This is the third blog in the series on digital transformation. The first post lays the groundwork for how companies can leverage technology, processes, and people to establish a new way of thinking. The previous post discusses customer goals and expectations for digital transformation.
Industrial organizations that engage in digital transformation face realignment on three critical fronts: people, technology, and processes. Of these three core elements, the people dimension can pose the biggest challenge.
Most of the clients we encounter take divergent approaches when implementing their transformation projects. Many initially misinterpret digital transformation as simply consisting of a technology pilot or proof of concept. For example, what was once in a spreadsheet is now tested on a tablet or smart phone. The individuals who deploy such a project want to try out a new technology, but they have not formulated a vision for how this new solution contributes to business transformation at all levels.
Others take a broader view and think about it as a means for addressing an immediate business problem. A business unit manager, for example, may have a vision about what the transformation can bring to his or her function within the company. It could be a completely new way of cooling an energy plant, or it could be a faster method for linking to the raw materials supply chain or to end customers. A third perspective could be an enterprise-level executive, who is looking for ways to cross pollinate a full list of action items across corporate divisions that will result in a totally new experience for the end customer and a stronger, more valuable overall position for the company.
Why Digital Transformation and Digitization are Not the Same
Harmonizing and aligning these disparate interpretations of corporate digital transformation enables organizations to move forward with their transformation initiatives. In order to assure that your efforts are successfully implemented, we recommend the following steps to our clients:
- Recognize the differences – Many enterprises who think they are undergoing “digital transformation” are instead simply digitizing certain aspects of their operations. No fundamental business change is taking place, but manual (or analog) assets, such as typed sets of instructions, are converted to a digital format (digitized) that then allows the information to be viewed across various connected devices.
Digital transformation, on the other hand, is a phenomenon that occurs at each level of the organization and that has as its output new business value, new customers, faster business throughput, and significantly higher profit. Recognizing this distinction helps corporate leaders to establish a common language, early in the transformation process. This then helps to align and coordinate corporate teams to the cultural change that is about to take place.
- Look for transitional leaders and make sure team membership is dynamic – When filling the leadership roles to drive these initiatives, look for people with a business strategy focus who are keen to identify opportunities that transformation can uncover or create, who have an eye for recognizing new digital capabilities, and who aren’t afraid of trying new concepts. These leaders should also possess the ability to link what has tactically already been accomplished into the broader, longer term vision of upper management. The management should assume the important role of broad sponsorship of the transformation initiatives. In this way, the work being driven by individuals or teams can be recognized and accepted across the entire company.
In addition, as the process progresses, make certain, as time goes on, to frequently add new members to the planning and implementation teams while slowly replacing existing members. The makeup of the team should always reflect the diverse talents and skills needed as the project works its way through its logical phases to fruition. Although overall leadership guidance should remain consistent, having the right people in place at the right time will produce the outcome you want for your customer.
- Staff your transformation teams with diversity – True transformation takes place when the people around the table come from different ethnic, gender, education, and age backgrounds. In so many cases across process industries, transformational teams are often staffed with like-minded, culturally similar individuals who mean well and who are extremely knowledgeable of the current processes, but who lack the perspective to generate true change. In such an environment, out-of-the-box thinking is difficult to achieve. We often recommend bringing in young people, or people from truly diverse backgrounds, who can complement the existing pool of experts. Both the new and existing staff members should be prepared to be open and ready to proactively engage in generating new ideas. Together the teams can begin to ask very fundamental and naïve questions that can often open new channels of thinking. Such a diversity of people motivates individuals to seize a new direction, helping to make the initiative a success.
Only the Strongest Leaders Will Survive
Many industrial stakeholders find it difficult to justify digital transformation within their organizations. The many obstacles that present themselves can be daunting. However, business survival often mirrors the Darwinian view of nature: those who do not transform or mutate are destined to die out if they do not adapt to the new external environment. Digitization is a good first step for altering the path away from extinction. It may also put you in a position to lead the race. True transformation, however, is the formula that offers participants not only survival, but also the ability to gain an edge in the race for new customers.
CNN Indonesia published a Digital Transformation article co-authored by Rik and Farid Belbouab, CEO of shipping company Meratus. Read the English version here.