Digital transformation: 4 contrarian tips for measuring success
Blog: The Enterprise Project - Digital Transformation
I recently spoke with a friend who had just returned to work from maternity leave. She told me that a digital transformation initiative regarding her company’s internal ways of working was being restarted…for the fourth time.
I asked, “What’s the strategic intent behind this transformation?” She replied that it hadn’t been articulated. We spent a while guessing – it wasn’t clear if the goal was cost savings, security and compliance, improved employee experience, or something else.
After our conversation, she asked the transformation team for clarification. Their initial answer was silence, followed by very different ideas of what the end goal was.
Digital transformation starts with the “why”
This lack of clarity and the absence of goals is all too common – not only with digitalization initiatives but in a broader context of strategies and transformation programs.
My advice to her? If you can’t figure out why you’re doing the transformation and how you’re going to measure it, kill it. Stop doing what you’re doing and start from scratch.
[ Get answers to key digital transformation questions and lessons from top CIOs: Download our digital transformation cheat sheet. ]
A lack of strategic clarity, an output-based focus, and tracking too many digital touchpoints can lead your transformation efforts astray. Focus on the following metrics instead.
1. Measure clear strategic outcomes
At this point, there is little competitive advantage to gain from digitalization across most industries – you are simply removing some of your competitive disadvantages.
Digital transformation is a means to an end, not a value in itself. That means your organization must understand the end goal of your transformation. Digital transformation is a journey on a road that never ends; the goals and target metrics will keep shifting and moving constantly.
If those goals are not shared by every member of the management team, the transformation is unlikely to succeed because the change can’t be managed alone. If the goal can’t be communicated in one sentence that everyone can articulate easily, then it’s not clear. And it should be high-level, such as driving efficiency, driving engagement, or meeting the compliance needs of your customers.
Start by asking: What are we looking to achieve? What is the desired outcome of our transformation? Are we looking for more revenue, cost-saving, selling to new or existing customers? How should it look in the future?
If you can’t answer these questions, don’t start your transformation.
Finally, find out if the change and its impact on people, processes, and tools is mapped clearly enough to show what your transformation is and what it’s not.
2. Measure people transformation, not digital transformation
Digital transformation will make no difference at all if it doesn’t change the behavior of your employees and customers.
Yet successful transformation is often measured by the number of tools and software that an organization implements. This output-focused approach doesn’t provide any information about the success of the transformation – maybe it happened, but do your employees understand the purpose of the transformation? How have they responded to the change? What’s the adoption rate?
The way people respond to your efforts should directly correlate with the outcomes you set for the transformation. Consider this example: If you’re a CPR educator, the value or success of your initiative will only be realized when people become qualified to perform CPR, not when you finish the training.
For internal transformations, examples of potential outcomes include:
- Improved efficiency
- Improved employee engagement
- Reduced customer churn
- Improved legal or contractual compliance
Notice that none of these business metrics include the word “digital.”
However, these outcomes are often seen toward the end of the process. An effective way to assess how your transformation is progressing is to measure how many employees adopt new ways of working, or employees’ clarity and engagement with the initiative.
You might also consider setting upskilling or skilling targets and have those cascaded throughout the profit and loss units. The only way to build a high-execution culture with internal digital transformation is to change how people lead and work around the new tools.
When internal efficiency is driven by the IT department through tooling and practices, make sure that your initiative has the full backing of the executive team, or forget about it. The adoption of new processes relies heavily on the frontline staff, and if their management isn’t behind your transformation, it will feel like an imposed change and will be more likely to fail.
[ Read also: Digital transformation: 9 emerging roles you need on your team. ]
3. Don’t try to change everything simultaneously – measure one transformation at a time
Take an iterative approach to digital transformation. Remember, if everything is important, nothing is important.
A CIO once told me that his employees felt confused about how their transformation progress was going. I asked, “How many transformations are you doing right now?” He started listing and realized that his team had 15 simultaneous ongoing changes.
Worse, every change included different touchpoints for every individual end user, which created even more confusion for those who didn’t understand why the change was happening. Every incremental digitalization initiative should have a person or team responsible for it – the CIO, CTO, or CEO, or perhaps the internal services organization if it’s driving internal efficiency. In the cases of disruptive innovation, it should take place where it’s easy to let go of the past ways of doing things, typically in a separate innovation unit.
Measure the outcomes you’re looking to achieve and communicate from an outcome perspective, often through a story – and if your transformation does not fit into your objectives and key results or KPIs, for example, drop it or save it for later.
4. Measure all feedback – good and bad
Feedback and employee experience are critical to understanding if you’re moving in the right direction.
Sharing positive feedback is generally easy and useful for most organizations. But negative feedback can be equally beneficial, helping you shape your transformation methods and signaling that things are changing.
However, too much of either can hurt your progress and indicate a wider problem in your organization: Either you sweep negative feedback under the rug and focus only on the positive, which creates a culture of fear, or you focus only on the negative and forget to celebrate the good stuff, which can destroy motivation and cause a complaint culture.
Transparent reporting will help to alleviate these problems. When employees see that you are reacting to their experiences and that the changes you’re implementing are making a difference, they’ll help you drive the transformation. You’ll also have a strong justification to report to any other C-level managers who want to know how the transformation is progressing.
[ Culture change is the hardest part of digital transformation. Get the digital transformation eBook: Teaching an elephant to dance. ]