The digital transformation strategy is a framework for addressing the complex interrelationships between people, processes, and technology to drastically improve how work gets done. Digital transformation is not only an important strategic business priority, but as we are now learning, it is the key to organizational resilience in an increasingly unpredictable world.
IT Strategy vs. Digital Transformation Strategy
Traditional IT strategy focuses on how technology will be managed and supported. While the occasional strategic initiative will be launched—maybe a new system will be purchased or an old one deprecated—the IT strategy typically focuses on maintaining and incrementally improving the status quo.
A digital transformation strategy differs from a traditional IT strategy in the following ways:
- Introduces a new vision for the role of technology in the organization
- Serves as a bridge between IT and the organizational strategy
- Addresses the people and process side of transformation
- Can support major shifts in how technology is selected, used, and managed across all departments
- Often calls for multi-year investments beyond what the IT budget alone will support
In other words, the digital transformation strategy is the starting point for ambitious, multi-year initiatives at the nexus of business process improvement, workforce enablement, and organizational design.
Looking to get started on your digital transformation strategy? We've developed a governance committee charter template you can use to get started.
Why You Need a Digital Transformation Strategy
Here are 6 common reasons why an organization needs a digital transformation strategy:
- The organization is swimming in technology but employees still complain they don’t have the right tool for the job
- The organization has ambitious growth plans but no clear strategies around how its technology will scale or shift as a result
- Too many manual or “paper”-based processes
- Lots of systems that don’t “talk” to each other
- Technology is being blamed for inefficient business processes
- IT budgets keep increasing with little to no improvements in organizational efficiency
If any of these issues are surfacing in your organization, it’s a great time to get ahead of the curve and build a truly cross-cutting digital transformation strategy that will help your organization be at the top of its game. And if you don't know where to start, digital transformation consulting can help you jump-start the process.
5 Steps to Building A Digital Transformation Strategy
So you’ve decided to build a digital transformation strategy. Where to start? Not to worry! We’ll break it down for you in 5 steps:
- Define linkages to your organizational strategy
- Form a cross-cutting coalition to lead the way
- Learn about current-state challenges
- Build the digital transformation roadmap
- Launch the change process
As you prepare to develop your strategy, think about what digital transformation might look like at your organization. It’s also a time to think about how ready the organization is to embrace new ways of working and the disruption that’s an inevitable part of the process.
At this early stage, also take the time to familiarize yourself with the concept of digital transformation and identify the additional skills or knowledge that you or your collaborators will need to successfully carry out this work.
Step 1: Define Linkages to Your Organizational Strategy
The digital transformation effort you are leading (or planning to lead) should be strongly linked to your organization’s goals and vision for the future. Look to the organization’s strategic plan or other high-priority and high-visibility initiatives to guide the “why” of the digital transformation effort. Establishing and articulating this alignment early on will be an important tool for gaining support for digital transformation from leadership, board members, and other key stakeholders.
This search for alignment isn’t just window dressing to “sell” this effort to your stakeholders. The goal is to ensure that the work is actually contributing to the organization’s accelerated progress toward a set of pre-established goals and priorities (KPIs anyone?). After all, why reinvent the wheel when the call to action is right there with the leadership’s seal of approval? Establishing this alignment early on, before you communicate the need for digital transformation more broadly, will also lessen the chance that the effort is perceived as a solution in search of a problem.
Once this alignment is established and as you begin to socialize the idea of digital transformation within your organization, you’ll want to clearly communicate why using language that reflects a thorough understanding of your organization’s strategy, purpose, and culture is important. This is the time to lay the groundwork before you begin diving into the specifics of the exact changes to be implemented. What better way to start the transformation journey than with strong backing from all who are already 100% bought into the organization’s vision and purpose?
As part of your preparation, you’ll want to develop a working definition of digital transformation that aligns with your organization’s language, culture, and context. And since digital transformation is just as much about people as it is about technology, human-centered design and change management, among other methods, will be an integral part of your toolbox.
Fasten your seatbelt: it’s going to be an intense, challenging, but highly rewarding road ahead!
Step 2: Form a Cross-Cutting Coalition
Three groups are needed for a well-executed digital transformation project: the core project team, a steering group, and champions.
The core project team is responsible for performing and coordinating the tactical, day-to-day project activities. The steering group, a strategically minded leadership team, is needed to engage in decision-making around the key aspects of digital transformation while lending their support along the way. The champions are enthusiastic supporters who can serve as a sounding board, test user group, and ultimately the primary means by which changes will take hold across the organization.
A Digital Transformation Steering Committee should ideally be formed before the recruitment of champions. That way, steering group members can have input into how the champions are selected and mobilized as one of their early orders of business. Steering group members should include leaders representing all key business functions that will have a stake in or be significantly affected by the outcomes of the digital transformation project. You’ll also need to decide at this point how the steering group will be led and managed. You can use this steering committee charter template to develop a plan for how this group will run and share it with prospective members.Tip: Before going off and starting a new group, think about whether a group already exists that comprises the right—or almost right—mix of people. If your organization is already overloaded with steering groups, you’ll want to make sure that a new group is actually called for.
A well-functioning steering group will support the widespread adoption of the upcoming changes and will likely play a key role in planning, budgeting, and prioritizing digital transformation activities now and into the future. For that reason, it should be seen as a group that will exist in perpetuity, or at least until the digital transformation effort has reached a mature and stable state. This group can also be responsible for reviewing or revising relevant policies, making decisions around departmental budgets and staff-time allocations, and reviewing meaningful metrics once improvements are implemented.
Champions are critical to the success of any change effort and do not require a ton of structure to be effective. They are indispensable to any digital transformation project. Champions are typically staff members from across the organization who are invested in the success of the digital transformation effort and will promote and generate interest and excitement about the effort in their respective teams and peer groups.
As an informal extension of the core project team, champions serve as representatives and advocates of users, providing feedback at critical stages of tool design, implementation, and rollout. Champions are also a resource to support staff adoption of new tools or behaviors, as they model these new approaches and provide informal user support to people they work closely with.
Tip: There is no ideal number of champions. It is more a function of organization size and ensuring that all user types and groups are represented. Use the Dx Champions program description template to craft the right messaging about your group, and start recruiting willing participants in consultation with the steering group and core project team. It’s best to let them weigh in on the function and management of the champions so that they are fully supportive and helpful in identifying potential champions and approving their participation.
Step 3: Learn About Current-State Challenges
The most important step in making a strong case for digital transformation is to understand the human side of the equation: people’s day-to-day experience using technology to perform their work. Now is the time to begin building your case with facts about how the state of the organization’s technology is perceived by people across the organization. We like to call this step "discovery."
This is also a good time to measure your organization's digital maturity. This type of assessment provides a high-level view of your current digital tool strengths, weaknesses, and gaps, and can serve as a useful foundation for the deeper investigation you will undertake during this and subsequent steps.
The focus of your discovery at this stage should be on collecting ideas and anecdotes that will help you build that case and bring home the real-world struggles people are facing. These concrete examples are especially important to communicate to those in leadership who may not be “feeling the pain” as acutely.
You can use a combination of surveys, focus groups, and interviews to collect the needed information. Work with the members of the cross-cutting coalition you formed in the previous step to settle on an approach that is right-sized for your organization’s size, culture, and context.
As you gather perspectives on the current state, you’ll want to inventory and map out your organization’s technology. This information might be readily available (fingers crossed!) or scattered and difficult to find, but it is vital to have a firm grasp on the full technology landscape to help you, and your many collaborators, fully understand the current state of the organization’s technology.
Be prepared to make some new discoveries as you embark on this path. You (and others) may be surprised at the sheer number of different systems—both official and unofficial—in use. And although determining costs may prove difficult, try to uncover as much data as you can. Knowing how much the organization is spending on licensing, managing, and supporting its technology will help you articulate the potential return on investment (ROI) of the changes being proposed as part of the digital transformation effort.
The IT systems map and inventory you create will help highlight the overlaps and redundancies in your current technology stack. It will also uncover the systems that are over or underutilized and the major opportunities for cost savings and efficiency gains.
Presented alongside what you hear from the people you speak with, this data will demonstrate that there is a real cost associated with maintaining the status quo. Get ready for some rich and illuminating discussions!
Step 4: Build the Roadmap
Transformation requires a clear vision in addition to planning and strategy. It will be important to rally the organization around a shared vision for the future that feels both hopeful and realistic.
You’ll need a vision and a set of objectives that can inspire and mobilize others. And then there’s the practical matter of creating a preliminary, high-level work plan. Armed with a digital transformation roadmap that demonstrates how you'll address the challenges and opportunities you uncovered, you’ll have everything you could possibly need to move forward.
This is also a time to begin thinking about what resources and budget you will need to achieve the initial phase of your digital transformation effort. It will be impossible at this stage to know exactly what the price tag or level of effort will be, but you should be able to come up with some rough estimates.
And remember what we talked about in step one. Your roadmap should articulate how the proposed digital transformation can propel, and in some cases fulfill, one or more of the organization’s strategic goals or other key metrics. In most cases, there are fairly obvious links between investment in digital transformation and delivering on aspects of your organizational strategy, whether it’s related to efficiency, competitiveness, impact, culture, or something else.
Step 5: Launch the Change Process
Change is hard, or so we are led to believe. But chances are that most people in your organization would welcome changes of a certain variety—namely, changes that can make their work faster, easier, or even more enjoyable.
The key question is: how can you convince your colleagues that the change you are bringing about as part of the digital transformation effort is really going to deliver on its promises?
Here’s where it helps to play armchair psychologist—and even anthropologist. People are complex and they bring varied histories and experiences to the workplace, along with a healthy dose of personality. Our friend Everett Rogers, in his widely applied diffusion of innovations theory, provides many reasons for how and why innovations are ultimately adopted by a majority of members of a society or organization. But one of the main premises is people and their personal orientation toward change.
The main takeaway from this aspect of Rogers’ work is that where people fall on the spectrum of readiness to change (i.e., the diffusion of innovation curve) is fairly consistent, with most people falling somewhere in the middle in the early or late majority segment of adopters (see figure above).
What does this mean for you as a digital transformation leader? In short, it means you can’t alter people’s pre-wired orientation to change. What you can control is how the change is seen and understood, especially by those who have the biggest aversion to change. For instance, how well it aligns with individual or organizational values and goals, and how it is “worth the trouble” of experiencing a few bumps in the road to reach what’s on the other side.
Change management must be baked into every phase of the digital transformation process. We repeat, every phase—even this very early one you’re in now! Check in with yourself and your collaborators regularly to ensure that you’re doing everything possible to support a smooth and successful transition to your ideal state.
Oh, and one more thing. Have fun!