Transform. Transform. Transform. That’s what most organizations have been doing since the Covid-19 pandemic struck and made digital transformation a necessity.
Companies are working hard on digital transformation projects, but some are experiencing digital transformation fatigue and giving up–because they’ve spent large amounts of money with no ROI.
The success rate of digital transformation is a lot lower than the failure rate (70 percent). Many organizations have paused their initiatives or stopped them altogether.
What have successful companies done differently? Let’s look at successful digital transformation stories and the lessons other organizations can learn from them.
3 Companies That Have Undergone Successful Digital Transformation
DHL
DHL’s strategy is to deliver excellence in a digital world. The Covid-19 pandemic has made the company fast-track its digitization efforts, and it will invest more than $2 billion in digital transformation initiatives between 2021-2025.
DHL now has an Advanced Quality Control Center (AQCC), a state-of-the-art platform that interprets big data and makes predictive analyses on real-time issues, deliveries, and shipment movements. The platform uses machine learning and Artificial Intelligence to continuously adapt and improve itself.
DHL has also improved customer experience through digitization. Its chatbots allow users to schedule the delivery time of their items and receive real-time information on the location of parcels. Parcels have QR-code labels for easy return and to minimize physical touch.
IKEA
IKEA’s digital transformation journey shows companies that it’s possible. Its transformation truly set off when it hired Barbara Martin Coppola, a tech professional with a track record of transforming and growing large-scale companies globally.
The company’s biggest challenge was how to remain true to its DNA while digitizing every sector: from sourcing materials to delivery services.
IKEA was thorough in how it handled its transformation strategy. The company started by simplifying its IT architecture. It adopted a modular approach to technology and parallel processing.
Next, decision-makers scrutinized customer touchpoints and created a strategy for combining digital and physical processes. Afterward, internal and external operations were digitized and a shift in company culture was created. By focusing on these three major components, IKEA became an integrated digital transformation company.
80 percent of IKEA’s customers start their purchase journey online and can now use VR and AR applications to create new interiors and visualize how specific items will look in their homes.
IKEA’s supply chain is now based on market trends and consumer demand through machine learning and AI predictions. API integrations with companies like TaskRabbit allow customers to hire skilled workers like furniture builders. IKEA’s digital transformation shows it takes all areas of an organization to succeed.
LEGO
In 2004, LEGO was on the verge of bankruptcy. First, a series of digital media mishaps made the company drift away from its core business. Secondly, its departments operated in silos and had poor data flow.
When Jorgen Vig Knudstrop took over as CEO, he turned things around. The company started focusing on its core value proposition and aligned technical, operational, and marketing processes.
First, LEGO created a new enterprise system to enhance data sharing internally and externally. Its digital transformation platform gave teams easier access to data and new tools to interpret it.
Then LEGO crowdsourced product design through LEGO Ideas. The company leveraged user creativity and produced user-generated designs. It engaged a digitally attuned target demographic and produced designs that did well.
Lastly, LEGO pursued media endeavors. It produced movies and games and significantly increased its profits. To create a coherent experience for its customers, the company put the media successes to use by incorporating them into product offerings.
5 Important Lessons to Learn from Digital Transformation Successes
1. It’s a Multi-Disciplinary Effort
You don’t have to hire a chief digital officer to steer digital transformation, what matters most is a cross-functional approach. Companies that have succeeded in digital transformation have integrated IT and business units in their digital initiatives.
These organizations have a committee comprising IT and business experts who guide digital transformation efforts and report to a center of excellence team. The committee comprises people with technical, process, and change management skills, while the center of excellence features expert automation engineers who are familiar with various automation technologies.
2. Don’t Rush Things
Businesses are under a lot of pressure to digitally transform and deliver results. As a result, some are undertaking transformation projects without thoroughly analyzing their needs. Don’t rush digital transformation because you think you’re being left behind.
If you implement transformation before you understand its business and technology impact on your company, the project will fail. Before pursuing digital transformation, build the three macro transformation pillars: culture, talent, and technology.
3. Measure Success
When you know the metrics to keep track of, you can determine if your digital journey is on the right path. Successful digital transformation requires sustainable technology adoption, and measuring digital transformation success helps you know if everything is progressing well. Some of the important metrics to measure include:
- Employee productivity
- Return on digital investments
- Technology adoption and performance
- Customer experience
- Active usage
- Cost-benefit analysis
- The percentage of cloud deployments
4. IT and Business Alignment Is Key
Technology plays a crucial role in every modern enterprise, but don’t just adopt new tech for the sake of it. The main idea behind digital transformation is to enable and support the overall business strategy.
It should increase security business-wide, streamline workflows, boost employee productivity, and enhance communication across departments.
Business units and IT should not be siloed; IT strategy must be aligned with business objectives. Outline how technology will be used to support the business strategy.
IT and business users must co-create and solve problems together to deliver value to customers. Leadership must also have a shared vision of the importance of digital transformation for the future.
5. Hit Pause from Time to Time
Digital transformation is not a one-off project; it’s about embracing continuous change. While the project never gets completed, it’s important to press pause and assess its impact.
Putting digital transformation projects on hold can prove to be a blessing for many companies. It allows them to see what’s working and what isn’t and provides an opportunity to reframe initiatives.
Don’t Let Digital Transformation Give Way to Digital Fatigue
A McKinsey survey carried out in 2019 revealed that only 16 percent of organizations had successfully improved performance with digital transformation. 7 percent reported that performance improved only for a while.
It’s easy to get frustrated if the results are less than satisfactory. Press pause and assess your digital initiatives. Work on the areas that have veered off course and reinforce practices that are more likely to yield positive results.
