The speed of digital transformation can make it challenging to nail down what’s at stake in the process. Organizations need to better understand why they need to transform, where the company is headed, and whether it can achieve the desired results. And to ensure successful transformation, companies need to understand how (and whether) their current technologies are capitalizing on the opportunities they’re after.
This piece by Liden (et al) published in 2016 in the Harvard Business Review, encouraged leaders to ask 7 questions before embarking on their next digital transformation project. While these questions could apply to almost any area of the business, digital transformation projects must yield results, and are especially useful in this context.
In this article, we add to those questions for the business in 2020 seeking to get a move on with their own digital transformation projects. Here are seven more questions that leaders should ask before they buy into a digital transformation project:
1. Is your project structured to make new money or sustain existing returns?
The singular focus on short term bottom-line financials is often short-sighted. While this will determine how to spend digital technology dollars today, leaders should also focus on long-term value. That requires putting new revenue generation first.
2. Will your initiative improve the quality of your operations or increase productivity?
The rapid pace of disruption means that if you’re not upgrading your processes, you will be out-competed. By focusing on making digital platforms more robust, and using new technology to deliver a better experience, you can dramatically increase the value of your offering and increase revenue per employee.
3. Do you have the right people and processes?
Deciding how to serve customers and how to create an easier user experience requires changes in organizational structures and thinking. At Archima, we advise our clients that any investment in digital innovation should directly link revenue generation to digital talent and capability, which will in turn lead to sustained profitability.
4. Are you measuring the right things?
As important as it is to drive new revenue, long term success goes beyond financial metrics. Digital transformation should also demonstrate the sustainable benefits of aligning new products, services, and capabilities to business priorities like market expansion, service growth, and productivity improvement.
5. Will there be any long-term payback from this investment?
How long it would take for a digital transformation to deliver positive bottom-line results? The goal should be to create a set of metrics that will commnicate how a digital transformation project will help to deliver financial results on a sustained basis.
6. Is there enough money to execute?
While some companies have tremendous digital transformation initiatives, others invest heavily to launch a pilot without sufficient resources or time to get the projects running smoothly.
7. How much time should you give to experimentation?
The big questions about digital transformation are never black and white. You need to structure your approach carefully and avoid rigid timelines. But companies that get to the point quickly and are structured right tend to score the best with their shareholders.
Additional questions for your company about digital transformation:
- How can digital technologies maximize the benefits you seek?
- Are you making digital transformation a top-of-mind activity for every employee?
- Does your company have a sustainable, widespread digital transformation strategy?
- Is your digital strategy broad enough, encompassing all areas of the business?
- What digital activities should you focuse on, in terms of products, data sources, or technical platforms?
If the answers to these questions show a lack of interest in digital transformation, or unwillingness to experiment with new technologies, then your organization may not be in fact ready. Digitizing processes is tough, and if you don’t think your company is willing to tackle the challenge, step away from the process until the solution becomes more apparent. Or find a strategic partner with the experience in delivering results through asking and answering these tough questions. At Archima we work with clients wherever they are in their journey. Contact us today to schedule a free consultation.
