The most critical element of a digital shift is the identification of a clear need or opportunity that digital technology can address. Successful enterprises continually examine their marketplaces along with how those marketplaces are changing. They also look at both their processes — and how to carry them out better, faster, and cheaper — and new technologies that could open up hitherto infeasible opportunities. It’s important that pull from the enterprise, not push from technologists, be the basis of any digital shift.
So the most crucial question to answer in deciding to make a digital shift is “Why?” The second most important is “Why now?” Some generic reasons a company might have include:
Perceived opportunity to leverage digital technology to improve standards of quality in product, services, or customer experience at acceptable cost before competitors do so.
Perception that a company is falling behind competitors in quality and that standards are no longer high enough.
Perception that costs are higher than they need to be to meet standards of quality, thus eating into the margins required to fund future innovations and improvements.
Realization that a totally new business or business model could meet customers’ needs better at the same or lower cost.
Identifying problems and opportunities requires careful and objective evaluation of current processes and methods. It’s almost guaranteed that up-to-date technology offers opportunities for improvement. Basically, improvement is possible whenever more current and accurate information would enable performing critical processes better, faster, or cheaper. This is good old reengineering, a discipline enterprises should continuously exercise as technology gets cheaper and more versatile. But reengineering alone is far from good enough. Digital shifts are not just about internal efficiency; they increasingly include the customer experience — always making it easier for customers to do hassle-free business with the company.
Identifying threats — by asking, “Is the company about to be disrupted?” — requires a clear understanding of what the customer is buying. The starkest examples of disruption, cited earlier, are recorded music and on-demand, point-to-point transportation, where new technologies allowed the creation of entirely new ways to obtain a product or service that entirely new business entities exploited.
Now, a particularly bad reason to launch a digital shift is because magazine articles, popular books by professors and other gurus, or “free” seminars given by tech vendors promote digital shifts as the thing to do. Designing a program as expensive as a digital shift requires keeping quantified targets firmly in mind. In general, the targets should not be monetary; rather, they should be operational measures that are leading indicators of financial success. Such indicators could include staff productivity, cycle times, quality measures such as error rates, utilization rates for help desk operators, and customer feedback. The key idea is to isolate the effects due to the shift from those attributable to the general business climate or other factors beyond the company’s control.
Many areas might benefit from a digital shift, but it’s almost certainly a very bad idea to try to address too many areas at once. Priority-setting is critical. The natural priority is:
Dealing with potential disruption
Enhancing the quality of products, services, or the customer experience
It may be a mistake to assume the more that’s digital, the better. In some businesses or enterprises, human contact is an essential part of the customer experience. Naturally, however, what the customer doesn’t see or care about is fair game for a digital shift.
The idea of “robust, C-level buy-in” may have become a cliché when applied to IT, but there is no substitute when it comes to digital shifts. These are not IT initiatives; they are enterprise initiatives. Answers to the why and why now questions need to articulate the driving issues and goals motivating the shift in as tangible and meaningful a way as possible to elicit and ensure steadfast commitment from stakeholders (i.e., employees, executives, and outside owners/directors). Digital shifts represent substantial commitments, not just of money but of C-level time and energy, requiring the continuous attention of top executives. Assuring success is not merely a spectator sport for the C-suite and operations managers.
Digital shifts are often beset by obstacles and reverses, not all of which could have been foreseen and prevented. The old saying, “It’s better to have tried and failed than never to have tried at all” is not quite applicable if a failure might breed excessive caution that could result in failure to seize a future better opportunity. Going wobbly over the financial commitment after a rough quarterly earnings report is counterproductive; if the basic idea was good — and it better have been — it still is. All an abrupt change accomplishes is to create cynicism among the folks who may have put in months of 70-hour weeks.
No project will get C-level buy-in without a detailed budget and timelines for implementation. A digital shift project is not a time for overoptimism. Once upon a time, candor in budgeting IT projects would ensure them not being approved; IT executives would offer deceptively low estimates and pray that the results would be good enough to deflect C-level consternation and possible sacking. And mostly that would happen.
Nowadays, C-level folks are inured to the notion that digital shifts are both expensive and necessary; that the cost of not making them could vastly exceed any short-term savings from not attempting them. Thus, thoroughness and candor are in order. Truly unpredictable setbacks should be understood as such and tolerated, but setbacks that could have been predicted will not be viewed favorably.
Some organizational cultures are receptive to change and innovations. Others change only slowly and with great difficulty. When a significant digital shift is necessary to survive, the job is obviously harder for the change-resistant, but it still must be done. Nothing guarantees an enterprise’s continued prosperity or even existence; one need only compare today’s Dow 30 with that of 50 years ago.4
On the other end of the spectrum, some organizations (at least at the top) are prone to embracing all kinds of change — they latch on to the “flavor of the month” — only to be put off by costs and practical difficulties, or by being distracted by another idea. In a way, these organizations pose more of a challenge than the slow changers, because employees will have become cynical, figuring “this too shall pass” and working only as hard as necessary to avoid being fired. There needs to be a lot of clear and sustained signaling to get across the point that “this time will be different — really!”
A culture that lies well between these extremes can still present challenges. If it’s siloed and political with lots of interdepartmental rivalry and ill-feeling, for example, that challenge must be addressed if the specific digital shift being implemented requires cross-functional teamwork. It’s also possible that a specific digital shift may not necessitate much if any cultural change; if so, there’s no point in using the “change” word with its implicit threat.
[For more from the author on this topic, see “Making a Digital Shift (Without Grinding Gears).”]