Overview of Digital Transformation Strategy
Digital transformation strategies aim at converting organizations, their assets, and their processes to a digital environment as easily and holistically as possible.
However, they rarely include a plan to carry out a digital transformation of their strategy; to digitize their strategic processes.
Large organizations are starting to recognize the danger of not going digital or at least modernizing critical parts of their operations because they have seen how fast others went down by underestimating it.
That’s why so many organizations are investing so much into developing a great digital transformation strategy. Invest in your strategy with the #1 Digital Transformation Platform!
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The most important and most overlooked part of that process is the digital transformation of strategy itself.
Although it’s hard to measure the impact that static tools have on strategy, large corporations have a hard time adapting to environmental changes because of them.
In this article, we’ll discuss the following topics:
- What is digital transformation?
- Agile vs adaptive organizations: why adaptability trumps agility
- The digital transformation of strategy: the advancement that drives adaptability
- Digital transformation strategy examples
- Adaptive organizations enjoy these 4 benefits
- The 4 key challenges of the digital transformation of strategy
What is digital transformation?
Digital transformation is the process of involving digital technologies in a business to improve business functions. The goal of digital transformation is to increase the effectiveness of a business's operations.
Agile vs adaptive organizations
Why adaptability trumps agility
The world is constantly moving and rapidly changing. Society and technology evolve quickly and they’re driving the evolution of consumer behavior. Consumers are rapidly adopting new behaviors rendering certain business practices irrelevant faster than organizations can respond.
This phenomenon, called hyper adoption, requires companies to become adaptive and evolve beyond the agile model.
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Agility doesn’t suffice
Agile organizations rely on iterative processes to respond to market changes following established business models. Although their reactive capabilities enable them to adapt to emerging trends, they are incapable of responding fast enough to lead the change.
They are efficient in changing but lack the tools to detect trends and opportunities fast enough for their adaptation to impact their position in the market significantly. As a result, they cling to previously performing practices until abandoning them is their only option.
Agile organizations don’t invest in technology to reconfigure their business model and adopt new, innovative practices to gain a competitive advantage. As a result, they’re most vulnerable to disruptors. Eventually, agile companies end up fighting for survival and not prosperity.
Agile is dead
Complacency fuels agile practices
Companies unable to keep up with market evolution and to adjust their way of doing business are sentenced to extinction. For large corporations, it’s not the lack of innovation that’s their biggest peril, but complacency.
Organizations that fall into the trap of believing that their size and prior success are enough to hold them on the top of the business food chain are fooling themselves.
On the contrary, because of their size, internal change requires tremendous effort and resources to match the pace of external change. Because of their size, they’re more rigid.
Adaptability drives prosperity
On the other hand, adaptive organizations leverage technology to improve their operational flexibility. They challenge currently established concepts in their industry and invest proactively in their digital transformation.
They can meaningfully predict market trends and opportunities and start adapting ahead of the predicted change, acquiring not only a competitive advantage but sometimes creating disruptive innovations.
Operational flexibility becomes a priority for large corporations that wish to maintain or establish market leadership. They recognize that reacting quickly to disruptions and significant shifts in customer needs doesn’t suffice anymore to keep up with the accelerating pace of change.
Thus, organizations need to predict beforehand the incoming changes. In service to that intention, digital transformation processes should include the adoption of technologies that remove operational and internal cultural barriers.
The adoption or creation of technology-human loops to accelerate the adaptive capabilities of an organization must extend as widely as possible to be meaningful and provide an edge over the competition.
Organizations must modernize their strategic processes and digitize their strategic plan if they are to become adaptive and predict environmental changes.
Adapt or die
Digital transformation plan
The advancement that drives adaptability- Adaptive organizations, contrary to agile ones, incorporate technological advancements in their daily operations to empower, inspire and enable their employees.
This is reflected in the strategic management process by migrating from static tools, like Excel and PowerPoint files, to dynamic digital platforms.
The process of shifting the strategic processes of an organization from a set of static tools that don’t work well together to a dynamic digital environment is called digital transformation of strategy.
The future market leaders will be the corporations that are able to predict changes in their industry and adapt quickly by aligning their massive workforce across the whole organization.
The alignment of the entire workforce in large organizations - from top executives to the people in the trenches- with the company’s strategic initiatives, especially after an adjustment to meet market changes, remains a great challenge that few organizations have solved, even partially.
This is mainly attributed to the lack of dynamic and complex tools that can facilitate all the stages of the strategic management process. As a result, organizations that perform a digital transformation of their strategy acquire a powerful competitive advantage within their industry.
They’re essentially modernizing their strategic processes, reducing the time to formulate, assess, and adapt their strategic plan while at the same time encouraging the development of bottom-up communication practices.
There are many examples of companies that got complacent and didn’t adapt to market changes fast enough to survive.
Digital Transformation Strategy Examples- Bad
Blockbuster is one of the most famous examples of a company unwilling to accept that the world around it has changed and that the needs and expectations of the consumer have evolved.
It’s not the lack of technology that led Blockbuster to declare bankruptcy in 2010. Rather it was clinging to an obsolete business model.
The company was making most of its profits from late fees. Because of its size and past successes, Blockbuster believed that it didn’t face an immediate threat from its disruptor, a.k.a. Netflix (who initially pitched to Blockbuster), so it made no serious moves to pivot in time.
Although the company had noticed the market shifted, it had grown complacent and didn’t initiate internal change at a significant pace. As a result, by the time the threat was evident, Blockbuster was incapable of evolving its business model and ended up on the wrong side of modern history’s most famous industry disruption.
This is a company that not only refused to react and own the evolution of the consumer’s behavior but also predicted it. Kodak invented the first digital camera, but due to its disruptive nature in the current market, the company decided to postpone its launch.
Since Kodak’s business model was making money on every stage of photography at the time, the digital camera was directly challenging it. So, instead of going digital and leading the photography revolution, Kodak simply denied that opportunity and stuck to its previously successful and eventually obsolete business model.
A few years later, the market outpaced Kodak and in 2012, the company filed for bankruptcy.
Keep in mind that “companies” don’t make decisions. People do. People grow complacent and don’t fight rigidity within their organizations, leaving them stagnant.
Just as there are examples of companies that failed to transform and survive, there are others that succeeded and prospered.
Digital Transformation Strategy Examples- Good
One of the largest athletic companies in the world that have traditionally relied heavily on retail distribution is making a great shift.
Nike has invested heavily into adopting a more direct-to-consumer strategy and promises to have over half of its sales happening through such channels by 2025. More than a third of its sales are already coming from its new digital channels.
In 2012, Hasbro started targeting parents by creating large-scale data-driven campaigns to better understand their customers. The insights drove decisions that removed friction in the purchasing process and personalized the buyer’s journey.
Hasbro keeps investing in its digital transformation, increasing its digital presence in various channels while at the same time developing online distribution channels and content productions.
Those moves are paying off since its stock price has enjoyed more than a three-fold increase since 2013 and Hasbro stays on top of new trends and market changes.
Adaptive organizations advantages
Migrating your strategic processes to a dynamic digital environment unlocks many of the capabilities of adaptive organizations and invites a lot of changes in the organizational structure.
Staying on top of the strategic plan
Staying on top of your strategy is critical to maintaining focus in the execution of it.
Every day your people are fighting a battle against noise and distractions. Today’s obsession with productivity has people wrongly believing that the more things they complete, no matter how trivial, the better. They try to do as many things as possible.
Accurate dynamic overview
A digital transformation of your strategy means, first and foremost, a permanent migration from a static representation of your strategic plan to a dynamic one.
Static strategic documents have one major drawback. They’re, well… static. Updating them takes time and expertise. It requires someone with deep knowledge of the organization, its processes, structure, and overall operational processes.
That person also needs to be involved in the strategy discussions and have access to sensitive information.
That means it’s a person in a senior (or a very senior) position. It’s a waste of time, money, and experience to have such a person occupied with the update of a static document. A waste that companies can’t afford in this rapidly changing digital world.
The digital transformation of strategy evolves the strategic processes into a dynamic one. There is no need to have one person or one team tasked with keeping up to date a static document for an overview of the strategy’s performance.
Besides, it rarely is an accurate representation because of the time it takes to update it. Static tools are lagging windows to your strategy’s performance. By the time they’re updated, the information is outdated.
Similar to the execution of the strategy, in a dynamic environment, the employees are the end-users of the strategic plan. Every single team becomes responsible for keeping their part of the plan up to date and their goals aligned.
Eventually, the process of internal organizational alignment is delegated successfully.
As a result, executives and heads of departments have a clear and up-to-date overview of the organization’s progress towards its strategic initiatives.
They can quickly and easily navigate every specific aspect of the strategic plan and detect problems that would otherwise remain unseen.
For example, duplicate projects that independent teams are working on or the teams and departments that are isolated and need a better alignment. These kinds of problems are hard to detect with the traditional tools but end up wasting significant resources.
A proper dynamic digital transformation of your strategic plan reveals the important internal issues that so many large organizations are unable to address due to unresponsive and lagging static tools.
Higher employee engagement
The digital transformation of strategy doesn’t benefit only the leadership inside an organization but every employee as well. It enables people to connect their everyday actions with the bigger picture.
Knowing the vision or the mission of a company is one thing. Understanding how your work contributes to it creates a much deeper and more meaningful experience.
Of course, the constant communication of the company’s strategy and aspirations is still critical to its success.
Transforming your strategy digitally doesn’t change that. It does, however, provide context and valuable visibility to your people that they wouldn’t be able to get in any other way.
People are more engaged with their work when they feel like what they do matters. Connecting a person's project back to the organization’s top strategic initiatives provides that important sense of contribution.
People feel they’re making an impact and taking part in the organization’s progress.
That’s not a small fee, considering that this exact sense of contribution is what drives employee engagement and reduces employee churn rate. Two metrics that highly adaptive companies are actively keeping track of.
Internal clarity and alignment
Another benefit of a digital transformation of strategy is the clarity it brings to the workforce, which leads to alignment.
Static documents have another very expensive drawback when it comes to communicating your strategy.
Static documents fail to represent the complexity of a strategic plan in a clear and accurate way. Instead, they force a trade-off between accuracy and clarity. And as if that’s not enough, the trade-off gets more impactful the larger the organization is.
When leadership tries to create a comprehensive document that thoroughly explains the strategic model the organization has adopted and breaks it down while connecting all the initiatives with the KPIs and the goals and the projects, it ends up a big, ugly, and hostile document.
Even if they succeed, the final product is something that nobody wants anything to do with, let alone read. It’s messy, huge, and impossible to decode and get the right information on time.
On the other hand, the static document is optimized for clarity. As a result, it fails to convey the intricacies of the organization’s structure, distinguish the responsibilities between regions or departments, or operate in any meaningful way as a reliable guide.
Critical information ends up either in another tool, complicating things, or passed over orally. In other words, every next level in the hierarchy will get one way or the other less information than intended.
Your people are impacted the most from that trade-off.
Transforming your strategy digitally solves that problem. Your people are able to understand the strategic plan overall, along with the direction the company chooses to follow.
The clarity in the strategic direction informs people’s decisions. Whenever in doubt, they can easily acquire the necessary context that will help them make the right decision. This is how alignment is built. This is how an organization moves as a unit.
Adaptive organizations are able to detect early and adjust their strategy to meet market changes due to efficient organizational habits regarding the assessment of their strategic performance.
A digitally transformed strategy facilitates the creation and maintaining processes for regular strategic evaluation on every level by eliminating friction. It’s difficult to overstate the importance of regular, disciplined meetings that address the progress of the most important metrics and their impact on the organization's adaptive capabilities.
The insights regarding the company’s performance and the market’s trends that derive from assessment meetings enable adaptive companies to adjust their operations and exercise flexibility that agile organizations simply cannot match.
It’s not that corporations don’t recognize the value of regular strategic evaluation. It’s the friction that traditional tools create that takes away most of that value of regular evaluation that forbids large organizations from building those habits on every level.
The 4 Digital Transformation Challenges
The process of transforming strategy digitally has to overcome various obstacles to be successful and provide all the benefits mentioned above.
The information in an organization’s strategy is some of the most sensitive. Thus, a central concern of the digital transformation of strategy is security as it should be.
The dangers of the digital world are as varied as they are real. No organization wants to have its strategy leaked and its competitors gain a detailed inside view. Digitizing your strategic plan must be a safe and secure process.
Each organization has a certain way of developing its strategy and chooses a certain strategic framework that it implements. Transforming strategy digitally must maintain this individuality aspect of strategy by being highly customizable.
Taking a strategic plan digital is fruitless if it is forced into an environment that changes its fundamental structural aspects or simply ignores them. If people are unable to view and interact with their strategic plan in a way that makes sense to them, then the purpose of the digital transformation of strategy is defeated.
One of the most important benefits of a digitally transformed strategy is the time saved in keeping it up to date. If tracking the changes and the progress of KPIs and objectives is as cumbersome as in an excel file, then again, its purpose is defeated.
Tracking should, for the most part, be automated. Updates in key metrics and objectives should automatically update higher-level metrics and objectives. That way, progress from different departments and regions are all aggregated automatically in the goals they’re contributing to.
A very common challenge of large corporations is the gathering and reporting of all the information that describes the corporation’s standing in regards to its strategy.
There goes a ridiculous amount of wasted time in the deceptively innocent attempt for a quick summary on strategic progress. Chasing down lost reports, their right versions, and all the data creates a time-consuming clutter that, once it’s sorted, most of that information is out of date.
Again, if the digital transformation of strategy doesn’t solve the problem of reporting, it’s not implemented properly.
Cascade is the world’s #1 strategy execution platform helping thousands of organizations bring their vision to life. It’s a dynamic digital environment where you can securely execute your strategic plan.
With our Cascade map, you can even see how your regional and department plans are coming along with a simple status rating and to what extent these teams are directly aligned to the broader vision.
Our strategy model enables you to customize your strategy according to the framework that your team and organization are using, so you can maintain the structure that people are familiar with.
Every end-user, i.e., employee, manages their projects and tasks through their personal GoalDeck. There, they can see all the projects they own along with their deadlines, update their progress and leave any sort of comments to each one.
Snapshots, one of the most favorite features of our platform, present in a clear and concise way any information the user desires. Apart from its customizability, every time you run a Snapshot, it creates an up-to-date report.
For teams that are using more complex and targeted reporting methods, Cascade has Dashboards that enable the user to be more creative with tools that apply to his specific use case.
We have customers who update their strategy before their evaluation meetings and instantly create the necessary reports, saving their organization time and money while conveying information in the clearest way possible.
If you want to digitally transform your strategy, book a demo with us to take you on a product tour.