In the last decade or two, there has been a lot of talk about digital transformation—and a lot less talk about digital transformation strategy.
However, the stats show that’s a grave mistake. McKinsey’s survey found that organizations capture less than one-third of the value they expected to see from digital transformation initiatives. Furthermore, less than one-third of organizations that achieve digital transformation benefits sustain them over time. That’s abysmal!
Embarking on a digital transformation journey without a solid plan in place is costly and foolish.
Rewired: A McKinsey Guide to Outcompeting in the Age of Digital and AI (a book released in 2023) lays out six capabilities critical for successful digital transformation. Guess what’s #1?
The ability to craft a clear strategy focused on business value.
As McKinsey’s article states: “Companies should focus their transformations on specific domains (customer journeys, processes, or functions) that generate significant value for the business. The transformation should be guided by a roadmap, which details the solutions and resources needed to deliver change to prioritized domains.”
And that’s exactly what we’re going to help you create—a roadmap based on a deeper understanding of all the moving parts a digital transformation entails.
In this article, we’ll dive into the following topics:
- What Is A Digital Transformation Strategy?
- Understand The Digital Transformation Strategy
- 5 Key Areas Of Digital Transformation
- Importance And Benefits Of A Digital Transformation Strategy
- How To Create A Digital Transformation Strategy
- Digital Transformation Challenges
What Is A Digital Transformation Strategy?
Digital transformation strategy refers to a comprehensive plan that organizations adopt to make the most of digital technologies and transform how they do business. It focuses on embracing digital tools, optimizing processes, putting customers at the center, and fostering an innovative mindset.
The ultimate goal is to fuel growth, boost efficiency, and deliver outstanding value. It's a roadmap for organizations to navigate the world of new tech and come out on top.
Understand The Digital Transformation Strategy
It’s important to understand that a digital transformation plan should go beyond the adoption of digital tools and employ a holistic approach. As digital transformation reimagines an organization's operations, business models, and customer interactions it touches more than just technology.
“Digital transformation is often perceived as a technological matter – changing the plumbing and installing new platforms. But it genuinely isn’t about that,” says an expert in a Raconteur report. “As much as anything, it is a matter of culture and mindset. If you default to a technology play, you can fairly and squarely miss the point.”
Optimization of processes through the power of modern technologies, such as artificial intelligence, machine learning, cloud computing, and the Internet of Things (IoT), is alluring. But you mustn’t forget about the employees, the tools and processes they’re used to, and how they will need to adapt.
To embark on a successful digital transformation journey, you need to listen to feedback, get internal buy-in, and align strategic initiatives throughout the organization.
It’s important to emphasize that digital transformation is not a one-time project but an ongoing journey.
Besides the cultural change within the organization mentioned before, it also requires strong leadership commitment and continuous investment in technology, talent, and processes.
You will have to foster a digital-first mindset, promote collaboration across teams, and embrace a culture of innovation and experimentation to drive successful digital transformation initiatives.
5 Key Areas Of Digital Transformation
Digital transformation involves several key areas beyond technology that organizations must consider when developing and implementing their strategies.
These areas are like puzzle pieces that fit together to make the whole digital transformation picture come alive.
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Let’s explore them in more detail:
Customer experience
Digital transformation centers around enhancing the customer experience. It helps organizations leverage digital tools to understand their customer's expectations, preferences, and pain points to deliver personalized, seamless, and engaging experiences across all touchpoints.
Focus: Enhancing and personalizing the customer journey and user experience.
💡Examples: Implementing omnichannel customer engagement, leveraging data analytics to understand customer behavior and preferences, and developing self-service portals and mobile apps for seamless customer interactions.
Operational processes
Digital transformation involves reimagining and optimizing operational processes to drive efficiency, productivity, and agility.
A digital transformation strategy will help you identify opportunities to automate manual tasks, streamline workflows, and eliminate bottlenecks through the use of digital tools and automation platforms.
By digitizing and integrating processes, your business can achieve faster turnaround times, reduce costs, and improve overall operational performance.
Focus: Streamlining and optimizing internal processes for increased efficiency and productivity.
💡Examples: Adopting robotic process automation (RPA) to automate repetitive tasks, implementing cloud-based collaboration tools for remote work, and utilizing Internet of Things (IoT) devices for real-time monitoring and predictive maintenance.
Business models
Digital transformation provides an opportunity for organizations to adapt, innovate, or even completely transform their business models.
New technologies can enable you to create new revenue streams, explore disruptive operating models, and adapt to changing market dynamics.
Focus: Innovating and adapting business models to leverage digital opportunities.
💡 Examples: Introducing subscription-based services or digital marketplaces, embracing platform-based business models and e-commerce, implementing data-driven monetization strategies, and exploring partnerships and collaborations to expand market reach.
Workforce and culture
Digital transformation requires a cultural shift within the organization.
Your organization needs to foster a digital-first mindset, promote a culture of innovation and continuous learning, and empower your workforce to embrace digital tools and technologies.
Focus: Empowering employees and fostering a culture of digital innovation and agility.
💡Examples: Providing digital skills training and upskilling programs, encouraging cross-functional collaboration and knowledge sharing, implementing flexible work arrangements and digital workplace tools, and encouraging experimentation.
Technology and data infrastructure
“If businesses are to capitalize on the hallmarks of digital transformation, they need to seriously rethink how their IT infrastructure is configured,” says Seamus Dunne, managing director at Digital Realty.
To do that, organizations and their CIOs need to assess their existing technology stack, identify gaps, and invest in the right digital solutions and platforms that align with their strategic objectives.
Establishing a scalable, secure, and integrated technology infrastructure is essential for driving successful digital transformation initiatives.
Focus: Developing and implementing robust technology systems and data infrastructure to support digital initiatives.
💡Examples: Investing in cloud computing and infrastructure-as-a-service (IaaS), data analytics tools, artificial intelligence, Internet of Things (IoT) devices, enterprise resource planning (ERP) systems, and making sure data security and privacy measures are in place.
By ensuring the alignment of these key areas, organizations can create a holistic digital transformation strategy that covers all the bases and drives both organizational and revenue growth.
It’s important to note that the specific components and their priorities may vary depending on the organization's industry, size, and strategic goals. Therefore, organizations should assess their unique needs and tailor their digital transformation approach accordingly.
Importance And Benefits Of Digital Transformation Strategy
Here are the key reasons digital transformation is vital for long-term success:
Adaptability to changing market dynamics
Digital transformation enables organizations to stay ahead of the curve by adapting to market changes.
A well-crafted digital transformation strategy equips organizations with everything needed to monitor market trends, anticipate customer needs, and adjust their strategies to capitalize on emerging opportunities or mitigate risks.
Enhanced customer experiences
Customer experience is a key differentiator. Digital transformation enables organizations to offer personalized, seamless, and omni-channel experiences to their customers.
By leveraging digital technologies such as AI, data analytics, and automation, organizations can gain deeper customer insights, tailor their offerings, and provide exceptional value to their customers.
Improved operational efficiency
A digital transformation strategy enables you to efficiently implement automation, digitization, and data analytics to streamline workflows, eliminate manual tasks, reduce errors, and improve overall operational performance.
This not only saves time and resources but also enables organizations to allocate their workforce to more value-added activities.
Innovation and competitive advantage
Organizations that successfully implement digital transformation strategies gain a significant competitive edge in the market.
By embracing digital technologies and processes, your organization can continuously explore new business models, products, and services. They can leverage data analytics to disrupt traditional business models, create new products and services, and enter new markets faster.
Data-driven decision-making
Digital transformation enables organizations to harness the power of data for informed decision-making. This is a huge step towards visibility and business observability, and all the benefits they bring once you achieve them.
By integrating and analyzing data from various sources, organizations can gain valuable insights into customer behavior, market trends, and operational performance. Data-driven decision-making allows organizations to make strategic choices based on evidence rather than assumptions.
Future-proofing the organization
A digital transformation strategy ensures your organization is prepared for the future.
By embracing digital technologies and processes, organizations become more resilient, adaptable, and sustainable. They use emerging technologies to keep pace with innovations and new business models.
Organizations that proactively embark on digital transformation are better positioned to navigate uncertainties, disruptions, and evolving customer demands.
As you see, by developing a well-defined digital transformation strategy, your organization can streamline business processes, capitalize on emerging opportunities, and create sustainable growth in today's dynamic business landscape.
But how do you create a digital transformation strategy? Let’s take a closer look.
How To Create A Digital Transformation Strategy
Creating a digital transformation strategy requires careful planning, alignment with business goals, and a systematic approach.
Here are the key steps you should follow when developing an effective digital transformation strategy:
Step 1: Understand your business objectives and challenges
Begin by aligning your digital transformation efforts with your overall business objectives.
Identify the specific challenges your organization faces, such as outdated processes, limited technological capabilities, or changing customer expectations. This understanding will serve as the foundation for shaping your digital transformation strategy.
You should also think about priority metrics that will help you prove the impact of digital transformation on business outcomes and track them constantly by connecting goals with key performance indicators (KPIs).
In digital transformations, KPIs usually fall into three categories:
- Value creation KPIs measure how digital solutions you’re implementing are translated into financial benefits.
- Team health KPIs measure team and employee performance and their strategy execution progress.
- Change-management progress KPIs measure the progress in building new capabilities and the health of the transformation itself.
Cascade’s Relationships make it easier to set up objectives since it allows you to see how initiatives are connected and impact each other, e.g., which functions are a dependency or a blocker. This is great for visualizing your transformation plan.
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Step 2: Assess the current state of your organization
Taking into account the main metrics you’ve defined, conduct a thorough assessment of your organization's digital maturity level and capabilities.
Evaluate your existing technology infrastructure, data management systems, operational processes, and talent pool. This assessment will help you pinpoint your main business needs, prioritize your efforts and allocate resources effectively to achieve the metrics and KPIs you have set.
“You’re likely to find a lot of manual processes and tech that hasn’t been stacked, as well as technology that’s no longer serving the business,” says Amanda Russo, founder and CEO of Cornerstone Paradigm Consulting. “After uncovering what your current state really looks like, then you can start having that conversation about what you need and don’t need.”
Step 3: Engage customers and stakeholders
Engage with your employees and customers to gain insights into their needs, expectations, and pain points. Use market research, surveys, and feedback mechanisms to understand how digital transformation can add value to their experiences.
Collaborate with key stakeholders, including employees, executives, and partners, to ensure their buy-in and support throughout the transformation journey. That’s key, as 43% of IT decision-makers say a lack of support among senior management is a major barrier to the digital transformation of their organization.
Use the obtained feedback and insights in your strategy, and it’s much more likely it will get executed across all levels.
Step 4: Root your strategy in data
Embrace a data-driven approach to inform your digital transformation strategy.
Leverage data analytics, market research, and customer insights to identify trends, patterns, and opportunities.
“Digital transformation without data is a bit like a car without fuel – it simply won’t work,” says Caroline Carruthers, chief executive of data consultancy firm Carruthers and Jackson, in Raconteur’s report. She believes problems typically occur when data and digital transformation are thought of as two separate areas. “These two go hand in hand and should be seen as two parts of the same whole journey for an organization.”
That’s why it’s vital to create a single view of your data by integrating information from various sources into a platform like Cascade. Centralized business observability makes it much easier to make data-driven decisions as it allows you to see key data and insights in one place.
This will enable you to make informed decisions and measure the impact of your digital initiatives effectively.
Step 5: Build a roadmap
Develop a roadmap that outlines the objectives, priorities, and timeline for your digital transformation journey.
Define clear milestones and allocate resources accordingly. Consider both short-term quick wins and long-term strategic goals. Assign owners and establish KPIs to track progress and ensure accountability. A well-defined roadmap will guide your organization's digital transformation efforts and keep them on track.
We created a free template and a guide that will help you craft a digital transformation roadmap that covers all the bases.
👉Download it here and make sure you don’t miss any important steps.
Step 6: Foster a culture of change and innovation
Digital transformation requires a cultural shift within the organization.
To achieve this, organizations should prioritize change management plans and effective communication strategies.
Change management plans involve identifying challenges, addressing resistance, and supporting employees through the transition.
Clear and consistent communication is essential to gain buy-in and drive successful transformation, highlighting the vision, goals, and benefits of the strategy.
You also need to foster a culture of change and innovation by promoting digital literacy, providing training and resources, and encouraging cross-functional collaboration. Empower employees to embrace new technologies, experiment with innovative ideas, and drive continuous improvement.
Step 7: Continuously monitor and adapt
Digital transformation is an ongoing process.
You need to continuously monitor the progress of your digital initiatives and measure their impact against predefined KPIs. Cascade helps you by automatically creating clear and concise reports or by showcasing a customized dashboard that monitors all the key metrics.
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Be prepared to adapt and refine your strategy as needed based on the results and feedback. Follow the concept of iterative strategic planning and often review and improve your digital transformation strategy.
That might sound like a drag, but it’s easier and less time-consuming with Cascade. Instead of searching through multiple sheets, presentations, and project management platforms, it lets you integrate your most used tools with Cascade. Then you can see all your data from various sources in one centralized place.
By following these steps, you will create a robust and adaptable digital transformation strategy. It will enable you to enjoy all the benefits mentioned so far and to stay ahead of the competition in the digital era.
Of course, you’ll encounter challenges on your digital transformation journey. We’ll address them right now, so you’ll have an easier time dealing with them.
Digital Transformation Challenges
So far, you’ve seen that digital transformation initiatives offer tremendous opportunities. But they also come with their fair share of challenges. Overcoming these challenges is crucial for a successful digital transformation journey.
Let's delve into some key challenges that organizations commonly face:
Security
Security is a huge concern in the digital transformation process. As organizations digitize their strategies and adopt new technologies, they must ensure the confidentiality, integrity, and availability of their digital assets. Protecting sensitive information, such as strategic plans, customer data, and intellectual property, from unauthorized access, cyber threats, and data breaches is essential.
👉How Cascade helps:
We understand the importance of your business information and offer enterprise-grade peace of mind. We make exceptional efforts to ensure your data remains secure and have all the most important certificates to prove it. Furthermore, Cascade also enables you to employ your custom security policies.
Customizability and dependence on legacy tech
Each organization has its unique strategic frameworks and approaches to business planning. Many of them depend on long-standing legacy tech. In fact, 53% of organizations see their dependence on legacy tech as an obstacle in their digital transformation journey.
During the digital transformation process, it’s essential to identify which frameworks can be maintained and which processes are in dire need of modernization.
The challenge lies in the right technology and digital solutions that can accommodate your organization's specific processes. Customizability is key to ensuring that the digital transformation strategy aligns seamlessly with your existing practices and methodologies while being able to gradually transform outdated processes.
That’s why finding digital transformation platforms that offer flexibility and customization options is key to a smoother transformation.
👉How Cascade helps:
Cascade is highly customizable. You can customize goal types, your strategy model, individual fields, and more. Our goal is to help you build strategies tailored to the way your organization works. Furthermore, you can integrate Cascade with the tools you’re already using - even some of the legacy tech!
Automated tracking
Tracking changes, key metrics, and objectives is a critical aspect of effective strategic management. In the digital transformation journey, organizations often face the challenge of manual and time-consuming tracking processes. Excel files or traditional reporting methods may no longer suffice in the dynamic digital environment.
To overcome this challenge, organizations need to automate the tracking of changes and progress in real-time. By leveraging digital transformation platforms equipped with automated tracking capabilities, organizations can streamline the monitoring and reporting of KPIs, goals, and objectives. Automation eliminates manual data entry, reduces errors, and provides accurate and up-to-date insights for decision-making.
👉 How Cascade helps:
With Cascade and its +1,000 integrations, each change you make is reflected across the workspace and also in each linked tool (e.g., Google Sheets, Salesforce, etc.).
Instant reporting
One of the common challenges faced by large organizations is the timely gathering and reporting of strategic information.
In traditional approaches, this process can be grueling, involving the collection of data from various sources, consolidation, and manual reporting. As a result, organizations may struggle to have a comprehensive and real-time view of their strategic progress.
To overcome this challenge, digital transformation strategies should prioritize the implementation of instant reporting mechanisms. By leveraging digital platforms that offer real-time dashboards, interactive visualizations, and automated reporting features, organizations can access accurate, up-to-date information about their strategic performance.
This enables business leaders to make informed decisions, identify areas of improvement, and take timely action.
👉 How Cascade helps:
Cascade makes it easy to create powerful, customized dashboards and actionable reports. It simplifies strategy tracking, unlocks real-time insights, enhances visibility, automates reporting processes, and saves heaps of time. It also helps you choose when to use dashboards and when to prepare reports to match stakeholder needs and present data in the clearest possible way.
Limited transformation knowledge and expertise
54% of organizations see a lack of IT skills and transformational expertise within the organization as the biggest barriers in their digital transformation journey. Whether the skill gap is real or only perceived, it holds the organization back from implementing transformational initiatives and leveraging digital technologies.
This challenge can be addressed by investing in training programs, hiring skilled professionals, or partnering with external experts to bridge the skills gap and build internal capabilities.
👉 How Cascade helps:
Cascade can help the expertise challenge by making the whole transformation strategy more transparent and trackable. It makes it easier for everyone to know what to do, how their actions impact the overall transformation objectives, and who is responsible for which tasks. While Cascade can’t replace skilled experts, it can help an individual expert to efficiently guide more people.
Addressing these challenges requires a combination of strategic planning, technological solutions, and organizational alignment. But overlooking these potential issues can quickly result in a failed digital transformation effort. Fortunately, Cascade makes the journey much easier.
Execute Your Digital Transformation Strategy With Cascade 🚀
Successful digital transformation strategy execution is no walk in the park. It requires a reliable and comprehensive platform that aligns your efforts and streamlines the execution process.
Cascade can be the digital brain behind your transformation and business strategy. It’s the only strategy execution platform that spans the entirety of your ecosystem and helps you understand the relationships between your business inputs (e.g., metrics, initiatives, investments) and outcomes (e.g., expected results, forecasted revenue, margins, etc.).
The clarity and understanding it brings help you navigate the complexities of digital transformation and ensure your business’s core competencies are emphasized even when undergoing a transformation.
Want to make sure your digital transformation has the best chances of success while going as smoothly as possible?
Sign up today for a free forever plan or book a guided 1:1 tour with one of our Cascade in-house strategy execution experts.
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