The success of a company's digital transformation depends, among other things, on its ability to sustain the change in the long run, and iterate when needed. Companies can anticipate to some extent: digital transformation has to be supported by a clear vision, and a proper governance.
Capgemini and the MIT recently released a joint study on Digital Transformation. After our interview with Capgemini's Patrick Ferraris, we meet with Maël Tannou, Visiting Scientist at the MIT Center for Digital Business.
L’Atelier: Digital transformation is one thing, but of course it has to be viable. So it really is a long-term process, isn’t it?
MT: Digital transformation means making an effort – over a certain period of time – during which the company will transform the way it works, produces, interacts with its customers, or develops new products and services, drawing on digital technologies. And this transformation will only be effective if it is underpinned by a range of management actions. It’s not just a matter of ‘passing the winning post’ once and for all either. First of all, reaching a milestone doesn’t mean that there’s nothing left to manage. The initiatives being taken still require proper governance, the company still needs to improve its capabilities, etc. Moreover, the environment is changing all the time. New opportunities appear and so it makes sense to revisit your digital vision regularly if you want to go on making progress and seizing new opportunities.
L’Atelier: So about how long does a digital transformation actually take?
MT: How long it will take depends on the extent of the company’s ambitions and the initial level of digital maturity. Developing a ‘digital service’ such as a mobile application or an open innovation platform doesn’t take very long in itself – probably a few weeks or months of work. But that’s just the tip of the iceberg of the digital transformation. A company which has a clear vision, can call on solid IT skills, has proper governance in place and a change culture among its people will be able to rapidly reap the benefits of the digital initiatives that it sets in motion. Less digitally mature companies will certainly find that their overall transformation takes a few years. A good example is Burberry, which embarked on its digital transformation in 2006 and today excels in such areas as customer experience and use of social networks. The next milestone they’re looking at involves their use of analytics.
L’Atelier: So, you need to leave room for flexibility and iteration. Is this challenging for large companies and international brands?
MT: Digital transformation is not necessarily something that has to be managed in an entirely centralised way. Some investments are quite ‘central’ by nature, such as developing analytics capabilities and building collaborative networks. But at the same time, over-centralisation can prove counter-productive, so each company should draw the line where appropriate for them. Nestlé, for example, which owns several hundred different brands, has set up a ‘digital acceleration team’, which takes people from all over the world and helps them to develop knowhow and acquire good practice. However, the actual development of mobile apps is carried out close to the local markets.
L’Atelier: What elements can the company leverage to improve the viability of its digital transformation?
MT: We’ve identified four key elements. First you have to define a clear vision: what exactly do we want to do? How are we going to go about it? This doesn’t necessarily have to be a final vision: you learn as you go, new opportunities appear. What is important is to have a vision and to communicate it – and enabling the vision to evolve is equally important.
Second, you need to establish the right governance. A number of new risks will arise and must be controlled. You might need to acquire new skills or find a new way of working. ‘Cross-silo’ coordination is vital. There is a range of different approaches for addressing these new governance requirements. Some companies have created new jobs – for instance a few months ago, Starbucks hired a Chief Digital Officer. You might set up a specific digital unit to provide new capabilities or ensure a cross-cutting approach to digital transformation, as Nestlé has done. You may need to create special new committees to oversee the work.
The third key aspect is involving employees in the transformation process. The culture change might prove a major obstacle for some companies – so you have to find ways and means of ensuring that your people feel involved in the vision that you’ve set out and commit to it. For instance, the Chilean mining company Codelco – which is entirely automating its operations – has set up an innovation competition among its employees with a view to inculcating a Change and Innovation culture. Last but not least is the need to ensure that the company’s IT-Business relationship works well. You will rarely be able to draw full value from any initiative unless the technology side and the business side get on well together, share the same priorities, and so on.