Factors for a successful digital transformation

Most companies today have embarked on the voyage to transform themselves digitally. However, the journey is fraught with challenges, and many organizations stumble. According to Deloitte, 70% of transformation efforts fail. The high failure rate of digital transformation often stems from a narrow focus on technology rather than a comprehensive strategy that integrates all aspects of the business. Therefore, in the following lines, I will point out, why transformations fail, how to avoid failure, and the role of the CIO in this.

By Martin Scheliga
 

Technology alone won’t drive transformation

A frequent misstep in digital transformation is the assumption that implementing new technology alone will drive success. Many companies invest in advanced digital tools, expecting them to enhance communication, collaboration, and efficiency. However, without a strategic vision that aligns these tools with broader business goals, the outcomes often fall short. To drive the expected change, the business strategy should incorporate technology. In addition, this change needs to be viewed holistically, including the cultural change. This is where strong leadership comes in. The people who make up the company need to be brought on board and feel the need for the transformation.

However, leaders face an uncertain future and (being human) also fall victim to psychological errors such as mixing up cause and effect, fear of missing out or hindsight bias. Inconsistent change, unclear reasons to change and change fatigue are issues that arise here.

A holistic approach to transformation

To navigate these challenges, a holistic approach to digital transformation is necessary. This approach begins with a clear and ambitious digital vision centered on customer needs (Why transform?). This vision serves as the foundation for aligning all business functions toward a unified goal. Five essential dimensions should be addressed to ensure a successful transformation:

1. Modern Business Model: Digital transformation requires a reimagined business model that fully leverages digital opportunities. This is not just about digitizing existing processes it is about redesigning the business to scale exponentially, reach new markets, and create value for customers in innovative ways. I’ve seen in my network, that having a seat on the Executive Committee or Board really empowers CIOs in this discussion, which also leads to better results for the company in the Digital Transformation as well.
2. Functional Organization: Aligning the organizational structure with the digital strategy is crucial. This involves breaking down silos and creating cross-functional teams that are empowered to drive change. By doing so, organizations ensure that all parts of the organization work together toward the digital vision. Most CIOs that I know, focus their attention very much here. But the successful ones include the other dimensions as well.
3. Collaborative Culture: A collaborative culture is foundational to successful digital transformation. It requires an environment where employees are empowered to make decisions, share ideas, and learn from mistakes without fear of blame. Leaders must actively involve their teams in the transformation process, ensuring alignment with the company’s goals, fostering a sense of ownership and motivation among employees (applying the WHY).
   This is the area that causes most CIOs I talk to the most headaches. It also requires many CIOs to invest in new, “soft” skills and even to redefine themselves.
4. Seamless Processes: Streamlining processes is essential to ensuring that the organization operates efficiently and effectively. This involves mapping the value chain from beginning to end, identifying areas where processes overlap or create friction, and reengineering them to be seamless and end-to-end.
5. Scalable Technology: Technology plays a critical role in enabling and scaling the transformation, but it should follow the business strategy rather than lead it. Organizations must carefully select and implement tools that support their digital goals, ensuring they have a robust IT infrastructure that can scale with the business and adapt to future needs. Technology is a source of joy in most CIOs I meet, so it is easy to get lost in this field. And to lose your business peers, if the conversation becomes too “techy”. Connecting the tech with the business strategy helps to keep a common level of understanding.

The role of the CIO

As the leader of the Digital Organization, you, dear CIO, are the absolute focal point of the digital transformation and crucial to its success. Your task is not only to translate the business model and vision into actionable programs but also drive the execution. If YOU focus only on technology, the needs of your company will not be met. And this will create a disappointment in the business partners. By taking responsibility for initiatives beyond IT and paying into business outcomes, you can create the trust and unity with the business partners to drive the digital transformation.

But further, as a modern CIO you need to fluently communicate IT to Business and Business to IT. Since in a digital transformation, the IT is part of the business, a modern CIOs business acumen is key.

Beyond that, being an impactful networker on the executive level as well as the whole organization will be very valuable to you. Expand this skill with the ability to convey the right message to each layer of the company over a long period of time to. This skill might sound negligible. But a transformation is no project, it is continuous. Influencing different stakeholders will determine over your success or failure. This is part of effective Change Management and a key skill.

Needless to say, to drive any form of change or transformation, your “house must be kept in order”, meaning your I&T organization needs to have a minimum of maturity and governance. Else you will find it hard to focus and deliver.

There is a plethora of skills needed for different types of CIOs in different types of organizations. But your role today is enhanced and consists of more facets than even 5 years ago.

If you wish to find out more on Driving Digital Transformation Success Through Holistic Solutions,  you can download the 8 page whitepaper here.

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About Bee360:

Bee360 GmbH is a globally operating independent company headquartered in Karlsruhe, Germany, with other locations worldwide. Since 2003, we have provided management consulting and comprehensive solutions for international corporations and prominent medium-sized companies through our Bee360 platform. This globally unique platform facilitates the integrated management of an organization, covering all essential functions and business areas at the appropriate level, thus providing a unified perspective on the company’s activities for all employees across the organization.