The digital revolution currently taking place is transforming our world. Over the next few years, many organizations will need to undertake radical change programs and, in some cases, completely reinvent themselves to remain relevant and competitive.
Digital technology is not only about embracing the latest software tools and apps; it also raises the bar in the war for talent. Organizations that want to thrive in the digital age need to think and act digitally — and that requires a different set of capabilities and strengths.
Think about it. Talented people aspire to be contributors in a contemporary, dynamic and digitally focused business with its best days ahead, rather than bound to a slow-moving dinosaur of a company that is not structured to be innovative and dynamic, even though it may have a strategy that asserts it will be. Innovative, market-changing organizations are built differently, not because they have a “digital strategy,” but because they think and behave digitally when setting and executing strategy.
As many organizations have discovered in recent years, strategic error in the digital economy can be lethal. Hyperscalability of digital business models and lack of entry barriers enable new competitors to emerge and scale very quickly in redefining the customer experience, making it difficult for incumbents to see it coming at all, much less react in a timely manner to preserve customer loyalty. The stark reality is that a digital focus doesn’t always translate into a coherent strategy, as many organizations do not fully understand the potential opportunities and risks and are not demonstrating the necessary sense of urgency.
There are four important activities for organizations to consider as they contemplate what digital means to their business and strategy.
- Assess digital readiness: Organizations must be capable of challenging conventional thinking and disrupting previously established value chains and ways of working. They should then develop a clear road map to gain and maintain competitive advantage and achieve digital leadership in the market.
- Continuously define and refine the digital vision and strategy: Once the organization’s digital readiness and capabilities have been assessed, management is positioned to think strategically. A leader of the organization must own responsibility for understanding the competitive landscape, the opportunities emerging technologies present and the threats to existing revenue streams.
- Define the target operating model: With the current-state assessment against projected needs as a baseline, and a compelling vision and strategy articulated, management should define the processes, organization, methodologies and systems comprising the future state operating model – including the talent needed to make the model happen – that remains true to the company’s identity and brand promise.
- Align the organization with the needed change: Using digital technologies to improve products, services and processes requires focus and discipline. To enable continuous breakthrough change with confidence, buy-in must be obtained from executive management (and from the board of directors for significant changes in strategy, processes and systems).
The exciting or worrisome truth is that the digital revolution is only just getting started. For most large, established companies today, it’s not a question of if digital will upend their business, but when? Even when executives are aware of emerging technologies that obviously have disruptive potential, it is often difficult to have the vision or foresight to anticipate the nature and extent of change.
You can read more on this topic in Protiviti’s Board Perspectives: Risk Oversight, Issue 98 and explore these digital transformation tools on KnowledgeLeader:
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