Technologies driving digital transformation are widely available and robust, and a growing number of firms have been adopting a digital transformation strategy to evolve how they create and capture value while radically reshaping business models and operations. Digital transformation is a do-or-die imperative, and in many different sectors it is generating winner-take-all situations.

Indeed, digital transformation can lead to relevant advantages, such as a faster innovation process with reduced time to market, products and services more efficient and consistent with customer needs.

However, starting with a digital transformation initiative can be a big challenge due to new technologies and associated business process changes that transform the core of the organisation, its capabilities, and assets. According to recent studies, 66% to 84% of digital transformation projects fail due to the magnitude of the challenge and the nature of risk (Libert et al., 2016).

There are 7 key points that are fundamental to accelerate the success of digital transformation.

Adopt a long-term value creation perspective, but work incrementally to capture business value as soon as possible.

Digital transformation requires adopting a long-term perspective. Indeed, it requires moving beyond just measuring financial performance for the next quarter to thinking toward a broader picture of future business scenarios and how the company could fit within them. But at the same time, it is fundamental to work incrementally to get quick wins and capture business value as soon as possible.

A proven approach is to map out your entire value chain and assess the forces of disruption that are likely to shake it up and to identify steps that have been or are expected to become digitalized.

Let us take a few examples. If incumbents are operating with high operating costs and they are facing pressure to improve operational efficiency, this leaves presage that new entrants could operate with lower margins and greater efficiency. This should be a priority area for digital transformation.

Another example. In the age of digital transformation, a high dependency on fixed assets could be a weakness rather than a strong barrier to entry. If capital requirements are the sole reason large incumbent players are able to thrive in your sector, this could suggest that new entrants could completely change the business model by passing this barrier. In this case, digital transformation should be a priority to evolve the business model.

In any case, it is fundamental to clearly define what your company wants to achieve, the scope of the transformation, and to design use cases with a focus on value drivers to identify and evaluate the economic and intangible benefits while ensuring the consistency of each initiative with the digital transformation strategy.

It is fundamental to clearly frame the future vision for your digital business, in terms of products and services, adoption of technology, organizational structure, people, leadership, and culture, and to compare this future state against your current state to identify gaps.

This implies identifying and prioritize a portfolio of opportunities for digital transformation, considering the functions and business units that can benefit the most from them. How you sequence your transformation projects depends on where you can find business value and how you can capture it.

As we have already said, it is fundamental to work incrementally and to get quick wins to capture business value as soon as possible. If you cannot identify digital transformation projects that return significant value within one year, continue searching.

Commit the entire leadership team to the digital transformation agenda, but appoint a Chief Digital Officer.

Companies are demanding that CEOs and C-level executives know what opportunities digital transformation opens up and how to create a digital value proposition that differentiates the firm from others.

Top managers must be comfortable with the terms and concepts of technology. This means spending time understanding the capabilities of relevant digital technologies and what development teams are doing, with an experimentation mindset and appetite for risk.

However, it is fundamental to appoint a dedicated senior executive focused on digital transformation results, a Chief Digital Officer (CDO), who is empowered with authority and budget to make the results happen. The role of CDO is focused not just on technology implementation or change, but also and especially on how the organization needs to evolve, to seize new opportunities, to create new value for the business, and to manage potential disruptions.

Create a central organization to act as the hub for digital transformation.

Best practices suggest to implement a Digital Centre of Excellence (DCoE), that is a cross-functional team of data scientists, software architects, and product managers who work collaboratively. The DCoE team needs to work closely and with the rest of the company to effect change; therefore, the team should be located together.

DCoE is particularly important for developing and deploying digital solutions across the organisation, such as AI and IoT applications, and for training the organisation to be self-sufficient in digital transformation projects.

Share the vision of digital transformation with all the organisation.

The entire organisation needs to align behind the vision, not just the top management. Changing the organization, its culture, and mindset requires to communicate effectively and sell the vision to stakeholders across the organization.
Truly changing culture, moreover, requires that support for digital reinvention flows through the organisation right down to every employee, so the full organizational is tuned towards the digital transformation vision.

Foster a culture of innovation, curiosity, integrity, and continuous learning.

To succeed in digital transformation, companies need to infuse their executive team and employees with a new mindset and new skills.

Recent research tells us that companies able to innovate effectively are those that share specific characteristics, particularly a collaborative culture, a lack of silos, and an effective decision-making process, together with a high level of maturity toward risk.

Furthermore, it is fundamental to cultivate core values founded on innovation, curiosity, integrity, and collective intelligence, and to reward collaboration, hard work, and continuous learning.

Finally, it is fundamental to identify the right strategic partners.

Partners play a relevant role, perhaps larger than in the past. There are 3 key areas in digital transformation where partners can add significant value, particularly strategy, technology, and change management and implementation.

Management consulting partners can help map the value chain, uncover strategic opportunities and threats, develop your digital transformation strategy, identify key applications and services to unlock value, and establish your organizational structure and appropriate processes.

Technology partners include software partners, cloud partners, and a variety of other technology partnerships and alliances. It is fundamental to look for technology providers with proven track records of enabling advanced digital technologies on-scale, with large data volumes. Technology partners can provide teams of developers, data integration specialists, and data scientists if you do not have those profiles in-house.

Change management and implementation partners are also fundamental, considering that organizational structures will require new architectures to integrate technologies such as AI into your business processes. The nature of work will change, and unless your workforce is trained, organised, and motivated to take advantage of these new technologies, the economic and social benefits will not accrue. This will involve understanding how people can work with new technologies.

Digital transformation is both a do-or-die imperative and a great challenge, and the coming two decades will probably bring more innovation in information technology than in the past 50 years.

Despite the difficulties, digital transformation is a tremendous opportunity to unlock new value and gain a new competitive edge.