The 4 Pillars of Successful Digital Transformations
Summary of the article written by Nathan Furr, Andrew Shipilov, Didier Rouillard, and Antoine Hemon-Laurens for Harvard Business Review, in January 28, 2022
In the dynamic landscape of digital transformation, established companies often struggle to grasp its true implications, leading to misaligned strategies and failed projects. To cut through the confusion, it is essential to recognize that digital transformation is not a singular concept but a multifaceted journey, varying in goals depending on industry and digital maturity. By understanding the distinct pillars of digital transformation and their unique demands, organizations can make informed decisions, allocate resources effectively, and ensure progress.
The four pillars of digital transformation are:
- IT Uplift: This pillar involves modernizing the company’s IT infrastructure, mobile systems, data lakes, and cloud capabilities. It empowers businesses with up-to-date tools, enhancing employee efficiency, reducing maintenance costs, and boosting satisfaction. Typically led by the CIO or CTO, the success indicators include access to new tools, lower maintenance costs, improved employee satisfaction, and enhanced business performance.
- Digitizing Operations: Focused on optimizing existing processes using digital tools, this pillar seeks to streamline business growth. It may involve simple swaps from analog to digital activities or, in more advanced cases, a complete re-architecture of systems to meet current customer needs. The CFO or COO often spearheads this pillar, with key performance indicators (KPIs) centered around time and cost savings and improved customer service.
- Digital Marketing: Centered on using digital tools to interact with customers and drive sales, this pillar requires investments in capturing clean data, artificial intelligence, and omnichannel presence. Led by the CMO, success is measured by return on marketing investments, reduced customer acquisition costs, and valuable data acquisition for customer service improvement.
- New Ventures: This pillar explores new opportunities for growth and innovation, often requiring significant investments, agility, and experimentation. CEOs or heads of sales typically lead these initiatives, and success is gauged through unit economic measures and solving customer problems profitably.
Digital transformation is a journey with evolutionary steps, and companies often begin with IT uplift and digitizing operations before progressing to digital marketing and new business building. However, the order may vary depending on specific contexts and needs. The key to success lies in understanding that digital transformation encompasses various aspects, each necessitating unique leadership, resources, and success metrics.
Embracing the four pillars of digital transformation and aligning strategies accordingly empowers businesses to thrive in the digital age, staying ahead of competitors and delivering exceptional value to their customers.
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Link to the original article — https://hbr.org/2022/01/the-4-pillars-of-successful-digital-transformations
