Synopsis: “Digital transformation” often means di erent things to di erent people—even those within the same organization. To dig into what it means to digitally transform an organization—and determine the best practices for doing it—we interviewed seven C-Suite members at the forefront of digital transformation, and surveyed 50 other C-Suite members. This overview and analysis of their responses and survey data provides insights from multiple points-of-view across several verticals.
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THE C-SUITE’S FIVE-STEP GUIDE TO
NAVIGATING DIGITAL TRANSFORMATION
Synopsis: “Digital transformation” often means different things to different
people—even those within the same organization. To dig into what it means
to digitally transform an organization—and determine the best practices for
doing it—we interviewed seven C-Suite members at the forefront of digital
transformation, and surveyed 50 other C-Suite members. This overview and
analysis of their responses and survey data provides insights from multiple
points-of-view across several verticals.
It’s becoming clear that “digital or die” isn’t just hyperbole. To be a contender in
today’s quick-moving, hyper-connected global economy, businesses need the
edge that digital technologies—particularly data and analytics—provide.
Until recently, though, most businesses have adopted digital technologies in an
a la carte fashion; a CRM system here, a social listening platform there. But that
a la carte approach is rapidly becoming outdated, as people, processes, and
things become increasingly connected.
Without a more integrated approach to technology adoption, it’s impossible
to take full advantage of technological advancements. And that makes it
impossible to keep up with changing customer and market demands.
That’s why digital transformation is—or should be—a top priority for
today’s leading companies.
To dig into what it really means to digitally transform an organization—and
determine the best practices for doing it—we interviewed seven C-Suite members
who are at the forefront of digital transformation and surveyed 50 others.
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DEFINING TRANSFORMATION
Before we go any farther, let’s clarify what digital transformation (DX) means. To
get to the heart of the phrase, we asked our C-Suite members for their definition:
Bryan Stockton, former Chairman and Chief Executive Officer (CEO) at Mattel:
It’s all about leveraging new technologies to compress and reduce time spent on
operations to increase productivity.
Manish Bhatt, former Senior Vice President and Chief Digital Officer (CDO) at
Metlife: It’s an opportunity to reinvent your business with new competencies.
Wayne Heller, Former Chief Operating Officer (COO) at Republic Airways Holdings: It’s
the constant need of proactively updating business processes to avoid disruption.
Robert Ryder, Former EVP, Chief Financial Officer (CFO) at Constellation Brands:
It’s moving away from gut-feel decisions to data-driven ones.
Kevin Summers, Chief Information Officer (CIO) at H&R Block: It’s the ways in
which traditional retail channels are being disrupted by digital online channels.
Jason Abelkop, Chief Marketing Officer (CMO) at The Krystal Company: It’s finding
new ways to meet and communicate with customers externally. And internally,
finding new ways to engage with employees.
Dan Ellis, Chief Technology Officer at Kentik: It’s implementing technologies to
automate processes both internally and externally.
While each interviewee’s definition is slightly different, ultimately, they all say the
same thing: Digital transformation is leveraging technologies—including cloud,
mobile, Internet of Things (IoT), big data, analytics, virtualization, machine learning,
and artificial intelligence (AI)—to optimize internal and/or external operations.
Digital transformation can and does occur in every industry. And it can and should
affect every activity, process, function, department, and division in the organization.
The impetus to digitally transform can be driven by any number of factors,
including customer demand; advances in technology, changing industry
ecosystems; the need to cut costs or boost income; or simply the desire to
innovate ahead of the competition.
Whatever the driver and goal, bear in mind that digital transformation is not so
much a final destination. Rather, it’s an ongoing evolution to an ever-more agile,
responsive and adaptable organization.
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THE JOURNEY
TO DIGITAL
TRANSFORMATION
So, how does an organization go about harnessing the power of digital technologies to
transform operations?
Through analyzing data from our interviews and survey, we uncovered five key best
practices that are helping organizations launch successful transformation initiatives:
Roadmap Planning; Culture Shifting; Measurement Planning; Implementation; and
Determining Success.
First, you need a strategic plan or roadmap. One that clearly defines the answers to
four tactical questions:
• Why do we need to digitally transform our organization?
• Who should be involved in planning the transformation?
• When do we plan and implement the transformation?
• How do we go about transforming?
ROADMAP PLANNING:
WHY, WHO, AND WHEN
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Why
The first point—Why?—is especially crucial. Identifying your goal is not only
imperative, it’s illuminating. By working with all of your organization’s stakeholders
to narrow and then increasingly refine exactly what you want to achieve, you may
discover that the “why” isn’t exactly what you thought it would be.
For example, it was interesting to discover through our survey that increasing sales
wasn’t (directly) the number-one reason executives gave for undertaking a digital
transformation. As you can see in Figure 1, the majority are actually looking to
improve customer experiences, while improving sales comes in at number two.
That doesn’t mean the respondents focusing on customer experiences are sacrificing
revenue for experiences. In today’s consumer-driven economy, delivering world-class
customer experiences is viewed as the primary pathway to increasing sales, whether
it’s through offering entirely new products or services or enhancing existing ones.
Mattel, for example, is transforming into a maker of IoT-connected smart toys.
MetLife is focusing on creating a more seamless customer experience. H&R Block is
increasing its offerings of digital tax filing solutions. And Kentik is investing in cloud
network analytics, so it can offer more advanced network traffic intelligence services.
Any of those innovations could fall into either the “improving customer experiences”
or “increasing sales” bucket. However, you can’t just assume that A (improved
customer experiences) will automatically lead to B (improved sales). That’s where
analytics and agility come in. We’ll talk about both of those topics a little later on.
Reducing costs, through increasing efficiency and productivity, is another major
impetus for digital transformation. For some companies that might mean
automating processes like fleet dispatch or maintenance notifications; for others
it could be remotely monitoring people, contents, or conditions.
Increase Sales
Reduce Costs
Improve qualitity
Improve internal operations
Improve customer experience
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Figure 1 – Top reasons for undergoing digital transformation
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Who
Once your Why? has been established, it’s time to put together the team to
plan and implement it.
Keep in mind that true digital transformation requires an all-inclusive mindset and
a plan that includes and connects all business departments and processes. So
while CEOs, CIOs, and CTOs have traditionally been the primary technology-related
decision makers, CDOs, CFOs, COOs, and CMOs now all have seats at the table.
CMOs, in particular, are taking on a larger role, as platform implementation is
increasingly related to the marketing stack. It’s especially important, if improving
the customer journey/boosting sales is your priority, for everyone on the team to
understand your current customer journey—and to agree on how it should evolve.
Additionally, CTOs and CIOs should ensure that all parties are educated on the ins-
and-outs of today’s rapidly-evolving tech landscape.
Figure 2 illustrates how our respondent ranked the importance of each C-Suite position in a cross-
discipline transformation team.
CIO
CEO
CDO
CFO
COO
CTO
CMO
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When?
With your goals and team in place, the next question is how often should you meet?
The C-Suite says the more often, the better.
That’s because shifts in technology and best practices occur too frequently to not have
a commensurate level of strategic liquidity. Monthly is the most oft-used cadence for
strategizing, but 20% of our C-Suite respondents stated that they meet as often as
weekly. And 60% said they need to spend even more time together as a team.
Regardless of how often you meet, long gone are the days of implementing a strategic
plan that goes unchanged for a year or more. With technology and market conditions
changing at an unprecedented rate, strategic liquidity is more crucial than ever before.
Because just as all processes in an organization are ultimately connected, so too are
global ecosystems and markets. Think of it as the economic butterfly effect. And it
often necessitates innovation on the fly.
So agility in planning and execution are a must. In fact, 98% of our respondents
assume they will make changes to their strategic plans to some degree, while 70%
stated they’ll update it as needed, based on changing market conditions.
Here’s what our C-Suite panel had to say about planning and agility.
Embrace changes to planning: For Dan Ellis, CTO at Kentik, managers need to be
realistic with changes to their planning horizon. Plans that are three months out are
likely going to happen; at six months out you’ll see inconsistencies between the plan
and execution. And at one year out, the plan will likely change to a large degree.
It’s important to not fight against the tides of these changes, he emphasized. By
embracing the inevitability of change, you facilitate a culture that embraces change.
And that’s one of the foundational elements of a successful digital transformation.
Take chances. Not everyone will bat .1000, says Robert Ryder, Former EVP Chief
Financial Officer at Constellation Brands, but he advocates testing new technologies
through fact-based bets to find new, productive means of driving revenue.
It’s also important to use those learnings. If a process or solution doesn’t work,
make sure it’s well documented and discussed in future planning sessions, so you
can avoid similar pitfalls down the road.
Understand your company’s operational readiness: Manish Bhatt, former VP and
CDO at Metlife, pushes leadership to assess their operational readiness for specific
digital platforms, and how it will impact their business strategy. By prioritizing
initiatives through those lenses, you can avoid overwhelming your company with
projects that your infrastructure—and staff—aren’t yet ready for.
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As mentioned above, developing an agile company culture is one of the most
important factors in a successful digital transformation. And, as indicated in
Figure 3, that isn’t something you can retroactively fix later on. The people in
your organization need to be ready and willing to embrace new technologies and
processes; otherwise, adoptability will be low and the initiative may fail.
Unfortunately, not all of our respondents were completely confident that their
organizations are sufficiently agile and ready for change.
Figure 3 – Importance of having the right culture before new technologies are implemented
Whatever the size of your organization, shifting an established company culture is
no easy feat. But our C-Suite panel has outlined some key ways to get it moving it in
the right direction.
CULTURE
SHIFTING
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Don’t dwell on planning—focus on doing. For Ellis, a Silicon Valley vet, a successful
culture is one that gets to a finished product as quickly as possible. No, it won’t be
perfect. But, he points out, no product is perfect, and his people are always actively
looking for ways to optimize and iterate. They’re perfectly comfortable dealing
with real situations, rather than hypothetical ones, which is a hallmark of an agile
organization.
Conduct an expense report test. Here’s an interesting exercise: How many people
need to sign off on an employee’s expense report before it’s approved? While this
isn’t an exhaustive test for entrepreneurial environments, it’s a good indicator of
how many layers of bureaucracy you have in your organization. When you have
fewer layers, employees feel more trusted and empowered. And that means they’re
more likely to feel invested in your organization, and support its evolution.
Educate employees on the benefits. Stockton feels strongly that it’s incumbent
upon organizations to fully educate employees on not just the new technologies,
but how they and the company will benefit from them. He’s found that the key to
success with new platforms and processes is making it clear that there’s something
in it for everyone—regardless of whether the initiative is internal or customer
facing. The goal is to build a culture that supports and encourages change—and
taking chances. And that will be easier if people understand why changes are being
made, how they are being made, and how they will directly benefit.
Provide multiple vehicles for employee education. For Jason Abelkop, CMO at the
Krystal Company, it’s crucial to match professional education and training mediums
to his employees’ personal digital behaviors outside the workplace. For digitally
savvy employees, it’s much more impactful and natural to learn on an iPad, rather
than read from a paper manual.
But, as Kevin Summers, CIO at H&R Block, points out, it’s also important to
supplement digital training with traditional methods, at least until non-technical
users get up to speed. Gradually increasing their use of digital technologies can
help employees better understand and appreciate the value of the technology, and
increase their confidence in using it.
Utilize internal technology evangelists. Look for employees who have a good
understanding of the benefits of the initiative and encourage them share to their
enthusiasm, both formally and informally.
Make data-driven decision making company-wide: Ryder says educating
employees across the enterprise about the importance and use of data will help
people understand and appreciate the move from gut-based decisions to data-
based ones.
Remember, you can’t make an organization more adaptable and agile with just a
tagline and a couple of meetings. Evolving a company culture requires time, effort,
and clarity of purpose. Be sure to recognize that in your up-front strategy planning.
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Measurement planning is another thing that needs to be nailed
down before you embark on a digital transformation journey.
All members of the C-Suite must align on how success will be
measured, evaluated, and used.
In a digitally optimized business, traditional financial key performance indicators (KPIs)
aren’t enough. While business outcomes should absolutely continue to be part of your
measurements, you also need to monitor and measure other metrics to get the big
picture on your initiative’s success.
Partofcreatingameasurementplanisunderstandingwhatdatayoucanmeasure.Only8%of
ourrespondentswerefullyconfidentinknowingwhichdatatheyneedtotrack.Thevastmajority,
78%,saidtheyhaveadecentgraspofwhattotrack,butcancertainlyimprove.
That gap in knowledge can lead to a continued reliance on old ways of determining
success. For example, nearly 30% of our respondents leverage data for some business
decisions, but still lean more on intuition and experience. While the latter should never
be overlooked, the majority of our respondents are leveraging data as much as possible,
and looking for additional ways to use it.
However, don’t just go fishing. As Bryan Stockton, former Chairman and CEO at Mattel,
points out, if you don’t have a good grasp of what you’re looking for, you can keep casting
the net out over and over again. That’s a good way to accumulate a lot of meaningless data.
Such fishing expeditions can be avoided with a bit of reverse engineering: Start with the
decisions you know you need to make.What info do you need to make better decisions? From
there, determine which data will help you arrive at that info and insights.
Also, simply aligning on a strategic direction, such as improving the customer
experience, helps determine some of the data you need to track.
For example, you could use a customer-success metric, like Net Promoter Score, or
satisfaction surveys at critical touchpoints. Or you might track overtime pay, fuel usage,
units produced, or units shipped for an internal cost-lowering initiative.
Also, be sure to gather data on an ongoing basis, share that data, and act on it.
Whether you’re tracking wait times, response times, scale, frequency of use, customer
satisfaction metrics—or all of the above—you need to turn that data into insights, and
those insights into action. That’s what digital transformation is all about. And if a product
isn’t selling, or customers aren’t responding favorably to a new service, change it. That’s
what agility is about
One last note on measurements: If you engage directly with customers, make sure you do it
at the right time, in the right channel. (This ties back to the importance of creating a strategic
customer journey.) Your method should also be fast, simple, and seamless. Customers are
more likely to give feedback if it’s quick and easy—and if they believe it will improve future
experiences. So again, be sure to act on those valuable insights.
MEASUREMENT PLANNING
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As you can see in Figure 4, the biggest impediments to successful transformation
projects are all too familiar in business both large and small: management
resistance, employee resistance, and organizational silos.
The cost of projects, as well as the tendency to simply maintain the status quo—aka
corporate complacency—also act as barriers to implementation.
Figure 5 – Top barriers to a successful implementation
Our C-Suite panel have outlined some of the steps they’ve taken to overcome these
barriers and increase the likelihood of success:
IMPLEMENTATION
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Management resistence
Employee resistence
Cost
Takes too long
Organization is too siloed
Status quo is easier
Inadequate staffing
Technical knowledge gap
Limited adoption
Lack of incentive
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Communicate the benefits. Again, it’s crucial for all stakeholders to know exactly
what’s in it for them. For managers and employees alike, implementing a new
technology platform can be a long and arduous process, so they need to know
exactly how it will benefit them. And communicating the benefits can’t be a one-time
effort. Transformation doesn’t happen overnight, so it’s essential to consistently let
stakeholders know that their efforts are appreciated and remind them how they’ll
all benefit in the long run.
Identify the hand raisers. Though we talked about creating technology evangelists
earlier, it’s worth repeating. Find the stakeholders who have a passionate interest in
the transformation project, the ones who will be evangelists for the new technology
or process, and empower them to own the project in some way. Once invested with
a sense of ownership, they’ll help galvanize fellow employees and foster adoption.
Assemble task forces. Complacency creates silos, and large, bureaucratic teams
that operate within them. But mandating more collaboration isn’t necessarily
the key to silo busting. Instead, try creating small, nimble task force teams, with
representatives from each silo, so create a startup mentality. It will help drive
adoption and increase excitement, as task force members take their learnings back
to their initial teams.
Get feedback early and often. Wayne Heller, former COO at Republic Airways
Holdings, experienced the repercussions of not getting employee feedback and
buy-in prior to launching a new platform. A new application, which was supposed to
improve productivity, ended up reducing productivity, because employees viewed it
so negatively.
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His takeaway is clear: It’s critical to get feedback early and often. Even though you
might sacrifice some productivity in the short run, in the long run you’ll have a
product that employees feel ownership of and are willing to use.
Never be done. Though your implementation may be complete, your job isn’t done.
You need to look at internal adoption, productivity lift, customer experience impact,
and what you’re monitoring, to determine where there’s room for improvement.
According to Figure 6, most respondents stated that they start looking for ways to
iterate their new platform soon after implementation.
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With the right strategic direction and accompanying measurement plan in place,
determining the success of your digital transformation initiative is direct and
objective. Did you meet or exceed your goals? Did the initiative fail to meet financial
objectives, or fall short in some other metric?
As you can see in Figure 7, not all endeavors are deemed a success. With technology
and market conditions evolving so rapidly, it’s impossible to mitigate all risk.
That’s why it’s absolutely critical to foster a sense of entrepreneurialism and an
appetite for (or at least acceptance of) risk in your stakeholders. Through that lens,
projects that don’t meet goals aren’t failures; rather they’re key learnings to take
into your next strategy session.
Figure 7 – How many digital transformation projects managers deem successful
Following are some last insights from our much-
appreciate C-Suite panelists.
Feed learnings into future planning: Whether the project under- or over-performs,
any learnings (and there will always be a ton) should be harnessed and utilized
for all future planning sessions. This helps reiterate to employees that under-
performing doesn’t mean failure; instead, it means a new insight to work from.
Reward successful endeavors: Ryder has found success by tying incentives to goals
in digital transformation projects. Whether it’s based on adoption rate, revenue, or
otherwise, having some kind of meaningful bonus tied to specific, clearly-stated
benchmarks will fuel a sense of ownership over the project and increase your
chance for success.
DETERMINING
SUCCESS
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Conclusion
Digital transformation isn’t easy. It requires ongoing time and resources,
a willingness to change, and the fearlessness to fail.
The benefits, however, are considerable:
• An agile, resilient, competitive, technologically-optimized
organization
• A company culture that encourages creativity and innovation
• Employees that thrive on challenge and change
We hope that the best practices shared by our interviewees inspire you to
start mapping your own journey to transformation.