Digital transformation has become an imperative for enterprises looking to adapt and thrive in an increasingly disruptive business landscape. However, embracing digital is easier said than done. Research shows that close to 70% of digital transformation initiatives fail or do not yield the desired results. Why is this so? Primarily because organizations struggle with clearly defining what digital means for their specific business context and outlining a structured approach to drive this change.

This article aims to decode the DNA of digital transformation for CXOs.

Articulating a Digital Vision and Strategy

The first step for CXOs is to clearly articulate what digital means for their organization and define a vision aligned to strategic business goals. Building a digital strategy requires assessing the current state, understanding customer needs, establishing competitive benchmarks, and charting a roadmap to activate the vision. The vision and strategy should focus on how digital can add value across dimensions like customer experience, operational efficiency, product and service innovation, data monetization, risk management, and new business models.

According to McKinsey, companies with a clear vision and strategy for digital transformation are 2.2x more likely to realize value from their initiatives.

Building a Customer-Centric Culture

Transitioning to a digital business requires putting the customer at the nucleus of every action and decision. CXOs need to drive an outside-in, customer-obsessed mindset across the organizational culture. This entails understanding evolving customer preferences, mapping journeys, obtaining feedback and co-innovating with customers.

Gartner finds that 89% of organizations expect to compete mostly on customer experience by 2023. A customer-centric culture forms the foundation for delivering personalized engagement.

Rethinking Processes and Systems

Digital is as much about transforming underlying operations as customer touchpoints. CXOs need to sponsor process reengineering initiatives across functions like supply chain, manufacturing, procurement, and service delivery. This means eliminating inefficient workflows, optimizing handovers, and simplifying redundant steps leveraging automation and AI.

Legacy systems modernization is also integral for unlocking agility, data transparency and speed-to-market. Up to $20 trillion is likely to be spent globally in the next decade on digital transformation according to IDC. Of this, over 50% is estimated to be allocated towards modernizing technology estates.

Enabling Data-Driven Decisions

Data is the fuel that powers digital transformation. CXOs need to put in place the tools, technology and talent for trusted data capture, management and analytics. This provides the foundation for evidence-based decision making across strategic choices like entering new markets, unveiling products, responding to competitive threats and more.

According to Forbes, organizations that promote data-driven decisions are on average 5-6% more productive and profitable than competitors.

Adopting an Agile Operating Model

Digital calls for trading traditional hierarchical structures for cross-functional, empowered teams focused on customer-centric outcomes – enabled by lean governance frameworks.

CXOs need to drive this shift to agile ways of working by funding experiments, allowing flexibility in roles and processes, and pushing for collaboration across silos. Leading digital natives like Amazon, Netflix and Spotify have all embraced agile models by organizing around small, accountable teams rather than process-driven departments.

Developing Digital Talent and Skills

Realizing a digital vision rests on having the right talent and skills to execute the strategy. Gartner predicts that by 2025, 70% of organizations will have digital literacy as a requirement for every role across teams to keep pace with technology innovation.

CXOs need to sponsor reskilling programs, bring in digital natives and leverage the gig economy to obtain new competencies in areas like customer experience design, data science, IoT, cybersecurity and cloud computing.

Exploring Emerging Technologies

Cutting-edge technologies can be potent change agents for leapfrogging the competition. CXOs need to be proactive in exploring emerging tech like blockchain, augmented reality, quantum computing, AI and robotics.

While working with lines of business, the focus should be on identifying promising use cases, running controlled pilots, and scaling innovations that demonstrate tangible benefits. To illustrate, AI-based visual inspection technologies helped BMW shorten quality assurance process timelines by over 25% in 2018.

Architecting a Technology Foundation

Underpinning enterprise digital transformation is a robust, secure and insights-driven technology architecture. CXOs need to modernize legacy IT estates and pivot to cloud-based building blocks that provide speed, scale and adaptability to enable innovation.

Equally important is investing in a digital services layer via APIs to foster ecosystem connectivity. Research shows that leaders in digital architecture realization are twice as likely to lead in profitability within their industries.

Tracking Transformation Success

Robust analytics should be an integral element of any digital transformation program. CXOs need to institute objective key performance indicators to track initiatives against the outlined vision and goals. Measurement parameters could range from customer retention and market share to cost savings, new revenue streams and time-to-market for new capabilities.

Ongoing feedback loops based on results should be enabled to course correct plans if required. According to Harvard Business Review, organizations that deploy relevant metrics to monitor transformation efforts end up increasing the odds of success by 2.7 times.

Anchoring Change Management

Perhaps the most mission-critical lever that CXOs need to activate is driving change management across people, culture and leadership. Even the best strategies fail when employees are disengaged or left confused amidst the hullabaloo of digital change.

Sustained executive direction, transparent communication, continuous reskilling and motivation of cross-functional teams can anchor the desired transformation. Research by McKinsey underscores that organizations which ensure strong change management realization are 3.5 times more likely to deliver and sustain value from digital transformation in comparison to competition.

The blueprint above provides a structured approach for CXOs to crack the code on digital transformation specific to their business scenario. Activating these elements in conjunction will enable organizations to shape value-driven programs, accelerate digital adoption across units and sustain outcomes by continually iterating on this playbook. With emerging technologies and customer expectations continuously evolving, digital should be viewed as a permanent state of change rather than a one-time project. CXOs must step up and spearhead this adaptive, agile transition that drives competitive differentiation and future-proofs the enterprise.