Over the last weeks we discussed that most companies know they have to adapt and evolve to compete in a digital economy and that the very mention of the term «digital transformation» creates fear and apprehension among the most seasoned managers and business leaders.
There’s no doubt that the notion of digital transformation can be daunting — but it doesn’t have to be. We also discussed that digital transformation is based on a common set of elements, #1 being to envision the digital future of your organization and #2 closing the gap between designing and delivering a strategy that works.
#3 Invest in digital initiatives and skills
Transformation does not happen without investment. Digital transformation is no different. The investment may be large, and the business case may not be completely clear. It may be a series of low-risk experiments that lead to a larger investment. It often becomes a strategic bet that only senior executives can make. As with any investment, digital transformation requires understanding the need for investment, managing risk, and making the changes necessary to capitalize on the change. In addition, there is often tremendous value to be gained from making the most of investments you have already made. Find the right skills — invest in initiatives that advance the vision.
While strategic plans identify what your organization should do differently, very few provide a roadmap for how to build the skills, knowledge, and processes needed to carry out and sustain the critical changes. But without building these capabilities, it’s very difficult to achieve the results you want.
Lets have a look at the example of a multi-product technology firm who decided on a strategy to significantly increase business with its large enterprise customers by creating single points of contact and focusing on providing solutions as opposed to delivering products. The strategy was sound, but making it happen required many new capabilities: dozens of sales people had to learn new approaches to selling and relationship building, different sales divisions needed to share information and collaborate, new roles for coordinating enterprise accounts had to be created, financial information had to be presented and analyzed differently, and so on. These changes meant that hundreds of people in the company had to work differently in some way — but the plan said nothing about developing capabilities. So despite general agreement that the strategy made sense, the missing capabilities made it impossible to carry out.
Capabilities lie at the heart an organization’s ability to achieve results, so it’s hardly a surprise that different results require different capabilities. But strategic plans often get this simple equation wrong, for one of two reasons.
At first, many strategic planners and senior executives assume that if the strategy is logical, then people will figure out what to do, and don’t build capabilities development into their plans at all. And yes, every organization has people who are highly adaptable, learn quickly, and can operate in this mode. Unfortunately, they often comprise a small group, and leaders end up over-relying on these «usual suspects» to tackle challenging execution assignments; and since these few people can’t do it all, the efforts founder.
Next week, we’ll finish off this series with our thoughts on leading change from the top.