Digital transformation strategy: 7 items to rethink now

Some accepted wisdom about digital transformation looks different in light of the COVID-19 pandemic. We asked experts: What approaches may need rethinking?
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As CIOs and IT leaders have worked their way through the highs and lows of digital transformation initiatives over recent years, they’ve accumulated a number of lessons learned: how best to lead digital transformation, the habits of highly successful teams, ways to boost ROI, and even the lingering reasons why some efforts still fail.

Thankfully, much of that accumulated knowledge about what works and what doesn’t remains valuable. However, the COVID-19 pandemic has had an impact on some accepted wisdom about digital transformation.

[ Get answers to key digital transformation questions and lessons from top CIOs: Download our digital transformation cheat sheet. ]

We asked some digital transformation experts: What approaches may need rethinking right now?

7 digital transformation decisions to rethink now

1. The business-as-usual mindset

If an IT leader hasn’t done so already, now is the time to step back and take two weeks to understand the business and what happened in the past few months. “Stop doing the normal things,” advises Steve Hall, partner in digital advisory services at global technology research and advisory firm ISG and president of ISG EMEA. “Do a strategic review of what worked.”

Some one-quarter of organizations in Europe had to pause or stop trading during the pandemic because of a lack of digital capability. “Only businesses that had digital channels survived,” says Hall. IT leaders must examine the business model and eliminate what no longer makes sense.

2. Sticking with incumbent IT service providers

COVID-19 revealed weak links in the IT service provider supply chain. “Therefore, this is the time (as part of the strategic review) to pay for what actually works, not what you can stomach,” says Hall. “The weighting in the business case will have changed to include a disaster recovery/business continuity planning element, meaning business can now get closer to a champagne solution instead of a cheap beer solution.”

3. Segmenting your digital approach

“Many firms used assumptions about the channel preferences of their customers – usually assuming only the younger markets prefer digital ­­­– to slow down the breadth of the digital transformation efforts,” says Cecilia Edwards, partner with Everest Group. But it may be time to forget about preferences.

“No one had a choice with stay-at-home orders put in place,” Edwards said. “Therefore, nearly everyone has had to have some increased level of comfort in operating in a digital mode.” Going forward, IT leaders will prioritize digital channels above all else.

4. Doing digital for digital's sake

"Don't just add digital channels without thinking about how to differentiate or add customer experience to the offer."

At the same time, digital initiatives should get the green light going forward only if they will better the customer experience or otherwise add business value. “Don’t just add digital channels without thinking about how to differentiate or add customer experience to the offer,” Hall says.

For example, one organization implemented a video concierge service for its contact centers, conferencing in support personnel to deal with the customer issues face to face. Since then, customer experience metrics have gone through the roof, and customer aggression toward agents is down, says Hall.

5. Taking a project management approach

“From the ‘things I would never do again list’: I can’t imagine going to the board or the CEO with a $100 million plan for a 3-year application development project,” says Hall. Leaders want things now with deadlines measured in weeks, not months. “We are moving from a project mindset to a product mindset at all levels of the organization,” Hall says.

“The issue is that being milestone-focused and just using time-to-live as the metric is a decision-making behavior that feels good but leads to poor customer and employee outcomes longer term. Working in service of outcomes, a product mindset, and customer focus are more important than ever to focus effort on the most valuable activities.”

6. Decision-making pace

Leaders must enable real-time decision-making by those closest to the front lines. “If the team is executing against the strategic direction set by the executives, they must be empowered to make decisions around investments, processes, and policies that will enable the success without having to wait for executive committee approval,” Edwards says.

7. Seeking incremental improvements

Before the pandemic, many organizations were still making digital changes mostly on the edges of their legacy operating model, says Hall. They may have begun agile transformations, but only in centers for excellence or within an innovation hub, for example, instead of adopting agile across the enterprise. That approach won’t cut it anymore. “Incremental changes lead to ROIs below the cost of capital and to changes that are too small to match the external pace of disruption,” Hall says.

Organizations rapidly adopting AI-enabled tools and algorithms to redefine their business operating model at scale have been outperforming their peers, according to Hall. “This will be increasingly true as companies deal with large amounts of data in a rapidly evolving landscape,” he says. “A new business operating model needs to take this into account and will be the focus of future digital operating models.”

[ Culture change is the hardest part of digital transformation. Get the digital transformation eBook: Teaching an elephant to dance. ]

Stephanie Overby is an award-winning reporter and editor with more than twenty years of professional journalism experience. For the last decade, her work has focused on the intersection of business and technology. She lives in Boston, Mass.