Building a digital company of the future

From an organizational standpoint, the criticality of digital transformation cannot be over-emphasized. Resisting digital adoption is akin to signing up for irrelevance in double quick time. Analysts believe that at least 50% of the Fortune 500 companies won’t be around in the next ten years as mortality rate is at an all-time high. Arguably, most new companies would consider themselves lucky if they cross the 20-year mark. Having said that, the pace at which various industries continue to adopt digital, is hardly uniform and leaders must not allow complacency to set in.

It’s important to realize two aspects. One, it’s about having the tech capabilities in place, and two, it’s equally important to have the right leadership which can drive this shift which is nothing less than tectonic. As Gil Elbaz, an entrepreneur puts it, “The world is one big data problem.” We aren’t quite sure yet if that’s an overstatement, but we are most certainly headed in that direction. Marc Andreessen, a VC had written in WSJ around 2011, “Why Software is Eating the World” which became an instant hit and galivanted global thought leaders to rally around to address on the elements of the digital world pervading businesses.

To be sure, the global digital transformation industry is a 1.7 trillion-dollar industry but overwhelmingly, 70% of all such attempts fail according to Tony Saldanha who is an industry veteran and has led major digital changes in P&G. He has also detailed out the reasons in his recently published book, “Why Digital Transformations Fail?” Let’s look at some of the critical factors that must be borne in mind in order to be a part of the 30 per cent that gets it right

A Sense of Ownership

Successful transformations are characterized by a high sense of ownership from the CEO’s side and it has to be a top-down approach. The temptation of me-too digital adoption which is nothing more than snake-oil must be resisted and a piecemeal approach is unlikely to yield the desired results. Increasingly, companies are hiring Chief Digital Officers who can work alongside the business to deliver digital transformations in companies. In practical terms, getting a complete buy-in is not easy and has to be through a consultative process with a high degree of transparency and clear accountability. Traditionally, any tech purchase decision has always been solely the CIO’s domain but with enhanced complexity, his/her role has matured beyond that – a mentor and a facilitator in the entire process. The CIO is now, providing invaluable technical inputs to ensure feasibility of the project.

In an environment, which is marked by a high degree of uncertainty, a long-term strategy which looks at a 3 to 5-year horizon may be counter-productive. Often, leaders don’t pay heed to early warnings because of inflexibility or due to their inability to be agile and effect mid-term course correction. It’s critical to NOT be straitjacketed in tightly defined strategy and there must be sufficient legroom.


A digital transformational journey may last 18 to 24 months or even longer. A steady funds flow must be ensured which has to be in line with strategic investments in tech investments, talent hiring & reskilling, process change including org structure realignment. Not everything can be accurately measured though and will have to be factored in while calculating the IRR on investments.

There’s an old saying, “What gets measured, gets done” which is applicable here. For instance, the overarching goal may be, “In 3 years’ time, 60% of revenue will come from digital channels.” As the strategic scorecard reflects this broad vision it will have to be communicated across the organization for priorities to follow suit.

Since digital offers a whole range of opportunities it can also overwhelm leaders and lure them into trying too many things at the same time which can lead to disastrous consequences. If KPIs and measurement metrics are firmly in place, there’ll be less chance of deviation from the path of financial discipline.

Harnessing the Power of Technology

Digitization and digitalization aren’t fungible terms. While there’s a connection (the former may at best be a subset of the latter) and leaders need to understand their respective impacts before embarking on a transformational journey. Merely entering truckloads of manual data into a digital format is not transformational change. What’s being done with the data by leveraging analytical tools is the differentiator and will demarcate successful transformations from the also-rans. The Customer is at the heart of any digital transformation. The whole idea is to provide a frictionless experience and ensure the relationship is sustained and we have a satisfied customer. Ideally, it should result in alternative revenue streams as well due to deeper customer insights. The degree of personalization which is now possible wasn’t the case earlier

If you do a Google search for the word digital transformation, be sure that the all-encompassing search engine will throw up terms like Cloud, IoT, AI, Analytics etc. It can be overwhelming to those who want to transform but don’t know how to and are likely to look at these very same technologies in silos. Whereas, in reality, it’s really their combinatorial power which creates the impact. Moreover, this is a continuous process and it’s critical that Agile as an approach is adopted. It’s important to understand that companies can’t simply “buy digital” to plug and play.

Talent & Culture – the Final Word

Nothing of course will be achieved if this block is not in place. Laying the foundation is about on-boarding people or upskilling available talent in digital technologies. The tricky part is managing change and keeping the entire organization on an even keel. The transformational journey will be in phases so it’s likely, a two-speed organization will be functional – legacy and digital will operate concurrently. The leader must ensure that people don’t press the panic button, remain committed to the organizational goals and stay motivated. Digital organizations are flatter structures which would mean slashing away needless hierarchies. While in principle, it seems the right thing to do, but there is likely to be a high degree of disinclination, even resistance, when power centres are disbanded.

Digital transformations will lead to new organizational dynamics which is characterized by a collaborative way of doing things coupled with a very high degree of customer centricity. In reality though, organizations need to view things impartially and the very same inefficiencies which had plagued the legacy systems, must NOT be allowed to creep in.