By Lorenzo Vasini, Chief Growth Officer at Celerity
The present crisis has brought the value of digital solutions into stark relief. Businesses entirely reliant on physical premises and often associated footfall, with no digital solutions to fall back on, have scrambled to pivot, or in many instances simply closed down operations altogether. These businesses typically have analogue origin stories – maybe they’re manufacturers or pharmaceutical businesses. Ones that have resisted transformation in its truest form and instead used digital capability to save cost, rather than transform the way their businesses fundamentally generate revenue.
Covid is an obvious catalyst for change and we’re seeing huge swathes of these ‘disrupted analogues’ seriously considering digital transformation for the first time, to satisfy both their medium and long-term needs. However, there’s a real risk businesses will fall short of the full, true transformation they need.
As MIT researcher George Westerman puts it: “Successful digital transformation is like a caterpillar turning into a butterfly.” He also makes the important point, however, that when it comes to digital transformation, “many companies aren’t picturing butterflies, they’re just thinking about faster caterpillars” i.e. they’re not thinking about a true transformation of their businesses from the bottom up, they’re simply considering supplementing and hopefully improving existing operations with digital layers. As Westermann points out, this will inevitably see competitor businesses forge ahead. This is especially true in a digital-first environment like another pandemic where only token efforts at transformation will be laid bare.
Companies at the bleeding edge of digital, the Silicon Valley big tech disruptors, have earned their position at the head of the table through constant and aggressive moves to cut costs and improve efficiency using technology. It is no coincidence, then, that these companies are also among the best equipped in the present crisis.
National governments – which have found themselves seated opposite the tech giants in the courtroom more than a few times recently – have turned to them for support. Facebook and Netflix are rolling out $100 million to support small businesses, while Google has rapidly created digital tools for teachers. Business is also good for these digital butterflies: Netflix reported that video streaming is up by as much as 25 percent and Zoom has seen its stock price soar by over 250 percent in six months.
These companies, which rely on digital tools and automation more than any other, are also the best equipped to rapidly adapt to a crisis. It’s almost impossible to imagine a better case for the efficacy of digital transformation.
Companies across almost every other industry, however, are realising that their limited shifts toward digital haven’t gone far enough. While they have long relied on digital to make marginal reductions to costs and improvements to efficiency, they have largely lacked the imagination to consider what a full digital reimagining of the company would look like.
This isn’t to undersell their efforts: Some businesses, particularly those delivering intangible goods and services like media and finance, have made progress toward a customer-centric digital model. However, these are the minority. The vast majority have interpreted ‘digital transformation’ to mean ‘digital iteration’ or ‘gradual digital change,’ and have therefore failed to reap the potential rewards.
Time for a change
It’s not too late for these companies to make the leap and properly implement a digital transformation – but we’re likely approaching a point where it’s too late not to. Digital transformations are challenging, and according to McKinsey, five times more organisations fail than succeed. Interestingly, in my experience, it is the customer experience-led transformations that are most likely to fail, not because it’s an unworthy endeavour, but because of the complexity of execution and depth of understanding required to pull it off.
Organisations that have seen the light and are looking to transform need to keep five things in mind, each of which is necessary for success.
- The first element is commitment. If decision-makers on the management team aren’t fully bought in and willing to risk their careers for the transformation, it will fail.
- The next element is clarity of desired outcomes. These end goals must be closely linked to value, either commercial, customer, or employee.
- Third is investment of the right resources to the programme. Appropriate allocation of technical skills – such as putting senior data and digital leaders in oversight positions – can yield big gains.
- The fourth element is accountability, which must be shared among divisions to ensure collaboration.
- Finally, agility: a popular buzzword, but far more rarely seen in practice. Agility means being able to change course quickly if circumstances change or to take advantage of an opportunity and scaling agile teams and technology concepts to accelerate outcomes.
Overall, there is cause for optimism. The pandemic and ensuing changes in customer behaviour have rapidly accelerated the shift to digital, which is a change for the better as it will help sustain more businesses and jobs, and while there will undoubtedly be additional challenges ahead, flights of recently metamorphosised digital butterflies will be ready for the next lockdown or any other change that disrupts the traditional buyer journey.