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How to minimize risks in the digital transformation of your company

Dmitry Trepolsky gives company managers 5 recommendations that will help promptly and without unnecessary problems to introduce new digital technologies in business
Surveys show that among the problems that cause the greatest concern of managers, a special place is occupied by the risks associated with digital transformation. According to Forbes, 70% of digital initiatives do not achieve their goals. Of the $ 1.3 trillion invested in digitalization in 2018, an estimated 900 billion were actually “thrown to the wind.” Why do some projects succeed while others fail?

The main reason is that, although most digital technologies make it possible to increase efficiency and form closer relationships with customers, in order to realize this, you need to change your usual way of thinking and modify your work processes. If this is not done, then the digital transformation will only deepen the problems that the organization is currently facing. Let’s make recommendations that summarize the experience of those organizations that have successfully gone through digital transformation.

Recommendation No. 1. Formulate an overall business strategy.

Leaders who want to increase organizational productivity with digital technology often think of one single tool (for example, machine learning technology). But for digitalization to work, it must be subordinate to organizational strategy.

Li & Fung, a Hong Kong-based company, has developed a three-year market service strategy in which mobile apps play the same important role as traditional stores. Leaders decided to concentrate on three aspects – speed, innovation and digitalization. Among other things, Li & Fung’s goal was to shorten the production cycle, shorten the time it takes to market the product and improve the process of using data in its global supply chain.

When specific goals were formulated, the company moved on to choosing digital tools. For example, the company introduced virtual design technology, which reduced the time from design development to manufacturing a product sample by 50%. The company also helped its suppliers establish a data tracking system, which improved production efficiency. In addition, a digital platform was created where information from sellers and customers was integrated.

As we see in the example, there is no specific technology that would increase the intensity of innovation, shorten the production cycle or achieve other goals. The set of technological tools for a particular organization varies depending on the content of the strategic vision that leaders will formulate.

Recommendation No. 2. Use the potential of your employees.

Often, organizations that are thinking of transforming, invite an army of consultants who (as a rule) offer some kind of universal solution in the spirit of “best practices”. But experience shows that it is much more advisable to rely on those of your employees who know better (than anyone) what works and what doesn’t.

The Department of Planning and Development of the Administration of the US District of Santa Clara has set itself the task of improving the efficiency of some key processes and improving consumer experience. At first, external consultants, based on their experience in other areas, proposed a more decentralized approval approval process. But the employees who worked directly with the district residents knew that people would be more comfortable with an integrated approach. Their opinion became decisive in the reorganization of work processes.

To ensure greater transparency of the procedure, the department broke it into phases. Through the portal, consumers were able to see how their applications move from one stage to another. For their part, employees automatically identified “stuck” statements and carried out the necessary interventions in them. As a result, decision-making time was reduced by 33%.

As we see in the example, often the introduction of the latest technologies does not give the expected return, not because of imperfection of the tools, but because knowledge of important nuances that only insiders have is not used (or ignored).

Recommendation No. 3. Design consumer experience from the outside in.

If the goal of digital transformation is to improve consumer experience, then each project should begin with a diagnostic phase, when an in-depth study of the opinions of consumers is carried out.

Employees of the aforementioned organization conducted more than 90 individual interviews (during which respondents were asked to describe the strengths and weaknesses of the structure and prioritize their needs), and also made up focus groups in which key stakeholders such as developers, builders, landowners, and representatives took part Stanford University.

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