Every business executive knows about digital transformation and the urgency to transform in the wake of the pandemic, writes Amanda Budler, Chief Operating Officer at Analyze Consulting. It’s in vogue, and everyone seems to be latching onto the term to describe projects or investments. However, it’s a myth. You can’t see a thing called digital transformation.

Just because everyone is doing something that they are calling transformation, it does not mean they are doing it the right way. It doesn’t mean they are actually achieving what transformation is supposed to achieve. In reality, what is called transformation and the way it is implemented, is not transformation at all.

A 2020 study by Boston Consulting Group found that 70% of digital transformation projects fall short of their goals – even when the leadership is aligned. No one wants to be part of that 70% as once the money is gone, it’s gone. And worse, it’s not inconceivable to believe that once bitten, twice shy, and opportunity to transform is left hanging.

So what makes transformation successful? A successful transformation exercise enhances a company’s ability to adapt to change; in other words, it develops changeability.

It entails analysing the key components of a business and then optimising them to enhance the ability to adapt, or, to deliberately use another in-vogue term, pivot. If we look around us we will see businesses with grand transformation strategies that span three to five years. It’s never going to happen.

Once we realise that transformation is about a business’s ability to develop changeability and adapt where it needs to, then this timeframe for change must be much shorter and include sharper, measurable goals. This needs to happen quarterly at best and annually at worst. Corporates with three to five year strategies almost always end up with one or both of two common outcomes: the goals are not achieved, or they change along the journey.

Another key component is an obsession with outward transformation as opposed to inward transformation. In other words, there is a lot of focus on making changes to enhance a customer’s experience, but what is being done with core internal functions, such as operations or finance which are the engine room for the business? Businesses should be focusing inwardly and outwardly simultaneously.

Transformation is more of a vision, whereas the strategy is about setting goals in shorter, more measurable cycles. A successful strategy will focus on people, process, data and technology. A mistake is not seeing how closely process and data are linked. Holistically, goal-setting should zone in on all those aspects of a business and not just technology or digitisation.

How does the process generally start?

Transformation starts by understanding the business’s vision: where are you going and what are you trying to achieve, in other words, what is your desired result? Then, measure this against where you are now and ask: what is our reality? Marrying this with the strategic perspective of the board is often where the first disconnect materialises. When this happens, either the vision isn’t clear or the strategy is too broad. If this is not arrested and corrected, this disconnect will filter into whichever initiatives are implemented and what the people will actually start doing in the business.

To avoid this pitfall, a business and its partner should build clear strategy execution frameworks that enable enterprise planning to connect the dots between the vision and the desired outcome very clearly because once you understand the vision and have settled on the right strategy, you must land on the right intervention.

The intervention may well be automation or another big ticket technology solution, but in reality, in most cases it is not. Many businesses just haven’t reached a maturity level yet where they have a solid grasp of their own processes. And so, while almost every intervention will have a technology element – running into this exercise with a “tech-first” mindset is going to miss the boat and a very important opportunity to transform the business successfully.

At each step along the journey there must be a very clear link between a digital solution and what benefit it will drive and which levers it will influence. Only when these clear links have been identified – or as we have already said, only if it connects the dots – then the technology investment is justified. The alternative is rushing into a shiny new solution that is expected to fix everything, but it ends up disappointing because something else needs to be fixed first – such as the business getting a grip on its own processes.

CFOs understand the big role they play in enabling transformation through investment in the right places. However, the business case for investment needed in the “cost centres” of the business, such as human resources and finance, are far less tangible and so these initiatives are much harder to justify. This is where CFOs can play a role to identify, own and drive the strategic outcomes of such initiatives.

Finally, C-suite executives should ask themselves this: How much do I really know about my business? How many accurate and usable insights can I see across my entire business? They must be able to answer these questions confidently to transform their businesses and if they can’t, then it’s time to invest in finding the answers.

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