How Small Businesses Can Successfully Shift to Digital
Even before the pandemic hit, businesses knew it was time for digital transformation. But the shift wasn’t a high priority – plans were either nonexistent or slow and steady.
When the pandemic hit, however, employees were forced to jump into remote work immediately, and companies around the world were charged with transforming digitally in record time – whether they were prepared for it or not.
Now, businesses are figuring out how to move their dust-gathering digital transformation strategies into swift action to meet new demands brought about by this pandemic. In doing so, they must carefully think through how they can not only implement effective change now but also sustain the positive impacts of digital transformation for years to come.
The road to digital maturity is lined with hurdles
The challenges businesses will face today in making the digital shift will be the same that have been holding them back for years. According to McKinsey & Co., only 30% of businesses experience a successful digital transformation. Knowing that has kept many business leaders from getting started in the first place.
For companies that are undergoing a digital transformation, significant hurdles abound. Knowing about and preparing for these challenges beforehand, however, is one key to overcoming them as you move your business forward in the digital realm. The biggest challenge is that it takes years to reach digital maturity and sustain it, which means returns on your time and effort are far from immediate. The demands of the world amid COVID-19 necessitate that you transform now, but the changes you make might not show significant results for years.
One problem is that companies often spend too much time on the front end coming up with a plan and not enough time carrying it out. A recent report revealed many IT teams spend too much money building the foundation for digital transformations, costing companies $2.5 million annually.
Even after you implement your digital transformation, it’s not easy to maintain its positive impact. Many industries (including oil and gas, automotive, infrastructure, and pharmaceuticals) report a success rate of between 4% and 11%. The same McKinsey report also found that only 16% of surveyed businesses experienced long-term improved performance and sustained changes.
Employees also hesitate to accept big changes. Living with uncertainty didn’t begin with the pandemic, but COVID-19 absolutely amplified the feeling. Employees, in particular, fear this unknown. What will the pandemic mean for their health, for their loved ones, for their jobs?
When you add the unknowns around digital transformations on top of that, the fear increases exponentially. Many employees fear automation and digital transformation because they don’t know how these processes will change operations and the essential functions of their roles within a company. That anxiety around the digital shift has been present for some time, but during COVID-19, sensitivities are heightened.
Adapting quickly can offer big competitive advantages to your company
It will take some work to address these challenges, but companies that stick with it and maintain morale will be at an advantage. During the 2008 financial crisis, companies that adopted digital practices fared far better than those that did not. The economic downturn hit both resilient and nonresilient companies hard; both lost revenue at first, but resilient organizations saw fewer dips in performance and improved more quickly once the economy began to recover.
A digital transformation doesn’t guarantee business success, but it can improve operations with a willing workforce. Many businesses are not shielded from the effects of an economic downturn, but they can use digitalization to perform as efficiently as possible in a challenging world.
What’s more, though many companies might have frozen hiring for now and the near future, someday you will need to bring in new talent, and candidates want to work for digitally evolved companies. This is especially important for nontech companies, which had a difficult time attracting quality talent even before COVID-19. The pandemic isn’t affecting tech jobs nearly as much as others, so nontech companies that need to hire tech workers will continue facing steep competition when it comes to securing top talent.
How can business leaders navigate the digital transformation process quickly?
Time is of the essence during this pandemic. Here are a few steps you can take to speed up your digital transformation.
1. Start with a strong leadership team to drive the change. A digital transformation requires a cultural shift, and you need strong leaders to drive your company through that change. You have to prioritize rapid prototyping, making decisions closer to the problem and placing customer value over hierarchy.
When companies attempt digital transformations and fail, it’s often because executives leading the charge aren’t willing to share control or temporarily slow down to build a better growth engine. Reevaluate your leaders: Promote servant leaders into senior roles and retrain senior leaders in servant leadership. If senior leaders aren’t able to manage bottom up, you should move on.
2. Be transparent with your workforce. Leaders aren’t the only employees who can expect significant changes from a digital transformation. The possibility for shifting positions can be high with all teams; often, digital transformations mean identifying employees working in roles that can be automated, eliminated or merged with another role. Communicate honestly and frequently about what the shift will mean for each employee’s role.
Consider also looking for opportunities to reskill or upskill internally to avoid letting employees go altogether. See whether there’s a way you can use their talents in different ways that will still bring value, and evaluate how an upskilling process could help transform your workforce. Look to partner with companies that specialize in transitioning individuals from lower-tech jobs into higher-tech jobs and train them in the specialized technology your company needs.
3. Set clear strategic targets. Your priorities for digital transformation should ultimately tie back to providing more value to customers. When you’re setting and explaining these priorities to your team, be as clear as possible so everyone knows what they’re working toward. For example, you can prioritize speed to market and responsiveness to customer needs.
One thing you don’t want to prioritize is worker utilization. Your goal should not be to grind every inch from your employees. It should be to create products that solve significant problems for your customers.
4. Give product owners or managers the room they need to be agile. Decision-makers need the ability to think and act quickly without having to wade through approval processes from several different teams. Give product owners or product managers profit and loss responsibility so they can move fast, experiment, and adapt quickly. Additionally, rework the budgeting process so successful products receive more funding as they reach milestones (think venture capital funding).
5. Get your data and code in order. Data is crucial for identifying customer needs and developing new products, which means it’s the fuel behind any digital transformation. You’ll need to make data as accessible and available as possible by centralizing data repositories, improving data integrity, and openly sharing data with product owners and business leaders. Also, catalog the data so everyone knows what information is available and where to find it.
From there, remove dependencies in your code and expand testing coverage so you can test products in the market faster. The secret to developing great new products is failing (with cheap prototypes) many times.
Digital transformation is crucial for revenue growth and competing in a rapidly changing market. That was true even before COVID-19. Now, the immediate transition to online and virtual workspaces as a result of the pandemic means leaders must prioritize digital transformation now. With the above steps, you can set your plans into action swiftly and lay the groundwork for a quick, successful digital transformation that will benefit your company well into the future.