The Only Digital Transformation Framework You Will Need
This knowledge is brought to you by Jen Storey, just one of the thousands of top management consultants on Expert360. Sign up free to hire freelancers here, or apply to become an Expert360 consultant here.
 
 Table of Contents
  1. What is a digital transformation framework?
  2. Why do organisations need to digitally transform?
  3. The benefits of a digital transformation framework
  4. How to choose the right digital transformation framework
  5. Things to avoid
  6. What's the return?
  7. The future belongs to the brave

 

What is a digital transformation framework?

  A digital transformation framework is the blueprint for how an organisation moves through a period of significant change because of the current evolving business conditions. The framework is a tool, used across an organisation, that guides all levels of the organisation through the journey. It ensures that no area of the business is left unattended during the period of change. It provides a common reference point that can be evolved as the organisation changes – thus, the digital transformation framework is central to success. The framework enables the strategy and roadmap that allows organisations, of all sizes, to evolve and success in the rapidly changing market conditions that now exist.  

What is digital transformation?

While digital technology pervades daily life in many countries, it is not technology that is the driver behind the need for an organisation to digitally transform. The driver is people – customers and employees, and what they expect from companies. The more people embrace technology, the greater their expectation that every company they work for or, buy products and services from, will also embrace technology. People love technology. They change their behaviours due to the technology. They expect companies to be different because of technology. And, there’s always new technology. Does that sound like a circular argument? Perhaps it is. But the cycle goes something like this: People invent technology. People adapt to the technology. It changes their life. More new technology is invented. People adapt to this technology. It changes their life. … you get the picture. It is a circular argument for the simple reason that technology evolves. As a result, people – customers and employees – constantly change their expectations. In the last decade, people have embraced and demanded new technology faster than ever before. It’s this environment that is forcing organisations to rapidly transform.  

Disruption, innovation and digital transformation1

A core function with any business is to continually advance and improve its operations, products and services. All businesses must continually improve to increase margins and, decrease costs. Organisations that successfully follow a digital transformation framework are equipped not only to improve, but also to drive innovation and disruption strategies. These strategies allow the company to compete in the rapidly evolving market conditions that are being driven by customer expectations, new technologies and, new commercial models.

What is a disruption?

Disruption refers to the confluence of external factors that are currently undergoing change:

  • What customers expect from companies
  • What employees expect from companies
  • What is technically possible
  • What commercial models are successful
  • What strategies work

It is this current convergence of events that drives organisations to embed a digital transformation framework and embed innovation into the fundamental DNA of the business.  

Why do organisations need to digitally transform?

  Most organisations have a long and proud history. Long-standing organisations tend to have an established way of operating that has enabled decades of success.2

These ways of operating are usually responsible for the organisation’s survival to a point in time; the company kept doing what was working and it prospered. The reality is that most companies are optimised for the environment where they already operate. When anything in that environment changes, be it quickly or over time, they are not equipped to adapt and changes. Now, enter all the external factors that are driving disruption – customer expectations, employee expectations, new technology, new business models and new, rapidly growing startups.

3

Suddenly, the established ways of working may no longer be delivering the same results. As the impetus for change increases, caused by falling revenues and other negative pressures, the leadership of the organisation needs to formulate a strategic response. Some choose to tweak the existing ways to increase efficiency; but this is rarely enough to tilt the organisation back on to a long term, sustainable path. The need for a revolutionary approach, one that revitalises the organisation and returns it to viability becomes obvious.

4

This is when digital transformation frameworks will help the leaders steer the organisation back onto a path that propels the business forward, not backwards. The reality is, it’s not the largest nor the most currently successful companies that succeed. Successful companies are the ones that are the most adaptable.  

Does your organisation need to digitally transform?

The short answer is yes. The long answer is yes unless your organisation is at its peak, where it has a deep understanding of customers, employee engagement is sky high and, all technology systems are modern, up-to-date and being used to deliver innovative products and services.

5

Regardless of the industry in which an organisation exists, common pressures from profit margins, competitor activity, employee expectations, customer expectation and technology drive the decision to commence a digital transformation. Your organisation may have already begun its digital transformation – officially or, unofficially. If this is the case, it is imperative that a digital transformation framework is established to ensure that the transformation is successful. Why? The digital transformation of any organisation is not easy. It’s not a matter of following a checklist and, after all, boxes are ticked, the organisation is transformed.

A digital transformation framework highlights the overlapping areas of the organisation that must change. It will also be the basis of a multi-faceted program of work to deliver results. The right digital transformation framework provides a guide in a time of organised chaos. Have no doubt that an organisation undergoing this metamorphosis is in a state of flux; a constant state of turbulence. The framework will be the guiding beacon that provides everyone in the organisation, from the Board down, a sense of progress toward the end goal – a revitalised, successful organisation. Without a sense of progress, the organisation is at risk of suffering from change fatigue. This can cripple an organisation, making it lose momentum and, if the business was already teetering on the edge of financial viability, it could be what tips it beyond a point of return. Change fatigue – the emotional response of employees caught in a cycle of endless change, with no positive end in sight – can be avoided by implementing a digital transformation framework.  

The benefits of a digital transformation framework

  All organisations exist as a finely tuned mix of separate functions, working together to deliver products and services to customers. The right digital transformation framework will provide scaffolding to guide the organisation through this period of intense change. It will ensure that no areas of the business are misunderstood or left behind in the process. It will provide a way to create tangible benchmarks, meaningful metrics and, clear indications of progress and, areas where more attention is required.  

The most important things

The most important thing for any digital transformation framework is its adaptability. Plus, the most important thing for any Board, CEO or leadership team to understand is that everything will change, constantly. As a result, the single most important thing that needs to change at all levels of the organisation is mindset. People need to think differently and be resilient in the face of continuous change. Having a digital transformation framework is one tool that will assist with the change, but it too needs to be adaptable to whatever the organisation and its people encounter along the way. For any digital transformation framework to work, the leaders of the organisation need to have the right mindset to adapt and adjust as the journey unfolds.  

Organisational wide benefits

Each part of an organisation has a vital role to play. The digital transformation framework is the tool that binds the organisation together and, provides a common starting point for all teams. The benefits of the digital transformation will be both universal and, also have specific applications in different team functions. The framework will provide: Leadership

  • An agreed, organisational-wide approach
  • A template to lead through the period of change
  • An organisation-wide visible program for reference
  • A working straw-man of risks, benefits and progress towards the goal
  • The opportunity to redefine what success looks like for the company

The Board

  • An agreed approach with the leadership team
  • A template that provides governance insights
  • A working straw-man to determine progress towards the goal
  • The opportunity to redefine what success looks like for the company

Employees

  • A template that provides all employees with an understanding of what’s ahead
  • An understanding of the change and how they will be involved
  • An understanding of the change and what it means for customers
  • The opportunity to work in cross-functional teams across the organisation to achieve the desired end state goals

Operations

  • A template to understand what will be required during the period of change
  • A blueprint that maps current state and the goal end state
  • An understanding of the cross-organisational flow-on effects of the change

Finance

  • A template to understand what will be required during the period of change
  • The mandate to map the current state and the future state
  • The opportunity to develop a new, iterative way of working and solving problems

Marketing & Product

  • A template to understand what will be required during the period of change
  • The mandate to reposition the brand, protect it during the state of change
  • A guide to engaging with customers to make them a part of the ongoing journey and transformation of the organisation
  • The mandate to assess current product/service performance against the expectations of customers leveraging new technologies
  • The opportunity to develop a new, iterative way of working and solving problems

7

Technology

  • A template to understand what will be required during the period of change
  • The mandate to assess current systems and skills versus the required future state systems and skills – eg. Cloud, social media, Internet of Things (IoT), Big Data, Mobile
  • The opportunity to develop a new, iterative way of working and solving problems

Internal Communications

  • A template to understand what will be required during the period of change
  • A mandate to engage with employees, listen to their concerns, celebrate successes
  • The opportunity to redefine all communication with employees leveraging new technologies

Investor Relations

  • A template to understand what will be required during the period of change
  • The opportunity to redefine all communication with shareholders leveraging new technologies
  • The opportunity to communicate the ongoing story of the transformation of the organisation from the old state to the transformed business

Legal

  • A template to understand what will be required during the period of change
  • The opportunity to develop a new, iterative way of working and solving problems
  • The mandate to assess current systems and skills versus the required future state systems and skills – eg. Cloud, social media, Internet of Things (IoT), Big Data, Mobile
  • The opportunity to develop a new, iterative way of working and solving problems

Human Resources (HR)

  • A template to understand what will be required during the period of change
  • A mandate to engage with employees, listen to their concerns, celebrate successes
  • A mandate to assess the current corporate culture and design a pathway to a transformed culture

Customers

  • A clear understanding of what the organisation is doing and, how it may affect them as customers
  • An opportunity to engage and support the organisation, celebrate its successes as it transforms

How to choose the right digital transformation framework

The right digital framework is one that is adaptable to an organisation yet can be phased into logical, cohesive steps that will show tangible progress. The initial phases ensure the organisation knows what it is doing and, why it needs to do it. The following phases are about execution and ongoing operational environment.  

8  

1. Discover

Vision

The organisation needs to have a vision of the future for the company, its staff, its customers and, the overall marketplace in which it operates.

Why

It is not enough for an organisation to change because of commercial pressures. The organisation needs to define a belief of why it needs to change that all employees can embrace; one that means something to its customers as well.

Insights

The organisation needs to leverage internal insights and knowledge to determine the desired future state.  

2. Design

Leadership

The importance and scale of a digital transformation are so great that a single executive is usually appointed to lead the transformation, with the full support of the Board, CEO and the rest of the leadership team.

Strategy

The strategy should include a complete market, legislative, regulatory and competitor review. It should provide a detailed assessment of the current state of the organisation, the desired end state, detailed metrics that will determine when success has been achieved at each stage, what will be done differently and how it will happen. How it will happen is more important than what will happen – the mindset change of doing things differently is what success is hinged upon. Metrics play a vital role in tracking how things are changing. These are two of the most important factors in a digital transformation strategy.

Roadmap

A roadmap that defines the stages to progress through the transformation is devised, with the knowledge that it will change and adapt as required.  

3. Initiate

Language

The single most effective component of a digital transformation framework is that it provides the organisation with one, unifying language.

Streams

Distinct streams for each of the core areas of the organisation should be established for: people, customers, process, product, technology

Culture

A dedicated, overarching program that ensures the organisational culture evolves and adapts to the changes. Dedicated communication, workshops and other initiatives to put the change process, outcomes and progress in perspective for all levels of the organisation.  

4. Refine

Assess

Constant evaluation of the metrics to determine progress towards the end state is undertaken. This informs the Board and Leadership and, forms the basis of the culture and communications program.

Benchmarks

Establishing new benchmarks begins at the start of the transformation. New ways of doing things cannot be measured effectively against the old methods.

Pivots

When a change from the initial plan and framework is required, pivots occur. These are informed by the assessment and benchmarking process. The purpose of the transformation is to progress toward the end-state, and changes in direction without changing the end goal will be required.  

Things to avoid

The three most common mistakes that organisations undertaking a transformation make are enough to derail the program. While any of these three mistakes can occur at any time, they are all interrelated.  

Focusing only on technology

The most common mistake is that organisations focus on the technology component of a digital transformation framework. This is often done because it is the most widely understood trigger for commencing the program of work. While technology is a vital component, overlooking the other streams in the Initiate step will derail the transformation rapidly. The upside is if this does occur, the program can be returned to the right path by viewing the organisation and the pressures upon it as a whole. Then, by increasing effort in the other streams to ensure the whole organisation moves together, at the right speed.  

Creating silos

Similarly, even if all streams are working towards the common goal, if they are not collaborating, the program will falter. Working in silos will mean insights are not shared, duplication will occur and, progress will diminish. Silos commonly materialise due to people or teams trying to feel in control and manage their workload through a period of dramatic change. It’s a natural, human response to being overwhelmed and fearing a new and uncertain future. The resolution is to ensure that there are regular communication forums, at all levels of the organisation, for those leading the transformation as well as those who are dealing with the program day to day. Working through the fear and magnitude of the path ahead is essential to ensure silos of isolation do not form. This method of regular communication and engagement with teams also reflects a different way of working for many organisations. Yet ultimately, working collaboratively is one of the desired outcomes of any digital transformation framework. The sooner this way of working becomes part of the organisational culture, the more rapidly the company will progress in its transformation.  

Not investing in culture change and communication

Even if every group is working collaboratively toward a common goal and that technology is not the only focus, an organisation’s digital transformation can falter if there is not an adequate investment in the cultural change stream of the digital transformation framework. An organisation is made up of its people; if they are not kept informed throughout the change – of both the good and the bad – the program will not succeed. The same feelings of fear and being overwhelmed can consume entire teams rapidly in times of high pressured change. Investing in the culture and internal communication stream is vital to the organisation riding the ups and downs of the turbulence. Successful cultural change programs are a collaboration between HR and internal communication teams. Usually, a dedicated, cross-functional team is created to lead the culture stream throughout the change.  

What’s the return?

Organisational change at this scale is complex, even with a digital transformation framework. However, the payback is significant. An organisation that can adapt and respond to the needs of customers, deliver innovative products and services and, disrupt market is one that has longevity. While the investment is significant, so is the payback. Organisations that have digitally transformed and have repositioned as innovative organisations outperform competitors on the core metrics of CAGR, EBITDA and Market Capitalisation Growth.  

 

9   Similarly, organisations that have the culture, processes and technology in place from following a successful digital transformation framework are faster to break even on the new products and services that are launched to market.  

10  

The future belongs to the brave

Leadership is born through dramatic periods of change, yet good leaders do not do it alone. Surrounding them are people with the right mindset and those that are ready to take a digital transformation framework and adapt it to the needs of their organisation. By following the principles in the above digital transformation framework, any organisation can create a logical and pragmatic approach to drive success in this period of radical change.

Thumbnail
Jen Storey

Partner & Chief Experience Officer at Edgelab Ventures

Jen is an expert in innovation, product & service design, customer experience and all things digital. 

She has experience gained at AOL, McKinsey, Suncorp, CBA, Flight Centre, AMP, Youi, Woolworths, NAB, many mid-large SMEs and some of Australia's best funded startups. She has significant cross-industry experience and extensive background in strategy, digital, marketing and execution

Tagged

digital transformation
Strategy