The term “digital transformation” is now ubiquitous. Nearly every company’s leaders and board of directors see the potential of digital transformation to create new value and improve their competitive positioning. They are investing in building out capabilities to transform their business. Unfortunately, some companies build digital capabilities but don’t generate value that changes their competitive position. So, are businesses really making progress in these investments? Where are we in efforts to succeed at digital transformation? Here’s my view and what I believe must happen next.
Digital Transformation’s Current Status
For the last 18 months, the focus of digital transformation was understanding the capabilities that companies needed to develop or implement for their digital journeys. In addition, consulting and advisory firms responded to this effort by coming up with frameworks and the Target Operating Model (TOM) companies needed for building those capabilities. This led to a problem.
The problem is the digital world is moving fast and we don’t have 10-20 ears of experience to know what works and doesn’t work. Disruptive technologies force new operating models or new capabilities, but companies can only hypothesize as to what those capabilities should be. Frameworks are untested. Thus, TOMs and frameworks are built in a vacuum. They don’t reflect reality; they only reflect the best thinking at the time as to what a model or framework should be. This is part of the reason for the abysmal number of transformation failures.
That is where the digital transformation market is now – companies need to move the discussion from building/implementing capabilities to how to measure the value a company extracts from that effort. But they struggle to do this. Here’s the issue: Only a paucity of metrics exists to measure progress in digital transformation and understand if companies are getting any juice from the squeeze.
Companies need to be more realistic in the capabilities they are building. They need a new framework to look at what works rather than what is theoretically meant to work.
The Last Step Is The Hardest
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