Five Steps to Advance Your Digital Transformation
by Ken Neal
July 28, 2020
For many enterprises, it was a matter of survival. Early in 2020, businesses of all sizes had to immediately find a way to deal with a global pandemic and a financial crisis at the same time. By now, most have undergone some level of digital transformation to enable their employees to work remotely, to stay engaged with key players in their supply chain, and to leverage technology in order to serve consumers, clients and business partners. Consequently, digital transformation is now simply a fact of life—everyone is doing it. But is everyone doing it right?
To effectively harness the full power of your organization’s digital transformation, consider these five key steps.
1: Frame the Right Strategic Vision
Your strategic foundation sets the tone for your entire digital journey and can set you on the path to success. More than just a roadmap, a well-considered digital strategy orients your business toward a common goal. It begins with your strategic vision, which defines your understanding of your customer and the marketplace, and it helps you to anticipate customer needs and isolate the most effective ways of meeting them.
The right strategy gives your journey structure and clarity. It allows you to be intentional about building capabilities, upskilling teams, investing in the right technology, achieving scale and measuring outcomes. Your strategic vision is execution-ready when it:
- Aligns everyone in the organization to shared values and gives stakeholders a common language to collaborate and innovate
- Articulates the expectations of your digital customer and how you will meet them
- Identifies the right starting point and gives you a clear understanding of current capabilities and resources
- Defines the scope of your transformation to help you target the right processes and enhance the right capabilities for meaningful change
2: Develop the Right Skills
Part of the right strategic vision is an honest assessment of your overall capability level—especially when it comes to the skill and acumen of your workforce. Organizations that get it right have a clear understanding of what fuels transformation in their industry, and they build their talent base around those skills that have the greatest financial impact.
Digital leaders also have a different approach to maximizing skills. They rethink incentive systems so that the most meaningful work is rewarded, and they help their people prioritize high-impact activity. They also foster a digital culture that unlocks talent. A recent McKinsey study estimates that up to 85% of the potential value of digital initiatives can be lost to misaligned culture. It cannot be overlooked as you evaluate your skills. Digital cultures that support a dynamic workforce:
- Embrace speed and maximize efficiency
- Iterate often to capture new ideas, innovate and foster agility
- Foster a mindset of continuous learning by measuring what works and what matters
- Reinforce and reward the most valuable behaviors
- Reassess capabilities often to quickly identify gaps
3: Target the Right Processes
Digital transformation is built on process transformation. Processes are the productivity mechanism inside your organization. Processes also connect you with customers when they use your services and make important purchasing decisions.
How do you transform processes? The best transformations automate processes to free up your skilled workforce to focus on high-impact activities. According to a McKinsey report, at least 30% of tasks in approximately 60% of all occupations can be automated. And digitizing end-to-end processes yields improved performance in just 3-5 months. Targeting the right processes allows you to focus energy and resources in the most effective places.
Digitizing manual, paper-based processes creates greater efficiency and cost savings, and it has the added benefit of creating new troves of real-time data. You can use this information to reinforce productive habits, identify patterns to drive innovation, and manage issues before they can become large-scale problems. Leaders who successfully transform their processes:
- Define the ideal future state of their processes, independent of restraints, to ensure that their goals are aligned to overall strategy
- Orient process improvement toward the consumer experience to reveal potential new revenue streams and reduce friction along the customer journey
- Create a center of excellence with executive sponsorship to assess capabilities and opportunities for process digitization
- Consider a third party to help supplement their internal capabilities and identify areas of opportunity
4: Deploy the Right Technology
“Technology for technology’s sake” has undermined many a transformation. Acquiring technology that is misaligned with your overall strategic vision, skills and processes can lead you to sink millions of dollars into technologies that don’t enable the opportunities you seek.
The right digital strategy integrates technology with your vision and your capability. For instance, legacy technology can hinder speed and innovation, but you need to get the most out of the investments you’ve made in your infrastructure. Leaders in transformation often find opportunities to make their legacy technologies fit a digital context. Conducting a thorough assessment of your existing technologies gives you a clear view of what works within your strategy and what doesn’t. Then, when it is time to retire legacy technology, you can focus new investments on areas of greatest impact. Look for technology that:
- Fuels organizational speed and reduces costs, such as robotic process automation (RPA)
- Creates new revenue streams, such as technology enriched with artificial intelligence (AI) and machine learning (ML)
- Eliminates unnecessary tasks and creates new data sources, such as intelligent data capture
- Emphasizes collaboration and breaks down silos so that critical information is readily available to decision-makers
5: Implement the Right Analytics
Digital-first organizations remain agile by constantly iterating in perfect alignment with their customers. These businesses seem to see into the future, but in fact they are simply using the right analytics to guide their choices and give leadership clarity into what’s working—and how to make it even better.
Digitization creates new sources of data you can use to improve processes and create new revenue. Applying the right analytics makes this data actionable and drives superior performance management that empowers your teams. The right analytics for your organization:
- Provides real-time insights so that you can anticipate changes in consumer behaviors and gain deeper insight into daily operations
- Offers continual support for making quick decisions at scale
- Uses AI and ML to create a feedback loop for improvement within your organization
- Provides daily dashboards and on-demand reporting to help refine your KPIs
- Enables you to drive better employee performance, assess vendor effectiveness, and course-correct misalignment before it happens—ensuring that your strategy stays on track
Next Steps for Your Digital Journey
These five steps comprise a comprehensive approach to digital excellence. But assessing your own digital maturity as an organization can be difficult to manage while also balancing the day-to-day needs of your business. To help you build the right digital framework, it often makes sense to identify a trusted partner. Getting another perspective can give you fresh insight into your digital readiness and help you see internal challenges more clearly. The right partner also offers key resources to help you execute at every stage of your journey. If you are ready to explore an assessment of your digital transformation maturity, learn more about our assessment process.
1. Cecilia Edwards, “Digital Transformation Is Dead – Long Live Digital Transformation,” video, 2:37, Everest Group, May 8, 2020, https://www.youtube.com/watch?v=XPDxT5fpUTI
2. Peter Dahlstrӧm et al., “From disrupted to disruptor: Reinventing your business by transforming the core,” McKinsey Digital, February 17, 2017,
3. McKinsey Global Institute, “A future that works: Automation, employment, and productivity,” January 2017