Lessons for Digital Transformation success

Digital challenges – reversing a positive trend of transformation success?

Opening the workshop, we heard that Digital Transformation (DX) projects are a risky proposition for leaders, with only 1 in 3 DX initiatives succeeding.

What’s more, the unique complexities of DX in our current era have reversed a trend of increasing transformation success. According to consolidated research from various analysts, the failure rate of transformation initiatives fell from 90% in 2002 to 48% in 2020 – yet in 2023, it’s returned to a concerning 67%.

I asked Robin what makes DX such a challenging proposition for organizations.

“In many cases leaders are failing to put the customer experience first. Fundamental to the digital revolution we’ve lived through over the past few decades is how much easier, faster, and more connected it’s become for people to interact with organizations.

This isn’t just about consumer-facing businesses either. We’re all now used to the speed and convenience of truly customer-centric experience from those organizations that get it right. Just because products or services are being delivered business-to-business is no reason for the customer experience to be worse, because with the use of data every business is commercially facing.

The danger for leaders is when they prioritize internal imperatives – efficiency, cost savings, productivity and so on – over the external customer experience, and to implement technology on a point solution basis rather than holistically. This is a big and often costly mistake. Automation does not equal transformation! The risk is that organizations end up doing the wrong thing, faster.

Another challenge for leaders is the sheer pace of change, particularly around adoption of emerging technology. This quote from Justin Trudeau summarises it nicely “The pace of change has never been this fast, yet it will never be this slow again.”

Today, organizations are often adopting completely new technology alongside broader organizational and business model transformation. Furthermore, the 3–5-year planning cycle common to many large organizations is unsustainable in the context of technology innovation. This is a lot for leaders to deal with, and cannot successfully be managed using decades-old organizational structures and processes.

One other point to mention is the risk of taking a superficial approach to DX – I like to call it applying “digital lipstick”. It’s easy enough to redesign your website, or app, so that looks shiny and modern. But behind the scenes, your processes are still paper-based, your teams are not joined-up around the customer, and there is too much bureaucracy.

This will never deliver the agility and outcomes possible through true transformation and frustrates both customer and employees alike.”

Putting customer experience at the heart of transformation

Prioritizing customer experience echoes Fujitsu’s own approach to DX and is central to how we co-create innovative solutions with our customers. I asked Robin to elaborate on how leaders can embrace this in their strategy.

“So, the beginning and end of digital transformation is the customer. That’s why we are – or should be – adopting digital at the end of the day, whether in B2B or B2C. The huge shift with digital and data is how much closer it allows organizations to get to their customers.

Leaders must start by really looking at what their customers need and expect.

A vital next step is to articulate and define a digital ambition for the business. It’s really tempting for organizations to jump on the latest technology innovation: let’s implement a Generative AI chatbot on our website, for example. But without a broader, holistic vision, these isolated initiatives will fail.

Creating a digital ambition allows everyone within an organization to understand why digital innovation is being implemented, and explains how this will help their customers.

Only then should investment be made in tools and technologies to deliver that ambition.”

The role of data in DX success

An essential enabler to customer experience, and DX, is data. Most organizations now understand this, but it creates severe challenges. Traditional organizational structure relies to a large extent on filtering and managing the flow of data so leaders are not overwhelmed.

But in a digital world where every business process or customer interaction can produce thousands of data points, how can the signal be found within the noise? I asked Robin to share his insights on this data challenge.

“Transforming to be a data-led organization is not easy. There are several areas that most organizations struggle with. A common starting point is to address historical data. Most organizations have a mass of existing data, possibly even including paper records that require digitization. This needs to be consolidated carefully, and thoughtfully, with its intended usage in mind. There may be vital insights in the historical data to inform future strategy, so it cannot be ignored, but its quality and value must be validated.

Looking more to the future, it’s vital to build data capture, management, and analysis into any new processes or technology at the design stage. Data integration should be a non-negotiable part of every technology project – leaving it until after a new technology has been rolled out is usually far more difficult, and expensive.

So once you have all this data, and you’re confident you can trust it, and you have your data governance in place, how do you actually use it? How do you solve that challenge of paralysis by analysis?

This is where analytics and data visualization can play a vital role. Organizations need data analytics to cover both structured and unstructured data sources, and crucially this analysis must focus on the metrics that matter the most to your customer experience and digital ambition. Data visualization is a highly effective way to present the results of this analysis – the human brain understands visuals faster than text; a big advantage for time-poor executives.

Finally, something that isn’t directly related to the technology, but perhaps most important of all: a change of attitude and behavior so your organization really starts making decisions based on data.

This isn’t a question of teaching people how to use tools; most of us can use a spreadsheet. It’s far more about changing peoples’ mindsets. There will always be a role for intuition and human judgement, but leaders should create a decision-making environment where this is backed up and validated by the data.”

Transforming culture and the role of leadership

Central to true DX is a transformation of the organization itself – possibly even the reinvention of its entire business model. This presents a challenge to traditional organizational structures and management practices, which tend to prize stability and risk avoidance. I asked Robin to explain more about how leaders need to adapt for a digital world.

“One of the most important thing is how leadership styles have shifted. You can’t use 20th century leadership in the 21st century world; command and control just doesn’t work anymore, those days are gone. Instead, I recommend that leaders focus more on guiding and coaching their teams through this journey of transformation.

To take an example, traditional management might see the most senior leader be the first to speak in a meeting, setting the tone and scope of the discussion – and, in practice, shutting down ideas that challenge their worldview.

In a transformed organization, that leader would instead support their team by being the last to speak as they bring all their potential ideas to the table, and facilitate a collaborative discussion before sharing their opinions. You can’t guide people without knowing where they are.

Leaders must become chief problem solvers – especially to help remove blockers and inefficiencies that hinder their organization’s purpose. Customer-facing employees and middle managers can often see exactly what is needed, but rigid, inflexible processes and policies prevent them from making changes to help the customer.

Leadership by example is also critical. Leaders can say all the right things about transformation, agility, or digital, but if they continue to behave in the same old ways, their team will not truly buy into a transformation journey. To transform organizational culture, leaders should demonstrate a bold move towards their digital future – setting an example to inspire and motivate their team.

Going back to customer experience, this can be a powerful inspiration to transform organizational culture. To take the example of DBS Bank of Singapore(*1) , they have set a goal to solve a million customer problems before the customer even realizes they have a problem. This imperative is shared across the organization and sets a clear expectation for every employee – how will their work help solve customer problems?

Our earlier point about data also plays a role in the necessary changes to leadership and culture. Data is essential to putting customer science into practice – this is where you combine customer journey mapping with data, to really get into the detail of how customers interact with your organization. DBS are transforming their organization to “manage through journeys” where their entire organization is structured around customer journeys, and employees are empowered to make a difference to the customer.

In general, leaders must nurture a transformation from vertical to horizontal management(*2) to help them succeed in a digital world.”

(*1) Robin has worked extensively with DBS Bank, and his book “World’s Best Bank: A Strategic Guide to Digital Transformation” provides an in-depth analysis and practical lessons from their digital transformation journey.

(*2) For more detailed insights on this concept, see Robin’s previous article with Michael Netzley published in Duke CE: “From vertical to horizontal leadership”.

Transformation for a prosperous, sustainable future

Our sincere thanks to Robin for these valuable insights. We hope they are useful to help inspire your own digital transformation.

At Fujitsu, we are focused on delivering transformation both within our own organization, and for our customers, to realize the potential of a sustainable, prosperous future. You can read more on this in our Fujitsu Technology and Service Vision – a deep dive into our thinking and insights.