Digital Transformation Blog Series: The five critical ways digital organizations work differently (Part One)

Define it to do it.

In the summer of 2016, Roland Deiser, founder and director of the Future Organization at the Drucker School of Management, conducted a survey of approximately 100 global companies. Eighty percent of those organizations were pursuing or planning to pursue a digital transformation. Related, a survey North Highland conducted that same summer came up with similar results: 83 percent of the 200 companies we surveyed reported that digital transformation was “very” or “extremely” important over the next five years.”

According to a Harvard Business Review article, “The Biology of Corporate Survival,” one in three companies will delist from the exchange on which they trade in the next five years. Considering this decline in corporate endurance, it’s not surprising that digital transformation is so universally important. What is surprising, however, is Deiser’s finding that most organizations don’t understand what it means to be digital. His survey showed that 43 percent of organizations have no or almost no understanding of digital transformation; another 13.6 percent reported that had a limited understanding.

It’s difficult to find a clear, consistent definition of being digital. So, we set out to define the common characteristics of a digital organization to be used as benchmarks and strategic targets for organizations on their own transformation journey. Here’s how digitally transformed organizations work differently:

A digitally transformed workforce is…organized around products and armed with the tools and skills needed to innovate and collaborate.

People are organized cross-functionally by product, and innovation is everyone’s job. Individuals are poly-skilled and agile-minded, empowered to experiment with technology to produce new thinking and work collaboratively.

A digitally transformed supply chain is…automated and marked by streamlined, outcomes-based supplier partnerships.

A digital supply chain is automated for efficiency and purely focused on product delivery. Contract terms with suppliers are shortened and outcomes-focused.

Digitally transformed customer engagement is…customer-centered and deeply reliant on feedback and data loops to rapidly refine and redeploy.

Customers – both internal and external – are central to a digital business. Omni-channel engagement ensures that customer interactions and user experiences are consistent, and data is captured and analysed in real time to continuously improve and rapidly iterate.

Digitally transformed technology is…DevOps, Agile methodologies and world-class digital technologies underpinning everything the business does.

Development and operations are one team. New technologies, in particular automation, cloud, and container technologies, are key, and Agile development techniques are used interchangeably.

A digitally transformed operating model is…value-driven and grounded by a digital strategy and roadmap that delivers business agility.

Being digital requires an operating model that does not kowtow to tradition. It is instead obsessively focused on delivering value. Doing that requires a precise digital strategy and roadmap, along with enterprise-level agile adoption to enable, encourage, and support business agility.

A digital transformation changes so much more than technology. A truly digital business must move beyond doing digital to being digital, in ways that are incremental and improved upon continuously. It redefines how an organization works in every facet, and positions an organization to thrive, even in the face of constant change.

For more of our perspective on digital transformation, check out our recent piece, “Making Digitization more Human.”