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Executing Digital Transformation strategy – Case for Acceleration

Executing Digital Transformation strategy – Case for Acceleration

18 January 2022

By Anuraag Bhatnagar


Case for Digital transformation has never been stronger and urgent. 2 years of the pandemic has had a profound impact on every business.  The question now is not any more “whether to?” but “How?”. In my earlier article, I had highlighted the need for ROI and Business case understanding of a transformation project. While that may be the first step, fast-tracking transformations and executing them is the next frontier to cross.

According to a McKinsey survey of Organizations that underwent a digital transformation, had an impact on some key financial and operational metrics. Transformation efforts resulted in a 30% reduction in inventory and cost of goods, a 50% reduction in Cost of Quality and a 30% improvement in cash and productivity. (Source: McKinsey*). Digital Transformation works, all organizations need to do is to assess the areas where maximum benefits can be derived with the change.

As we have progressed through the pandemic, the Industry ecosystem has been rapidly changing. New challenges and opportunities have come up like never before, requiring businesses to relook at strategy and operations. Component shortages, Supply chain bottlenecks, Manpower shortages, Capability transitions, ESG (Environmental, Social and Governance), Inclusive workplace, commodity shortages, inflationary economics are but a few critical areas that require a constant watch and fast response. An organization designed to be Agile with efficient information flow and fast decision making has a better chance to grow and thrive in this ever-changing environment.

So, how can Digital transformation help? 

Digital Transformation in its simplest form, is the use of technology to automate, simplify and measure information flow. Information before could have been inaccurate, prone to human errors or not measured at all. Digital Transformation, therefore, provides organizations with information to make better decisions. Changes in Process, Organization, and Business model are still needed to be implemented to derive full benefits.

A survey* of 1000 companies yielded a handful of companies who have significantly transformed their operations through extensive digitization. A large population is still at the Proof-of-concept stage. A lot needs to be done to convert POCs to sustained Digital transformation projects.

Transformation is a complex process. A brilliant strategy must be backed up with a solid execution strategy. Most companies struggle. Execution requires decision making across the whole process on a day-to-day basis. This cannot be undertaken without top management support and a senior transformation execution team.  Solid execution focusses on four critical areas**:

  •  Clarifying Decision rights – Identifying who takes what decisions.
  • Ensuring necessary information flow – Faster and efficient information flow to the right decision-makers.
  • Aligning motivators – Any transformation will need motivation for people to buy-in. These need to be aligned
  • Finally, make changes to the Organization structure to accommodate the first 3 focus areas. 

Strategy execution requires a more detailed discussion. A top-down holistic approach is needed for successful digital transformation.

References:

*  The CEO: Architect of the new operations agenda. McKinsey report

** Secrets to successful strategy execution by Gary L Nielson, Karla L Martin, and Elizabeth Powers

IntelliStride

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