Two guiding principles for digital transformation

09 April 2020 4 min. read

In a bid to keep up with digital-savvy competitors and new plus agile challengers, companies are throwing huge amounts of money at innovation. With the aim of realising new (digital) products and services, quicker ways of working, and improved employee experiences.

However, despite the vast amount of companies embarking on digital transformation journeys, a large share of such transitions are failing – in some cases they even go horribly wrong as illustrated by the failed SAP implementation at grocery discounter Lidl.

But digital transformation is not as daunting as it might seem, says Marit van Dijk, who is the Advisory Lead of Avanade in the Netherlands. The former KPMG consultant has been working in the digital transformation space for years, and leveraging her experience as well as Avanade’s deep track record in the field, she outlines two common caveats that organisations typically encounter and should act upon. 

Two guiding principles for digital transformation

Every journey starts with a vision

A clear vision allows companies to strategically focus their investments on a number of business objectives. In the transformation journey this leads to a small set of targeted innovation areas. This is vital – research by MIT Sloan School of Management shows that the total budget spent on digital innovation investments is not the deciding factor for success. 

Instead, the critical success factor is how investments are balanced across four types of innovation: employee experience; business operations; customer-facing initiatives and new business models. On average, successful companies allocate at least 10% of the budget to each category, while never allocating more than 50% in a single category. One notable finding is that top-performers in customer satisfaction on average invest 25% of their innovation portfolio into employee experience initiatives. 

Customers and employees go hand in hand

Employee experience is easily overlooked but companies depend on their employees' skills, intellect and experience to drive innovation and gain competitive advantages. Companies that put a big emphasis on employee experience are some of the most innovative and therefore well-performing companies according to the MIT Sloan School of Management study. 

Employees are often slowed by the organisational and technical complexity, making it difficult for them to do the work. It’s crucial to therefore provide an environment that is tailored to the employees and that fosters collaboration across all layers of the business. 

Employees are like a business card to the customer and a pleasant interaction can truly impact customer loyalty. Companies that therefore invest in providing employees with relevant technologies, tools, efficient processes and streamlined operations, will reap the rewards with customer satisfaction.

Think for example of a call centre where, as a client, nobody likes to wait on being helped. Initially, a center might use six different systems to make a simple address change. By integrating those all into one system, the employee’s task has simplified a lot, making it more enjoyable for them to make the change. The customer is consequently served more swiftly and the interaction is likely a lot friendlier. A win all around. 

In summary

Although there are a lot of elements to digital transformation, it is obvious that there are two things you shouldn’t lose sight of: your vision and your employees. The companies that provide employees with a pleasant, efficient workplace will be able to assert themselves well in an increasingly competitive world. Those who fail will struggle to retain their best employees and find it difficult to drive the innovation required to differ from the crowd.