In the past months I had several very insightful conversations with representatives of various companies and industries around a topic impacting them all: digital transformation. One question I always ask them is ‘What do think is a digital frontrunner?’. So far, I have not heard the same answer twice. While everyone agrees that a frontrunner is an organization that is somehow ahead of current trends in their industry, beliefs about the characteristics of digital frontrunners go from ‘a company that is data driven’ over ‘a company that employs the most recent IT tools’ all the way to ‘a company that has completed digital transformation’.
This perplexed me. After years of dealing with ongoing changes due to digital trends, discussions about how to turn these changes into chances, and a continuous information overflow on all internet platforms, we all know what digital transformation is about. Don’t we?
Surprisingly, several studies conducted in the past few years show that many companies are ‘digital fakers’. They say they are digital frontrunners, but are not investing or behaving digitally. For example, a Forrester research in 2019, which surveyed 1600 business and IT decision makers, found that three out of four executives think emerging technology is key to transformation, but only 17% are investing in artificial intelligence. While many companies and their top executives do see the need for some form of digital transformation, they are also unsure what it really entails and have taken few steps towards actually becoming digital frontrunners.
Instead, a certain level of overconfidence leads them to believe that a recently implemented digital tool, appointing a new ‘CIO’ or ‘CDO’, or an attempt toward the ‘agile way of working’, has put them ahead of their competition. And being ahead means being a frontrunner, right?
Well, it does not.
Time to face reality
There are a number of flaws in the outlined way of thinking. First, our judgement is influenced by overconfidence – a common tendency to overestimate one’s actual performance in general, as well as compared to others. For example, a study by Ola Svenson found that 93% of all American drivers claim to be better than the average 50%… which is statistically impossible. We observe similar statistics when it comes to digital transformation. According to Digital Trend Statistics of 2018, nearly 77% of companies say that their relationship with technology is average or above average. So while companies may think they are ahead, there is a good chance that they are in fact barely keeping up with the trends.
Second, digital transformation is more than launching a new website, finding new ways to leverage machine learning, migrating to the cloud, or other finite things that people associate it with. While digital transformation may include all of these things, it cannot be defined by a combination of IT projects. Instead, the goal of a true digital transformation is to reach an ongoing state of agility within the company that enables it to adapt quickly and effortlessly to any future changes in preferences of their customers or other marketplace dynamics. This means that the most significant characteristic of a real digital frontrunner is not the number of IT projects implemented, but rather that strategy, innovation, and culture are aligned in such a way that it enables the organization to flexibly respond to current and future trends.
Is your company a digital faker?
It may take courage to evaluate whether you are nailing digital transformation or faking it. One aspect that most ‘digital fakers’ have in common is the lack of attention they pay to the role people play in digital transformation. If you want to check whether you are a frontrunner or a faker, pay attention to the reaction of your team the next time a change is introduced into your organization. From experience, here are some typical statements that signal that your company has not mastered digital transformation yet.
A reaction like this signals that your people do not understand the purpose, goals, advantages, and strategy of the transformation, as well as their role within this process.
A statement like this shows that people are lacking the skills to use new IT tools. The missing competences are usually a mix of technical and transformation skills.
This is clearly an attitude issue. It signals a fixed mind-set, focused on successes of the past, rather than opportunities of today and in the future.
How to become a real digital frontrunner
As industries, organizations, and even teams within those organizations all face different challenges, the perfect solution to mastering digital transformation does not exist. There is however one factor determining success across all companies and industries: your people.
Any successful business journey begins with the most important set of people: your customers. Looking from the outside-in, how are demands, expectations, and wishes of your customers changing in line with digital trends? Asking this question marks a promising beginning of your organization’s digital transformation.
And at the end, it is your people that determine whether the strategies and connected IT projects you are going to implement will be successful. You may have the best strategy or the most innovative technology tools in the world – your people need to understand, be able, and willing to use them in order to make true digital transformation happen.
Lena Arndt is a Consultant for Digital Transformation at Pawlik Consultants Netherlands