To meet shifting customer expectations, many CIOs are aligning with key executives, making sweeping organizational changes, reskilling employees, setting up innovation labs and experimenting with emerging technologies to meet strategic mandates issued by their CEOs and boards.
One of the first things companies should do in embarking on a digital transformation is answer the critical question: What business outcomes do you want to achieve for customers?
“It starts with the business outcomes and the new business models you’re going after and working backwards from there,” says Genpact’s Tyagarajan.
Here, a keen understanding of your customer journey map and lifecycle is key. Consider the process of settling an insurance claim, which typically takes 7 to 14 business days and requires a lot of paper shuffling. Thanks to algorithms and mobile applications, consumers and claims officers can resolve claims in minutes. Allstate, for example, allows its customers to snap a picture of their damaged motor vehicle via their smartphone and upload it for a claims officer to review.
Making accountability — who is responsible for what — clear is critically important upfront, but companies can follow several other steps to affect the kind of change they desire, says Laura LaBerge, a McKinsey senior knowledge expert.
Ruthlessly focus on a clear set of objectives. Whether you’re transforming an existing model or starting from scratch, leaders must reach a consensus on the best path to pursue.
Be bold when setting the scope. Successful digital transformations are 1.5 times more likely than others to be enterprisewide in scale. This will also help CIOs recognize the biggest bang from their tech investments. "If they're stuck on incremental changes they may miss the big move they might have seen," LaBerge says.
Embrace adaptive design. The days of upfront investment requirements and rigid KPIs are over. Adaptive design enables CIOs to pursue monthly or even weekly tweaks to the transformation strategy, including reallocating talent.
“We see this adaptability ingrained in the design of successful transformations,” LaBerge says, adding that business leaders reporting success were more than three times more likely to facilitate monthly adjustments to strategy.
Adopt agile execution. Encourage risk taking, enabling even lower-level employees to make decisions, fail fast and learn.
It’s okay to disrupt yourself. Successful digital transformation requires preemptive changes rather than reacting to competitive pressures or disruptors, says Martin Reeves, of BCG’s Henderson Institute.
But when should you make preemptive changes? Reeves adds, “The observation of biological systems teaches us that it is optimal for companies to begin searching well before they exhaust their current sources of profit, and that firms should use a mix of ‘big steps’ to move to uncharted terrain and ‘small steps’ to uncover adjacent options at low cost.”
Regardless, having a strong bias toward change is critical.