Disrupt or be disrupted: Overcoming challenges in digital transformation

June 23, 2017

Visit Fortune, Bloomberg or the Harvard Business Review and you’re seeing them: headlines about digital transformation. Don’t be tricked into thinking this is another buzzword – it’s not. Digital transformation is the top strategic priority for half of executives globally in 2017.

What exactly does digital transformation mean? Ray Wang, principal analyst and founder at Silicon Valley-based firm Constellation Research Inc., defines the term as “the methodology in which organizations transform and create new business models and culture with digital technologies.” We sat down with Ray to discuss how today’s leaders can create a successful digital transformation. This is the third post in a six-part series.

There’s no other way to put it: digital transformation comes with some major challenges. Perhaps most significantly, CIOs and CTOs face difficulty in managing all the moving parts in their organizations:

• How does the change in digital business models impact technology and people?

• How do we adjust the marketing plan to support the transformation (and vice versa)?

• How does it impact the brand and existing customers?

• Are we hiring the right talent to support our growth, or will our current employees hold us back?

Until recently, organizations dealt with these challenges by adding chief digital officers to drive the transition to digital strategies and tools. Ultimately, this tactic won’t be enough.

Digital transformation is impacting the C-suite

As analog operations are converted into higher-performing digital businesses through the adoption of new technologies, the role of the chief digital officer is giving way to C-level leaders with digital skills. CMOs must now be proficient in supporting digital brands and using powerful new tools and cloud platforms. CIOs must hire, lead and support teams that are agile enough to support emerging business models. Even human resource leaders must adopt their skills to attract and hire digital artisans who don’t simply support existing architectures, but can also innovate with newly developed tools and practices. The days of business leaders leaving digital strategy to the CDO are over.

Hesitating hurts your business

But not all organizations are ready to make their own digital transformation. It’s human nature to avoid change, especially disruptions that are painful for those unable to adapt. Some business leaders see that their current analog businesses are still growing and argue, “Why fix something that’s not broken?” They’d rather wait until real problems develop before investing in technological changes.

Smaller organizations may also object to moving forward with a digital transformation due to the cost. A real transformation can require a significant investment in everything from new customer interfaces and experiences to back-end systems that support functions such as finance or sales. So they hold back, allowing competitors to take advantage of the opportunities, hoping (perhaps in vain) that they can catch up when the technology is more affordable.

Another challenge arises from inflexible organizational cultures that depend on outdated technologies simply because, “That’s how we’ve always done things.” These companies are handcuffed by old systems and policies that keep employees from doing their best. One example of this technical debt is learning programs that have been driven by regulatory compliance and slowly updating employee skillsets as standards are adopted. Tomorrow’s leaders must address these challenges head-on, adopting strategies that go well beyond compliance to focus instead on innovation.

In time, these tech laggards will see both customers and employees opt for better opportunities to interact with fast-moving competitors that are disrupting older, stable businesses and creating innovative customer experiences. Even disruptive companies such as Netflix and Facebook are constantly on the lookout for new ways to update and disrupt their own businesses. They know that eventually someone will do it — why not make sure that person is in-house when they can create the next big thing so the organization will benefit?

Gain speed through skills

It’s not just technology. Successful transformation requires both the tools and the talent to make it happen. The people running your transformation are as critical as the strategies and technology that make it possible. And while many organizations invest in training for their staff, the rate of technological change is accelerating so quickly that much of the training is obsolete as soon as it’s delivered. Effective digital transformations require continual investment in people and training that, until recently, only a few organizations could afford.

Today’s CIOs and CTOs have the opportunity to speed up their organization’s digital transformation by adopting and promoting new tools designed to help employees learn as they go — improving digital literacy and picking up new skills exactly when they are needed for innovation, not months or years later when skills need to be brought into compliance to support aging tech.

Digital transformation is coming. How will you embrace it?

It’s no wonder so many of today’s corporate leaders see digital transformation as a critical part of their strategy for the future. And why so many C-level leaders are becoming digital strategists, co-opting the role played by today’s CDOs.

By embracing and implementing digital transformation as the means not the end, these leaders are changing their organizations from slow-moving analog systems into innovative, agile companies equipped to compete well into the future. And the changes they enable over the next two years will no doubt reinforce the growing gap between fast-moving, innovative companies and the digital laggards in danger of falling behind forever.

Hear more advice from Ray Wang about successfully navigating digital transformation on YouTube.

Source: Forbes Insights