tale, why some digital transformations fail (and a case study)
• The six attributes of a successful digital transformation framework, with case studies

What Is Digital Transformation?

The computerization and digitization of processes is nothing new, but digital transformation is more critical now than ever. Businesses have to embrace digital methodologies to remain relevant; and senior executives continue to list digital transformation among their top business concerns.

Definitions vary, but for the purpose of this article, we’ll define digital transformation as follows:

Digital transformation 是一个组织利用数字技术重新定义和改进自身的整体过程，而数字技术在很大程度上改变了商业和社会.

Digital transformation is a continuous evolution. Too commonly, organizations see digital transformation goals as an end point. They decide to “do” digital transformation. “Digital is not just a thing that you can buy and plug into the organization,” warns the Harvard Business Review. The digital transformation journey encompasses much more than simply rolling out apps or redesigning a website. 它是关于通过数字技术从根本上重新定义一个组织的业务运作和客户体验，并创建一个公司 actually stronger and more agile than it previously was.

组织可以通过首先巩固组织高管和高级领导人的承诺，为成功的数字化转型奠定基础, recommends a Forrester report. 没有高层决策者为关键举措开绿灯——比如引进新员工或团队，使过时的CMS现代化, for example—progress will stagnate. With executive support, the organization can kick off a digital pilot project, like converting a single, minor business function to digital. Once confidence around a successful digital initiative is established, the organization can move forward with more experimental and bold projects.

For companies that can leverage the correct strategies, the benefits of digital transformation can be both reinforcing and lucrative (as in the case studies referenced below). Digital transformation’s primary advantage is to keep the organization relevant, adaptable, and competitive amidst a shifting landscape. Transformative efforts can redefine a business’s approach to customer strategy, consolidate operations, improve agility and streamline the enterprise’s products and services.

Digital Transformation Starts with the Right Talent

The digital transformation process isn’t plug-and-play. It has everything to do with who manages and executes the change program; an organization-wide program must also have the right talent across the organization. It turns out that’s more difficult than ever in today’s job market. A 2018 Gartner skills survey revealed that 70% of talent do not have the digital skills they need for their jobs today; 64% of managers don’t think their employees can keep up with skill trends.

Joint research 德勤(Deloitte)和《欧博体育app下载》(MIT Sloan Management Review)表示，人才相关障碍是运营和文化数字化转型的头号挑战. 投资于数字化转型目标的企业领导者需要兼具业务技能和高度技术敏锐度的人才, but it’s a difficult middle ground to locate. This leads organizations to a “build or buy” dilemma—whether to go outside the organization or develop from within. Experts suggest doing both. Gartner’s research points to connected learning, as opposed to continuous learning, which it says can increase skill shift preparedness by as much as 39%. 这种学习模式预测了对特定市场至关重要的技能，并为员工提供学习这些技能的资源. Healthcare software company Cerner is taking this approach head-on, for example, reskilling 10,000+ employees, including software programmers who aren’t fluent in modern programming languages.

Adaptivity is critical to transformational efforts; creating an adaptive organization starts with talent that can quickly reskill or upskill, shifting focus as the needs of the organization dictate.

Digital Transformation Meets Fast Casual: Chipotle’s Story

Brian Niccol took up the mantle as CEO of Chipotle in 2018 and inherited a struggling company. The struggle was mainly due to reported incidents of E. Coli and norovirus outbreaks, which resulted in losses in store sales as great as 20%. Then Niccols stepped in, spearheading an aggressive change program which owes much of its success to digital.

Niccol shifted Chipotle away from a defensive crouch, emphasizing quality ingredients and subtly introducing a concept of “fast casual.” Niccol also immediately relocated Chipotle’s HQ from Denver to Newport Beach, CA to better attract top-notch talent. His opening moves were essentially a corporate reset.

The biggest shift was to embrace digital completely and redefine the customer experience as a whole. Niccol pivoted digital focus from the back end—improving behind-the-counter operations—to customer-facing friction points. Chipotle分店开始为数字订单配备取货架，让这些顾客可以跳过排队(到2019年年中，将在所有Chipotle餐厅推广)。. Niccol also oversaw a partnership with delivery service DoorDash, increasing its access to new customers dramatically. 一些地方增加了“得来速”服务(“chipotlanes”)，并与数字应用程序相结合，提供高度定制的体验，这也是一种便利.

The results? Chipotle’s stock rose 152% in 17 months (as of July, 2019); its digital sales alone boomed by 66% during the last three months of 2018. In Q1 of 2019, Chipotle doubled its digital sales—a 100.7% year-over-year increase. Digital sales made up 15.7% of Q1 2019 sales, representing $205 million. “The digital access, removing friction [. . .] is a big unlock for the Chipotle business,” said Niccol.

Niccol pulled Chipotle out of a disconcerting slump. In doing so, he created a case study for digital transformation growth as an ongoing change program aimed at the entirety of a business. But the success of a digital transformation roadmap relies on much more than integrations and apps. The organization must be primed for agility and responsiveness (more on that below). There’s nothing easy about this. In fact, most digital transformations fail completely

Digital Transformation Trends: AI, XaaS, and RPA

Digital transformation processes are driven by newly-emerging technologies, and experts predict that 2020 will see some of the most exciting, disruptive, and innovative possibilities yet.

Chief among these possibilities, according to Forbes’ Top 10, is AI and machine-learning. Big data market revenues are projected to increase from $42 billion (2018) to $103 billion by 2027 according to Wikibon; some predictions even suggest a more aggressive trajectory. Organizations need to leverage powerful insights from this data. Automating data analysis, for example, combined with the scale of datasets stored in the cloud, can yield crucial insights.

IDC predicted that, in 2019, 40% of digital transformation initiatives would be supported by AI. 因此，在2020年及以后，对有能力的人才的需求将变得更加重要. The potential of these initiatives cannot be overstated—in some case studies, they’ve saved major companies $330 million in revenue and improved sales forecast accuracy by 15%.

XaaS (everything as a service) is an operating model that delivers IT services via the internet to enterprises. In a Deloitte survey, 71% of IT professionals from major US companies said that XaaS makes up over half of their enterprise IT. XaaS is slated to become a major boon to agility in 2020 and beyond, establishing itself as the new IT operating model. It’s a one-two punch that allows CIOs to upgrade legacy systems to be more efficient, secure, and reliable while simultaneously offering IT services beyond organizational borders, creating a new revenue stream.

One example is Amazon, which extended its own eCommerce solutions to customers. Another classic example is Salesforce, which offered its proprietary sales software as a service in 1999 via web browser.

RPA—robotic process automation—is the fastest growing market in enterprise, according to Gartner. The technology is aimed at automating digital processes that would otherwise be manual. RPA applications can be programmed to capture data, complete transactions, generate an automatic response, deploy bots, and integrate with other digital systems, for example. The result is a substantial decrease in manual task input from employees and reduced operation costs. RPA has seen major success across industries like insurance and healthcare.

By considering trends and aligning accordingly, companies can ensure viability and take advantage of the massive opportunity these digital pivots offer. But adaptive readiness is more than adopting new trends: It begins with organizational mindset.

A Cautionary Tale: Why Many Digital Transformations Fail (The BBC’s Story)

As many as 84% of digital transformations fail, according to Forbes, representing billions in failed efforts. Lots of major brands have come up short in their efforts, resulting in defunding, job loss, and CEO exits. According to a 2017 Harvey Nash/KPMG survey, a mere 18% of organizations self-rated their digital technology practices as “very effective.” Common digital transformation challenges include:

• Talent shortages
• Lack of prioritization
• Operating models that are difficult to adapt to digital
• Attempting a “one and done” transformation rather than an iterative process
• Lack of focused leadership attention
• Insufficient funding
• Lack of clear accountability and ownership for initiatives

A fundamental issue across these roadblocks is lack of digital mindset. Harvard Business Review agrees, citing several mindset-related blunders that are ultimately the responsibility of senior leaders. Many C-suite executives see digital transformation initiatives as an all-in-one solution, something that can be simply slotted into an organization. In the early 2010s, the BBC learned this the hard way.

英国广播公司的数字媒体计划(DMI)于2008年启动，旨在从根本上改变其内部数据管理实践和向观众提供内容的方式. It was the cornerstone of the BBC’s digital transformation model. After a struggling partnership with Siemens, the BBC moved DMI in-house, but came up short because of technical capabilities. It was canceled in 2013: the end result was a loss of over £125.9 million (appeoximately $152 million USD).

Where did the BBC go wrong? First, governance: PwC (PricewaterhouseCoopers) investigated the project and found that it suffered from a lack of executive monitoring and transparent reporting. Second, siloing: The transformational effort did not extend to business operations. The transformation was not overarching, isolated to the program itself rather than a change program which would apply across the organization.

As IT pundit Tony Collins puts it: “[. . .] the BBC’s failed £125.900万数字媒体计划是一个提醒——就像大多数失败的大型it项目一样——原因与软件无关，而与管理和人员有关.”

6 Keys to a Successful Digital Transformation Strategy

Pivoting to a digital mindset requires a number of shifts and the development of certain underlying traits to be effective. We’ve identified six core elements, which build on one another to create a digital mindset and digital transformation framework. Underpinning this structure is the first key: Leadership.

1. Leadership

Leadership is most critical in times of change and demonstrating the right mindset starts at the top. In one study, organizations with senior leaders familiar with digital technology were found to be 2.3x more successful with transformations. The same increased rate of success was also found in organizations with a dedicated chief digital officer. Digital maturity parallels strong leadership, which sets the tone for the top-down effort that digital transformation requires.

For example, Forbes identifies five qualities of digitally mature leaders:

• Clear purpose in adding technologies to the enterprise
• Forward thinking to locate opportunities
• 优化系统的感知能力(而不是仅仅修复已经损坏的东西)
• Encouragement of innovation and experimentation; praising failure as a learning opportunity
• Embracing partnership opportunities that serve the business’s end goals

Without the support of CEOs, CIOs, and other leadership roles, transformational efforts stand on weak footing. In the BBC case study cited above, failed reporting structures and governance fall on the shoulders of then-technology chief John Linwood, who was eventually fired. “The BBC Executive did not have sufficient grip on its digital media initiative programme,” said the head of the National Audit Office. In this case, the failure of leadership cost the BBC a fortune (not to mention public embarrassment).

2. Boldness

Research suggests the following when it comes to transformational efforts: Be bold. Unless an organization receives a top-down overhaul, it won’t be able to implement a digital transformation framework broadly. Of course, some ramp up is still necessary; in fact, many digital transformations fail because of too much, too soon. Beginning transformational efforts with behind-the-scenes operations, for example, rather than client-facing operations, is a wise approach. Still, the end goal is transformational capability across the organization.

One study found that efforts were twice as broad in organizations with the highest digital maturity. It is not enough for an organization to silo digital transformation objectives to a single function, unit, or even a few units. Data from McKinsey (下图)揭示了转换工作不太可能成功，直到任务的广度超过“多个业务单位”并被归类为“企业范围”.” Only then does its rate of success become 1.5x as likely.

Nissan CIO Tony Thomas sets a strong example of boldness in action. After his move from GE, Thomas transitioned the entire enterprise (about 240,000 employees) to digital working systems like Microsoft 365, enabled mobile access to corporate applications, 并在印度的一个数字中心雇佣了500名软件工程师，研究大数据分析和人工智能应用等应用. Nissan aims to create autonomous vehicles, and Thomas’ bold example across the organization is setting the stage to realize that future.

3. Agility

Digitally mature companies see their organizations as empowered, poised to convert disruptions into advantages. This is agility in action.

Optimizing cross-collaboration between functions is a hallmark of an agile organization. When Armstrong World Industries CIO Dawn Kirchner-King joined the company in 2015, she found the organization was waterlogged by suboptimal digital practices. By embracing agile project management methodologies, she brought a sense of urgency to the company, upgrading and updating CRM systems, travel management systems, and creating a new website. 然后，她将节省下来的资金重新分配到网络安全等关键项目上，并将IT团队的重点放在与制造过程相关的分析上. Through Kirchner-King’s transformational efforts, the company optimized to shift attention and resources quickly.

Embracing a certain dynamism as pertains to talent allocation and team formation is a necessary element as well. Shifting roles to respond to needs quickly, 重组团队以提高效率——敏捷方法也应该从团队结构的角度来考虑. Rather than viewing talent as a person who fulfills a role, 精明的组织将人才视为构建模块，可以根据项目和公司不断变化的需求进行重新安排.

A related tool which organizations increasingly rely on is contingent on on-demand talent. Because the needs of businesses fluctuate so often, assembling teams who can bond quickly around shifting sands is a priority. Because initiatives are increasingly enacted on an experimental or temporary basis, access to contingent staff who can fill in the gaps and increase momentum is a powerful aid to agility and speed.

4. Adaptivity

While the first three keys are vertical, the elements which define transformation in practice are horizontal: No single element outweighs its siblings.

Adaptivity refers to an organization’s capacity to restructure while still remaining secure (and cybersecure). Adaptivity is about incorporating new systems with speed while also staying alert to newer, potentially more effective systems.

kroger是一家有着136年历史的食品杂货公司，它非常重视数字适应性，并因此获得了回报. CEO Rodney McMullen pushed for a digital initiative in 2014; since then, Kroger has grown from no digital sales to $1.5 billion in digital sales in 2018, which he says is trending toward $9 billion annually. With online ordering and pickup, plus a partnership with Instacart, Kroger claims that everyone will be able to shop with them, either offline or online. Kroger also has a 5% stake in a UK online grocer Ocado to build 24 robotically-powered fulfillment centers. McMullen also cites alliances with Home Chef, Walgreens, and Microsoft—partnerships are key in his vision.

Kroger is effectively redefining itself as an omnichannel retailer, infusing its operations with digital and completely adapting to the shifts in the marketplace. Although it sits third in that marketplace (under Amazon and Walmart), there’s enough evidence to suggest these powerful digital initiatives may allow it to close the gap.

5. Data Focus

数据在任何数字化转型剧本中都至关重要，因为它为人工智能和机器学习提供的改变游戏规则的见解提供了动力. Without that fuel, efforts to utilize these incumbent technologies fall flat. Combined with expert predictions about the role of big data in 2020 and beyond, data is slated to only become more essential. 细致入微的数据和指标为组织决策提供了坚实的基础:88%的数字成熟度高的公司报告了通过数据使用产生的积极影响.

Sprint is one major organization leveraging data-driven insights as part of its main strategy. In response to pressure from competitors, 首席信息官斯科特·赖斯(Scott Rice)正在带头开展一项活动，利用一种名为Elastic Stack的开源软件来评估超过50TB的数据. This identifies any potential recurring glitches in customer cycles, which helps Sprint realize why customers aren’t completing a transaction. Rice says that previously, his teams were siloed, meaning the data couldn’t be evaluated as a whole. Going one step further, Sprint is utilizing a “data lake” that helps it make better recommendations to customers. In response, Sprint’s stock has spiked considerably in the second half of 2019.

6. Tech-driven Talent

For successful incorporation, an organization’s talent must be primed for digital change; for many organizations, this is a roadblock.

As referenced above, companies commonly invest in training or retraining programs to bring stakeholders up to speed. 企业的目标是打造一种企业文化——无论是通过人才招聘还是为现有员工提供教育机会——这种文化反映了从第一天起就数字化的公司的文化.

When Subway launched its digital transformation initiative, it hired over 150 new employees to fill its digital talent gap. Talent was critical to its digitally-driven initiatives—remote ordering capability via Facebook Messenger, for example, which contributed to a 100% year-over-year growth from mobile ordering. The company also recently rolled out digital menu boards, electronic kiosks, and a separate pickup area for mobile orders. Facing forward, the franchise is evaluating how trending technologies like augmented reality could fit into its system. None of this would be possible without the boost in digital talent the company committed to early on.

With this critical sixth component in place, a business can effectively rewire their organizational mindset to be digitally mature, but more critically, digitally prepared. 使用这些结构组件作为基础的组织倾向于对数字波动做出动态响应.

Digital Transformation: A Gold Rush

The digital transformation landscape might be compared to the 1800s California Gold Rush. The risks are there, but the potential is massive and best practices are being defined in-flight. Companies who want to utilize these transformations to their advantage start with the right talent, define a digital mindset, and create action plans with flexibility in mind. Continuous reevaluation becomes standard.

The very nature of a “healthy organization” is being reexamined. For companies that can adapt the radical mindset-shift that digital transformation demands, the future is full of exciting potential, despite its evolving nature.