What is your Digital Vision?

Transformation is neither a one-off exercise nor a “hype-cycle” urgency. It is the opposite of that. Transformation is a continuous and well-thought-out journey of successes, failures, and pivots. It is the aspect of business today where firms need to be most resilient and flexible while being robust in their resolve.

However, when it comes to Transformation, Leaders and employees tend to see these as either a project with specific functional boundaries or a big-bang exercise where huge investments are seen as a guarantee of success. The desire to see immediate in-year benefits and productivity shifts the priorities to short-term results vs longer-term sustainability. Each project or initiative is solely based on specific functional needs and is customized based on the likes and dislikes of sponsoring executives. This leaves the organization with a bunch of disintegrated and standalone pilots and implementations…only adding to its “Technical Debt”.

In 2014, the 120-year-old American Car Company Ford created a separate unit “Ford Smart Mobility” to centralise its digital and advanced mobility efforts. However, the centralization was seen as too distant from the rest of the organisation. It lacked integration into other business units. In 2017 alone, it reported losing $300milion during the whole year.

Organisations that have been successful in their digital transformation journeys are the ones who have crafted a clear Digital vision — in line with business strategy.

Here are 4 considerations for you to craft such a vision:

Map the value chain:

The first step is to map your end-to-end organisational and industrial value chain (T. Siebel, 2019). This includes carefully mapping out your value drivers, for instance, supply chain, manufacturing, logistics, consumers, customers and even your competition. Then assess which component or group of interrelated components have (or will have) the biggest impact of digitalization. For instance, is it redesigning core manufacturing operations, enhancing consumer experience or even venturing into an entirely new business model?

Cisco’s famous 40/40/2020 vision is a good case study of defining such a clear vision or “North Star”. Effectively realizing the future value being driven by recurring revenues (subscription-based model), Cisco crafted this vision to generate 40% of their revenues from this subscription-based model and 40% from Software by 2020. Now articulating that kind of vision is not possible without carefully evaluating the internal and external value chain for your organization.

Identify your core strengths:

Next, take stock of your most strategic assets (G. Westermann, D. Bonnet) that differentiate you and create a competitive advantage. In 2006 Burberry, the global luxury fashion retailer, was struggling to grow. The overall sector grew at 10 to 12% while Burberry’s growth was hardly 1 to 2%. The leadership realized they needed to shift focus to their primary customer base consisting of millennials, and to converse with them they needed to transform digitally.

Burberry knew one of its core strengths was around its network of physical stores. Leveraging this core strength, they created a unique in-store digital experience for the customers blurring the boundaries between digital and physical shopping experience. Consumers could watch live runway shows in-store and place orders from one of the in-store iPads.

These strategic assets are a key input in crafting your digital vision since they enable amplifying organizational core strengths through digitalization and when overlayed with a Value-mapping exercise (Step 1), it can create a huge impact. Burberry’s revenues grew from £1.5 billion in 2011 to £2.5 billion in 2015, thanks to the digital transformation.

Executive buy-in

Digital Transformation is not possible without leadership support. While it does not mean that it needs to be purely top-down exercise, to make Digital Transformation a success, the leadership team needs to be fully aligned on the urgency and importance of going digital. They need to lead with and embody a transformation mindset.

Digital transformation should be part of the performance objectives and appraisal system for everyone in the organization, starting from the top. Filter the vision into actionable objectives and tie in those with a clear reward, recognition, and accountability system. Without executive buy-in, the vision will remain a hollow exercise done in one of the offsite sessions. Bringing it to life requires a demonstration of commitment, ownership, and accountability from the executive teams.

Sharing the Vision

Similar to how important it is to have a view of where you want your organization or function to head towards, it is equally critical to rally the wider organization behind it. According to research, among Organizations that have truly mastered Digital, as high as 82% of those organizations have a shared Digital vision across the organization (G. Westermann, D. Bonnet). Do not keep the Vision exercise hovering at a certain level within the organization. Tap into the power of crowd-sourcing and co-create the Vision with the rest of the employees.

Encourage a sense of co-ownership which in turn influences the rest of the organization to treat that as a top priority. It mobilizes and motivates the change agents or “Digital champions” within the organization as they find a safe space to experiment and bring on innovative digitalization ideas. It has the potential to create a digitalization network effect.

A word for CFOs:

CFOs can play a pivotal role in influencing and co-creating this vision with the rest of the Executive team. Knowing the pulse of business and their insights around innovation, pricing strategies, investments, and risk management, CFOs are in a unique position today to play this co-pilot role in crafting an effective long-term vision. Moreover, overlaying a financial sense on top of the digital ambition is always imperative to give a ‘reality-check’. Being presumed Data stewards, CFOs are best placed to advise and collaborate on key enablers of Digital Vision, especially around Data-driven decision-making, Privacy, and Governance aspects.

This provides a unique opportunity to uplift overall Finance from a back-end function to real strategists and business partners.

Digital transformation is a complex business and successfully executing the same requires a careful orchestration of various organizational elements. Crafting a clear vision gives your organization a line of sight to its “North Star” and the direction your organization should be heading towards. How well you create a vision of such a North Star and rally the organization behind the journey will determine the success or failure of your Digital transformation efforts.