4 Winning Patterns of Digital Transformation

4 Winning Patterns of Digital Transformation

Companies have typically prioritized the speed at which they implement digital transformations across their organizations to combat digital disruption. However, these promising digital transformation initiatives often lose momentum and fail to produce the broad impact needed to compete in today's world.

In an annual survey of 1,200 international business leaders, Bain & Company found a growing realization among leadership teams that speed alone is not enough to capture the full value of digital transformation for an organization. Rather, companies are now learning to prioritize scaling their best digital services to create lasting impact across their operations. This typically requires retooling an organization's technological architecture and integrating digital fluency into its business functions.

"Despite launching promising digital transformation initiatives, incumbent companies continue to face old problems such as a cultural divide between IT and business operations," said James Anderson, a partner at Bain & Company and leader of its Vector: Digital Delivery practice. "Companies must start analyzing the needs of their businesses and begin creatively executing on solutions that promote digital transformation across their entire operating model."

4 winning patterns

These findings, among others, are outlined in the recently released report. By analyzing companies' most effective efforts, Bain identifies four key patterns of digital transformation that allow companies to both compete and rebuild in the digital landscape:

Pattern No. 1: Laying down the digital foundations.

This often involves companies that are under pressure to develop new digital capabilities and are essentially starting from scratch. The threat is clear and evolving steadily but has yet to produce a burning platform for change. Many industrial companies find themselves in this situation.

Pattern No. 2: Integrating a fragmented digital landscape.

Companies that fall into this next pattern suffer from digital fragmentation. They have no shortage of digital projects bubbling up across the company, but they lack the ability to prioritize the most promising initiatives and scale them across the organization.

Pattern No. 3: Digital transformation front to back.

The third pattern also confronts the legacy conundrum in the core business, but the problem in this case is different. Rather than a fragmented IT architecture, these companies have years of accumulated systems that were built on top of each other as the business evolved. The resulting tangle of tech infrastructure ends up being inefficient and inflexible, slowing down the company's reaction time.

Pattern No. 4: Launching a new digital attacker.

Sometimes the magnitude and pace of disruption in an industry require more change than an incumbent company can support. Its size, complexity, or resistance to change might prevent it from moving fast enough to remain competitive. Increasingly, the answer is to launch an entirely new business to attack opportunities that the core business cannot. A digital attacker is both an offensive and a defensive bet. On offense, it allows companies to enter a new market with a tailored, lightweight solution that is free of legacy baggage. On defense, it gives the company a fresh value proposition to attract new customers within its existing market — for instance, aiming at millennials, students, and young professionals to build the customer base of the future.

Find your way to boldness

These four patterns, of course, can’t capture the myriad risks and challenges companies face as they contemplate how best to transform themselves to compete in a digital world. They are meant as broad archetypes that highlight the interplay of practical realities that any transformation journey entails, especially during a time of accelerated disruption. They encourage corporate leaders to consider two critical factors.

  • What is the nature and immediacy of the digital disruption our industry is likely to face?
  • What must change within our technology stack and operating model to enable the company to move fast enough to keep pace?

There’s a tendency to underestimate both scores: Disruption is probably happening faster than you think, and the challenge of transforming a company to remain competitive is probably harder than you expect. That tendency too often leads to incrementalism or a strategy of launching small digital initiatives that ultimately fail to move the needle.

"There is a tendency for organizations to launch small digital initiatives that ultimately fail to move the needle," said Laura Polasek, director within Bain & Company's Vector: Digital Delivery practice. "Successful digital transformation depends on a balancing act — namely, the ability to scale meaningful change without disrupting the core."

Every company finds its own path, but all winning digital transformations share one thing in common: a willingness to be bold.

Article published by icrunchdata
Image credit by Getty Images, Moment, MirageC
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