Key Insights to learn from Digital Leaders

Insights from Digital Leaders

In this blog, we shall analyze how Digital leaders are successful in their Digital Transformation initiatives.In this digital age, every company wants to execute digital transformation, but very few companies are able to walk the talk and achieve success.
In this article, we shall discover key insights about the success of these Digital leaders and what other firms who wish to execute Digital transformation can learn from these leaders.

Digital leaders and their Digital Transformation initiatives

• In this age, executing Digital transformation is the top most priority of every organization but studies indicate that only 12% of Corporate transformations achieve their targets.Digital Transformations are even more challenging.
• With such a low success rate, a big question that comes to our mind is that what are the key factors that differentiates Digital leaders from Digital laggards.
• The key differentiating factor is that Digital leaders are agile, fast at decision making and execution.This agility enables them to experiment with new initiatives and pivot when necessary. They identify the emerging technology trends and align to those that matter the most.Once they align to the trends that matter the most, they are adept at orchestration by quickly moving from experimentation to full scale transformation.

What differentiates Digital Leaders from Digital Laggards?

As each company had made progress on its path towards Digital Transformation, some companies have been able to achieve more success than others and reap significant rewards. We will call these companies as Digital Leaders as these companies had accomplished atleast 50% of their digital goals.
Three factors that has contributed success to the Digital Leaders are:

1. Digital leaders are agile and quick in decision making, when compared to their peers.In addition, they are successful in executing their plans successfully.
2. Their focus on Digital themes is around a small number of trends that really matter in their industry.
3. Digital leaders are successful in building the right processes and assets in place in order to scale Digital transformation across the enterprise.

Let us take each of these success factors seperately and look to dissect them in detail.

Digital leaders success factor 1 – Fast Decision making and execution

Speed is critical to achieve success in business.Companies that excel in speed have higher probability to become a Digital leader.
Speed makes maximum impact in three situations.

1. It helps in quicker decision making
2. It helps in executing plans at the required speed
3. It also has an IT organization that is agile and can operate quickly when needed.

Companies that are agile make a decision first based on imperfect information and then start.These companies are flexible and pivot multiple times along the way.
Amazon has an interesting observation on decision making and segregate decisions as those that cannot be reversed and those decisions that can be undone. Many decisions if not all can be reversed and this encourages managers to take a calculated risk and be agile even with imperfect information.
As Jeff Bezos wrote in his famous letter to shareholders “If you are good at course correcting, being wrong may be less costly than you think, but being slow can be expensive for sure”.
Digital leaders think of the entire Digital Transformation journey as a series of tactical short term actions that can start to move an organization in the right direction.It is nearly impossible in digital to know exactly what would be the endgame.This is because the endgame may never be clear.Hence companies that are more agile, flexible and then adapt have the best chance of achieving success.
This approach can be difficult for large companies who are used to long term planning, a need for visibility and predictability for their shareholders and have an established decision making process.Hence these companies will require new way of working as they are not used to respond quickly without being certain of the endgame.
Digital leaders build speed by breaking their digital transformation journey into manageable pieces and then iterating/testing on it to learn from their trials.These leaders concurrently execute these multiple micro-battles to execute the strategic choices to action.
The Digital leaders are able to achieve this by:

1. Empowering individuals
2. Spotting trends and patterns
3. Sharing their learnings across teams
4. Reallocating resources towards high growth initiatives
5. Pivoting or closing their trials early when they fail.

By breaking their Digital Transformation journey into smaller initiatives help the Digital leaders foster innovation by reducing risk and make it easy to test and learn.

Digital leaders success factor 2 -Focus on Limited, but important trends

• Digital has been used so much now a days that it has become an abused and meaningless word. For many companies, digital is synonymous with individual technologies like Cybersecurity, Cloud or AI and they fail to connect the technologies with a customer proposition with impact.While others refer to digital at such a high level that it is not connected with their service offerings and value proposition.
• Hence Digital should be connected at the right level, neither too high nor too low.For instance for an auto manufacturer, the real benefit of digital is in focusing on automation, connectivity and mobility.Hence the company can establish centers of excellence to help its business translate these three key themes into strategic priorities relevant to its organization.
• Connectivity as a theme goes beyond the vehicle to include drivers, OEMs partners and dealers to integrate the entire supply chain.Similar to that each CoE cuts across many businesses and brands to help firms create it’s own strategy.
• A right digital level should be finetuned to help company in concisely defining its digital approach which means that the firm’s digital strategy should be described in a sentence.

Digital leaders success factor 3 -Mastering Full Digital Transformation

• Digital leaders realize that Digital transformation isn’t only Strategy or Technology but the ability to scale from experimentation to full Digital Transformation.
• Digital leaders achieve this by scaling change.They do this by breaking down digital transformation initiatives to components and then create well structured teams to take charge of change in speeding up decision making and execution.Digital leaders establish guardrails in which to operate but simultaneously empower the front line to innovate.They are successful in building a business case for Digital investment to compete against the Digital natives.
• Digital leaders measure and evaluate performance differently.Digital leaders do not limit to conventional metrics like ROI to measure the success.Instead they use additional metrics like Future Net asset value or other operational metrics that better reflect how their efforts are working.Having a different metric for ROI can enable the company to shift its internal funds from legacy businesses to digital business.

Digital leaders success factor 4 -Importance of Digital Investments

• Digital investments are not only required towards new sources of revenue or Profit growth, but also in protecting the business against cannibalization or obsolescence.
• The benefits of Digital investments can be measured in different ways.For one company, the metric for success can be increase in customer satisfaction and for others, it can be improvement in customer engagement which inturn can lead to higher conversion rate and sales

Conclusion

For digital leaders, digital transformation is an ongoing journey and firms need to combine strategy with more tactical considerations.
In order to become Digital leaders, companies should focus on three things:

1. Identify where the firm stands in relative to its peers.For instance, how fast the company is able to fill the critical gaps in its offerings.
2. Role of digital in their industry and its impact in the future.For instance, identify key themes in digital that will transform the industry and the steps to be taken in that direction.
3. Successfully shift from experimentation to transformation.Important asks to be addressed would be whether there are right metrics used to measure progress towards Digital Transformation, aligning the broader team towards digital ambition by building critical mass of digital practitioners and funding investments on the right digital bets.