The 2017 State of Digital Transformation

Great news for changemakers; the yearly Altimeter report from Brian Solis about the state of Digital Transformation was published last week. This post includes the main 2017 findings (in italic) and some personal notes. Hope you find them useful and it saves you time.

Now if you are an executive with little time to spend on this topic, you need to watch out. Digital Transformation, with it’s buzz word status, is a serious C-Suite matter.
And one of the key findings is that Digital Transformation lacks leadership and purpose.

Only 40% of responding companies operate their Digital Transformation with an executive mandated committee, responsible for company wide organizational transformation. Every company must shift their efforts toward next-generation digital customers and employees and finally becomes a technology business. And to transform successfully, it must ultimately be enterprise-wide.

For the report 528 digital transformation strategists and executives were interviewed leading change within their companies. Respondents were from companies in varied industries, with more than 250 employees, in the United States, Canada, United Kingdom,
France, and Germany.  I believe most of the findings in the report relate to many companies in the Netherlands very well.

It’s good to see that working on mindset is now included in the latest definition of Digital Transformation:
The investment in and development of new technologies, mindset, business and operational models to improve work and competitiveness and deliver new and relevant value for customers and employees in an ever-evolving digital economy.

I have developed a particular interest over the last years in stimulating a growth mindset. Compared to updating your customer processes and tools, growing the mindset, digital skills and talents of your people are invaluable success factors.

It was surprising to see that the main responsibility for Digital Transformation in most companies again belongs to the CIO/CTO. In 2015 the CMO was in most cases the main responsible as focus shifted from technology to customer experience. I would have expected to see also more CEO/CDO take this responsibility as Digital Transformation has become mostly a human story.
Well, maybe next year.

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Whilst transforming your business and stimulating innovation company wide, fighting the silo’s, it is strange to state that one department is responsible. In any way, to read that 33,7% of the companies replied that IT is the responsible department for making the change, that freaks me out. Most companies experience a huge gap or wall between Business and IT. That wall is there for a reason, in most cases because of what happened in the past and who got blamed for it. To successfully transform you need to sustain a new way of collaborating, providing trust and taking care. Not a natural talent for most IT environments.

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The main reason for companies investing in Digital Transformation is the evolving customer and employee behavior and preferences. Increased competitive pressure and growth opportunities in new markets complete the top 3. It’s great to see that a rising number of companies (36.9%) use digital transformation to pro-actively fight disruption. And a concern to see that 20.3% of the companies lack digital talent and skills.

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Low digital literacy or expertise is also the top business challenge this year. And transformation will suffer from that in the end. 
So if you are in HR, prepare for the coming journey. You should make development of digital skills and recruiting digital talent a top priority for the coming years.
As a second top challenge, the investments in Digital Transformation are often viewed as cost centers rather than investments in value creation. Especially when business as usual is doing just fine, it’s very difficult to see the need for big investments to prepare for the future. 
23.7% of the respondents say human barriers as politics, egos and fear are their top challenge in order to transform.

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We are not even near to closing the gap between business and their customers evolving behavior and preferences.
Only half of businesses are preparing for mobile-first customers. And only one third of the companies have completely mapped out the customer journey within the last year to define the digital transformation roadmap. 
Many businesses are still managing legacy touchpoints, technologies, and systems that govern current journeys. However, digital customers are moving on from outdated experiences. So despite the high expectations of customers most companies are experimenting with digital transformation initiatives based on outdated assumptions.

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Now here is some great news that offers real opportunities for employees to new learning, to innovate and demonstrate their creativity.
Business are making innovation a priority.  Many companies surveyed (37.5%) have sent executives on “innovation tours” in Silicon Valley and other technology hot spots around the world. More than half of the companies have build innovation labs with dedicated resources (55.9%) to advance new expertise, partnerships, and opportunities.
I am not yet convinced of these methods. Sending executives on a tour is great, for the experience. But we need more serious interventions to create urgency to transform.
In addition, I believe lots of companies are better of with an external lab. When egos, politics and fear dominate, starting your innovation lab outside the company might be better. Innovating outside with different communities will enrich your horizon and enables you to learn more, prototype fast and be more creative. The world of open innovation is promising and will provide companies more benefits then it can imagine.

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Many companies have their own reasons for starting the investment in Digital Transformation. It’s always a good idea to know what reasons others have to invest. Clearly the winners from this years’ report are Increase efficiency (58.1%), Customer satisfaction (54%) and Improve revenu and profit (53.8%). 

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To key findings of the report summarize:

Shortage of digital talent and skills within businesses is restraining the scope and extent of innovation to respond to consumers’ new expectations.

• Often when companies do invest in digital-transformation initiatives, they are viewed as short-term cost centers with very limited budgets. 

• Many company cultures are risk-averse, and their leaders do not feel a sense of urgency to compete differently.

• Politics, egos, and fear are the main obstacles to achieving the collaboration and solidarity needed within companies to make the changes digital consumers want.

Companies that do well are prioritizing the digital customer experience (CX) and employee experience (EX) to learn and define innovation roadmaps. They are spending more money than ever in innovation programs to leverage today’s digital reality.

Looking forward the report concludes that companies show signs of progress, but the progress is still too slow to cope with the ever-evolving customer behavior. We should speed up the shift from corporate DNA to more agile approaches beyond the silo’s, ego’s, politics and fear. Improving digital skills and experience of your people has become a top priority as well as the recruitment of new digital talents. To successfully transform businesses in the Digital Economy we should focus attention on companywide organizational change and make serious long term investments in Digital Transformation.

Digital transformation is much more than the sum of its parts. It’s more than investing in digital technologies and adapting to a digital economy. It represents an opportunity for companies to modernize business and operational models to stay competitive.



Let’s get in touch
 to accelerate your Digital Transformation or share your thoughts below. I can help you with transformation strategy, leadership, digital practice, innovation and digital talents.

 

 

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