Digital Transformation (DX) is the adoption of digital technology by a company to transform the traditional business processes and services, or create a new ones to improve efficiency, value or innovation. According to Deloitte, digital transformation is all about becoming a digital enterprise - an organization that uses technology to continuously evolve all aspects of its business models (what it offers, how it interacts with customers and how it operates).
However, a study from Accenture shows that most Malaysian companies remain in the early stages of their digital transformation journeys. Many have yet to realize improved financial performance through the execution of digital strategies and listed are some of the highlights from the study:
Where do you think your organization stands from the statistics above?
However, a study from Accenture shows that most Malaysian companies remain in the early stages of their digital transformation journeys. Many have yet to realize improved financial performance through the execution of digital strategies and listed are some of the highlights from the study:
- 57% of the surveyed companies use analytics for internal performance, but only 11% of it use analytics to evaluate the employee competence
- 11% of them only review the digital effectiveness
- 30% of the companies provide digital skills training, but only 15% break silos with initiatives to adapt to the digital agenda
Where do you think your organization stands from the statistics above?
Common Pitfalls in Digital Transformation
A survey from Harvard Business Review found that digital transformation risk is the #1 concern of directors, CEOs, and senior executives in 2019. Yet 70% of all digital transformation do not reach their goals. Why do some digital transformation efforts success and others fail?
A survey from Harvard Business Review found that digital transformation risk is the #1 concern of directors, CEOs, and senior executives in 2019. Yet 70% of all digital transformation do not reach their goals. Why do some digital transformation efforts success and others fail?
Lack Digital Skills
77% of companies consider missing digital skills as the key hurdle to their Digital Transformation ~ Capgemini |
Employee Resistance
62% of employees don't like leaving their comfort zone ~ Forbes |
Poor Change Management
Only 15% of companies with poor change management strategies met/exceeded their objectives ~ Prosci |
1. Strategy
While nearly all organizations are focused on digitalization, 43% of HR leaders reported that their organization does not have a clear and consistent strategy or goal for digital transformation. It is important to know what does a successful digital transformation means to the organization and what are the right key performance metrics (KPIs) to measure the success of it.
2. Processes
Common errors in digital transformation including the naive assumption that by investing technology will helps to organization to transform. But even the best technology will go wasted if the organization is lack of the right processes or culture to take advantage of the technology.
3. People
HR and people operations should be considered as a crucial voice when an organization is building their digital transformation leadership team. These teams will help ensure the workforce is receiving the right training, and their professional development is aligned with the changes that are occurring throughout the organization.
While nearly all organizations are focused on digitalization, 43% of HR leaders reported that their organization does not have a clear and consistent strategy or goal for digital transformation. It is important to know what does a successful digital transformation means to the organization and what are the right key performance metrics (KPIs) to measure the success of it.
2. Processes
Common errors in digital transformation including the naive assumption that by investing technology will helps to organization to transform. But even the best technology will go wasted if the organization is lack of the right processes or culture to take advantage of the technology.
3. People
HR and people operations should be considered as a crucial voice when an organization is building their digital transformation leadership team. These teams will help ensure the workforce is receiving the right training, and their professional development is aligned with the changes that are occurring throughout the organization.
Digital Transformation is not just about technology, but the People and Culture
According to MIT Sloan and Harvard Business Review, all the data shows that culture is the number one hurdle to digital transformation because digitalization will affect the corporate culture, the organizational structure, the internal capabilities needed and the relationships between departments.
Digital transformation starts with people, which is a useful reminder that whenever we talk about data - especially valuable data - there are humans at the end of it. A comprehensive digital transformation requires effort from all aspects, especially from "people" perspective.
According to MIT Sloan and Harvard Business Review, all the data shows that culture is the number one hurdle to digital transformation because digitalization will affect the corporate culture, the organizational structure, the internal capabilities needed and the relationships between departments.
Digital transformation starts with people, which is a useful reminder that whenever we talk about data - especially valuable data - there are humans at the end of it. A comprehensive digital transformation requires effort from all aspects, especially from "people" perspective.
Success Stories of Digital Transformation
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#1 - Moneyball
Identifying the "right" talent - Choose the right players based on statistics. Example metrics: OBP (on-base percentage) vs HR (home runs hit), AVG (batting average), RBI (Runs Batted In) |
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#2 - Google
Reinvent HR through data - Decision making based on data available throughout employee lifecycle – from hiring to leadership characteristics to retention – to enable predictive modeling |
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#3 - Netflix
Understand consumer behaviors - Predict movie preferences of users by analyzing users’ browsing and scrolling behavior, viewing date/time/location, content consumption pattern, etc. |
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#4 - Coca-Cola
Transform to a digital-first business using Artificial Intelligence (AI) - Create a 'platform' services organization - to elevate and accelerate data, analytics and insights capabilities to accelerate topline and bottom-line growth - to support changes in operating model using AI |
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#5 - The Home Depot
Improve eCommerce experience by enhancing digital and analytics skills - Created a group of 1,000 employees with digital & customer experience skills and bolstered IT department ability to gather & analyze customer data - to save costs through predictive analytics of local inventory levels |
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#6 - Honeywell
Cut operations to improve quality and make it easier to apply digital strategies - Launched DX group within company, which led to innovations like IoT-connected devices, data-driven product offerings and advanced industrial process control |
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#7 - Hasbro
Leverage on data to transform marketing effort - Created large-scale data-driven campaigns and use data to understand target audience's behavior better |
- Have you reaped the fruits of digital transformation in your organization?
- Do you know how to overcome the challenges in your organization's digital transformation journey?
- What does your HR need to do to elevate and become a driver of business, a change agent, a collaborator, and an innovator?
Download our concept paper to get more insights on Digital Transformation!
References:
- Lim, Y., 2022. Malaysia's Digital Performance Index | Accenture. [online] Accenture.com. Available at: <https://www.accenture.com/my-en/insight-malaysia-digital-performance-index>
- Prof. Loredana Padurean, 2021. MIT Sloan: Why so many business digital transformations fail. [online] Available at: <https://businesschief.asia/digital-strategy/mit-sloan-why-so-many-business-digital-transformations-fail>
- Pratt, M.K, Sparapani, J., 2021. What is Digital Transformation? Definition, Examples, Strategy. [online] Available at: <https://www.techtarget.com/searchcio/definition/digital-transformation>
- Chamorro-Premuzic, Tomas., 2021. The Essential Components of Digital Transformation. [online] Available at: <https://hbr.org/2021/11/the-essential-components-of-digital-transformation>
- Sundblad, W., 2020. Here’s Why HR Is Critical For Digital Transformation Success. [online] Forbes. Available at: <https://www.forbes.com/sites/willemsundbladeurope/2020/09/01/why-hr-is-critical-for-digital-transformation-success/?sh=6a6c82d9216a>
- Lalwani, P., 2020. What Is HR Digital Transformation? Definition, Strategies, and Challenges. [online] Toolbox.com. Available at: <https://www.toolbox.com/hr/hr-innovation/articles/what-is-hr-digital-transformation-definition-strategies-and-challenges>
- Tabrizi, B., Lam, E., Gorard, K., Irvin, V., 2019. Digital Transformation Is Not About Technology. [online] Available at: <https://hbr.org/2019/03/digital-transformation-is-not-about-technology>
- Arlington, Va., 2019. Gartner Identifies the Top Five Priorities for HR Leaders in 2020. [online] Available at: <https://www.gartner.com/en/newsroom/press-releases/2019-12-4-gartner-identifies-the-top-five-priorities-for-hr-lead>
- Spitzer, B., Buvat, J., Morel, V. and KVJ, S., 2017. The Digital Talent Gap. [ebook] Available at: <https://www.capgemini.com/wp-content/uploads/2017/07/the_digital_talent_gap27-09_0.pdf>
- Murphy, M., 2016. The Big Reason Why Some People Are Terrified Of Change (While Others Love It). [online] Forbes. Available at: <https://www.forbes.com/sites/markmurphy/2016/08/14/the-big-reason-why-some-people-are-terrified-of-change-while-others-love-it/?sh=2aa052cb2f63>
- Ewenstein, B., Smith, W. and Sologar, A., 2015. Changing change management. [online] McKinsey & Company. Available at: <https://www.mckinsey.com/featured-insights/leadership/changing-change-management>
- Prosci.com. n.d. What is Change Management and How Does it Work?. [online] Available at: <https://www.prosci.com/resources/articles/what-is-change-management-and-how-does-it-work>