Dr Leslie P Willcocks
Digital Transformation: A competitive necessity
In this briefing I explain the business payoffs possible from digital transformation, the challenges, and the core capabilities you need to build to compete against the digital leaders in your sector.
I also offer you an opportunity to take the pulse of your digital transformation efforts with a gratis benchmark survey comparing you with over 1100 case studies. I will feed back an analysis of where you are on your journey and what you need to do next.
Digital Transformation focuses on the whole organisation and large-scale change. It sees the transformation of business strategy, activities, processes, competencies and models to fully leverage the capabilities and opportunities of digital technologies and their impacts. Is Digital Transformation just the latest rhetoric? No. It is a competitive necessity due to the size of the prize, and the pressure of competition.
The Size of The Prize
The direct customer research I have done with John Hindle and Knowledge Capital Partners has been into what we call Total Value of Ownership (as opposed to Total Cost of Ownership). The research finds that, when just deploying automation, Efficiency gains of 30-200% or more are available from ‘doing things right’ – through greater accuracy, quality, speed, asset utilisation, and cost reduction. Effectiveness gains from ‘doing the right things’ can double such gains, for example from improved analytics, greater agility, more enterprise responsiveness, higher customer and employee satisfaction, and improved regulatory compliance.
Now our 2022 research suggests that the total available returns from digital transformation are typically four to five times greater than straight ROI calculations reveal, taking into account the wider transformational Enablement benefits from employing not just automation technologies, but combinations of technologies. Digital leaders are increasingly drawing upon other major technologies such as social media, mobile, analytics, cloud, blockchain, robotics, internet of things, digital fabrication and augmented reality. We have developed Total Value of Ownership as a way of capturing the business value from these developments, that cannot be measured using traditional ROI and TCO methods.
The exponential gains come from having an evolving flexible digital platform that supports major transformational options. We have seen, for example, first-mover advantages including innovations in product and service offerings, greater market penetration, faster acquisitions, improved and more resilient operations, differentiated customer and employee experiences, all leading to significant increases in revenue, profit and market valuation.
But There Are Challenges….
So, the prize is huge. But it is also difficult to grasp. About 65% of digital transformations are unsuccessful, abandoned or seriously disappointing. On average even successful transformations realise only 67% of the potential value. There are blocks and pipeline leaks everywhere. Up to a quarter of this lost value occurs in the planning and start-up stages—e.g low targets, poor planning processes, bureaucratic governance. Some two-thirds occurs during and after implementation.
How to join the elite group of digital high performers? Our research finds that successful organisations focus on building seven core digital transformation capabilities.
Digital maturity reflects advanced alignment of strategy, integrated planning, program governance, imbedded culture, digital platform, change management and navigation capabilities. Each of the following has a critical role to play:
Using The Diagnostic
Our Digital Transformation research exemplifies the words of our academic colleague at MIT George Westerman: ‘When digital transformation is done right, it’s like a caterpillar turning into a butterfly, but when it’s done wrong, all you have is a really fast caterpillar’. Becoming a digital business requires transforming the business. This is accomplished by deploying all seven core capabilities.
By completing the diagnostic (see link below) you can find out where you are on your digital transformation path and what you now need to work on in the coming year. I will, on request, additionally send you a short, supporting, customised analysis based on my experience, and knowledge of the benchmark data.