Digital Transformation Projects (3) - The Path to Digital Transformation

Madeleine Gritzbach, Wednesday 26 September 2018 | Reading time: unknown

Digitale Transformationsprojekte Teil 3: 6 Schritte zur digitalen Transformation

Digital transformation projects hold both opportunities and challenges for companies. Here’s how you can lead your organization successfully into the digital future – in 6 steps.

In part 1 and 2 of our blog series we have dealt with the basic aspects of digital transformation. We have based our work on the following definition: 

A digital transformation is a process of disruption ("destruction") and subsequent renewal. Old patterns are broken up and replaced by new, more efficient processes and structures. 

Finally, in the third and last part of this series, we will describe a possible path to digital transformation. This path serves only as a guideline - the process will differ substantially from company to company. 

The path to digital transformation 

Many industries see great opportunities in digitization, but still consider their own digital maturity to be very low. There is still a large discrepancy between wish and reality. 

To successfully complete a digital transformation, you need to be aware of where your business is right now, where you want to see it in the future, and what steps you need to take to achieve your goal. Before you can begin the actual transformation process, you need to set the right conditions. 

Step 1: Align the corporate strategy 

The first step towards digital transformation is the alignment of the entire corporate strategy to this goal. Digitization is a change process that has an impact on the entire company and all its departments, from marketing to development, to sales and human resources.  This means that managers must not neglect digital transformation but must ensure that it becomes an essential part of the corporate strategy. Select digitization projects that are aligned with your new business strategy and, most importantly, add value to the business, its people and its customers. 

Step 2: Modernize technologies 

The most important step after aligning the entire corporate strategy with digital transformation is upgrading technologies. The latest technologies and solutions hold many opportunities for companies. Technologies such as AI (Artificial Intelligence), the intelligent machine that can learn, robots or sensors (keyword "Internet of Things") enable an increased automation of processes and thus contribute to a significant increase in efficiency. 

Before you throw out the old systems completely and replace them with new ones, you have to take stock. Which technologies are obsolete and can be replaced by new ones? Which technologies have proven themselves and should be retained? Many solutions, such as CRM systems, have often been in use for years, and a complete replacement would be time-consuming and would not guarantee an increase in efficiency. In such cases you should develop integrative systems to link old and new systems. 

Do not hesitate to invest! Digital transformation projects often fail because the company does not have enough know-how or because there are not enough resources or capacities available for a successful and sustainable changeover. Most employees are already busy with their day-to-day tasks and cannot fully concentrate on the transformation project. In such cases it’s best to get help from experts. They have the necessary expertise and can develop and implement individual solutions based on the needs of your company. 

Step 3: Optimize processes 

Another prerequisite for a successful digital transformation in a company is the optimization of processes. Companies should always strive for optimization and continuous improvement of business processes. But in order to introduce digital processes, it is important to apply "best practices" in process management. This includes a development of new processes, which optimize and extend the existing business. 

Rigid, linear processes are replaced by flexible, iterative ones that enable exchange across departments and seniority levels. This direct contact between different departments promotes faster and more effective decision-making processes. It enables companies to react more quickly to the needs and requirements of their customers. Of course, this also requires more effective communication processes to be created. 

Web 2.0 has already changed interpersonal communication in companies considerably: geographically distributed virtual teams can now communicate and collaborate effectively in real time. Social media has also changed corporate communication. It plays an increasingly important role in all areas of the company, from internal communication to marketing ("social media marketing"), support and sales. Take advantage of these opportunities to make your company's processes and communication more efficient. 

Step 4: Communicate change effectively 

As the digitization process is a process of change, executives face initial mistrust and even resistance from employees and customers. But to align your business strategy with digital transformation in the long term, you need the trust and support of all stakeholders. This requires solid leadership skills: only if your employees see that you are determined and that the changes will have a positive impact on the company they will accept the transformation. It is necessary to communicate regularly with stakeholders throughout the digital transformation process, especially when change has a direct impact on their interests. 

Step 5: Promote new skills and knowledge 

The introduction of new technologies requires employees to be prepared and receive "digital training".  Many younger employees, the "digital natives", have grown up with new media and can quickly familiarize themselves with new technologies and methods. 

But there are also the "digital immigrants", i.e. all those who did not grow up with Web 2.0 and therefore need initial help.  The training includes technical knowledge and the acquisition of new perspectives and extended knowledge on various other aspects, such as customer orientation and cross-departmental cooperation. Targeted training and further education measures will prepare your workforce for the digital transformation and address possible concerns. 

Digital knowledge management also includes close cooperation with partners, freelancers, universities and other external service providers. Digital technologies enable collaboration with internal and external partners across all borders. So-called crowdsourcing enables the effective use of the collective knowledge of many different experts to close knowledge gaps in your own company. 

Step 6: Execute transformation project 

The goal of digital transformation is to lead "analog" companies into the digital future. This process is continuous and the change is introduced iteratively and inclusively. Every transformation project is unique so there is no perfect solution. Depending on the project, you need to adapt your methods and procedures accordingly.   

Agile methods are perfect for implementing digital transformation projects. Compared to traditional project management methods like waterfall planning, agile methods like Scrum or Kanban emphasize the iterative approach to planning and give the project manager and team more flexibility. 

This does not mean that you should completely discard the "old" methods, because you can also combine them with the new ones and operate a kind of hybrid project management. Your transformation project will not consist of one large project, but of many smaller sub-projects that form a project portfolio. Depending on the needs of the project, you can choose one or the other method for the individual sub-areas or integrate agile elements into classic planning and vice versa. Don't forget to ensure communication and information flow between the classic and agile project teams. Otherwise you risk that the project teams work completely isolated from each other instead of working together. 

Read on in Part 1 and Part 2

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