Originally Published in Techonomy
In the past few months, we’ve seen several unexpected corporate partnerships and deals between companies that hardly seemed related. But these partnerships result from the companies’ efforts to stay relevant and find new revenue streams in a resolutely digital age. Venerated auto company Ford joined forces with fast-food giant Domino’s to test self-driving vehicles. And the big one, when e-commerce juggernaut Amazon scooped up high-end supermarket Whole Foods and suddenly cut prices.
Companies across industries are facing the reality that if they don’t do digital right, they will lose market share, or fail. The question is no longer: “Do we go digital?” but rather: “How do we go digital—and without compromising our brand, our values, and our employees’ well-being?” A successful answer will depend on a company’s ability to discern the source of its digital stagnation.
In some cases, a powerful, mutually-beneficial partnership may be a good way to jumpstart a company’s digital transformation. However, all too often, the most pressing obstacles to digital transformation efforts are actually rooted in a failure to truly embrace business transformation.
While there are many obstacles hindering your company’s successful digital transformation efforts, here are two problems that plague far too many organizations— and a few solutions.
Problem: Your company lacks access to data
While many companies continue to sell products that are in high demand, they are struggling to match customer expectations. One good example is traditional brick-and-mortar stores. The remedy is to architect a digital infrastructure that allows the company to constantly mine data from all departments, analyze this data in real-time, and use the insights to fuel relevant and memorable online and offline experiences, often enabled by digital technologies. Doing so will increase the likelihood that the company will see meaningful innovation and be less vulnerable to disruption. A report by New Vantage Partners found that nearly 81 percent of respondents considered their big data investments to be successful, with nearly half describing the results as disruptive, innovative, or transformative.
Data is critical to transformation and innovation for many reasons. For one thing, in the digital era, mass distribution and exceptional customer experience are now table stakes. These are also two areas that rely on continuous access to data—and a culture and systems to support agility, velocity, and iteration. In fact, Amazon and Netflix might very well be described as data companies. Data and analytics are critical to enabling the recommendations and experiences that keep their customers coming back and signing up for new services such as Amazon Prime.
Unfortunately, many companies find that building such infrastructure, culture, and data streams are too costly and complicated for them to accomplish on their own. This is when seeking out an external partnership makes sense. The goal will be to strategically identify a company that not only has access to the data their company needs, but also the big data infrastructure in place to collect it in a way that is both faster and ultimately cheaper than creating such infrastructure from scratch.
Problem: Your company’s leaders are not embracing business transformation
Even with sufficient access to data, a lack of strong leadership can be a major obstacle to transformation success. In fact, a recent study by Wipro Digital found that nearly 1 in 5 executives harbor doubts about the value of digital efforts in general. The same study also found confusion across the c-suite about what digital transformation is: 1 in 4 executives cite a lack of alignment on what digital transformation actually means as a key obstacle to their strategies’ success. Let’s be clear—this is about transforming the entire enterprise. The phrase “digital transformation” can mislead many into believing that innovation will be limited to “tech” related departments. It should be retired from executive conversations.
Digitalization—especially the rise of technologies such as automation and artificial intelligence—can create an atmosphere of uncertainty among employees and customers alike. Executives must be aligned on the potential ROI of digital investments and be united under one clear business strategy. This unison sets the tone for the rest of the company.
Half of the battle is simply helping leaders understand what it means to “go digital” and what is needed to accomplish a company’s digital goals. Out of executives surveyed by Wipro Digital, 35 percent cite a lack of a clear strategy for digital transformation as the primary reason that transformation efforts are failing. This lack of understanding can breed hesitation or even incite outright resistance.
An outside partnership won’t remedy this internal trepidation. Companies facing such leadership problems must educate leaders across departments on the potential ROI of transformation. These will include reduced costs, improved customer experience, and increased agility. Then they will need to work together to come up with a plan of action. Often, this will involve entirely new ways of working.
All department leaders must envision how digital will benefit their work streams. Too many executives (60 percent, according to the Wipro Digital study) believe that back-end benefits—such as operations, IT, procurement and finance—reap the most benefits from digital transformation efforts. Naturally, this can discourage customer-facing departments like marketing from throwing their support behind these programs. It’s essential to get the front, back, and middle offices aligned on all of the potential benefits.
The ultimate solution: Create a digital culture
Whether you decide to seek out a game-changing partnership or focus on addressing leadership issues, the ultimate goal of any transformation strategy is to create a digital culture. It should also establish ways of working that will allow the company to keep pace in an increasingly competitive landscape. The business world will from now on be defined by constant innovation, rapid growth, and shifting client expectations.
Transformation efforts may differ from company to company. But your digital strategy and company transformation may struggle without the glue that holds these efforts all together—a new and evolved culture born of our new digital age.