Operational Excellence through Digital Transformation

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Productivity versus Value

What constitutes a digital transformation? If you go by traditional operational models, then effective change would be measured solely on the basis of productivity, which is defined by the minimum number of resources required to achieve a given value.

These systems are driven by reductionist philosophies that focus on cost-efficiencies above all else, and of course technological investments are counted amongst the costs to be minimized. Within these systems, changes are imposed by command and control style leaders who work according to strictly pre-defined plans. Their activities are largely centered on controlling variances in outputs and processes, rather than creating an environment for true innovation.

While these implementations might produce satisfactory results on a project-by-project basis under stable circumstances, ultimately they amount to nothing more than organizational band-aids. Digital transformation is not an isolated event; it is a consistent, ever-evolving process with no end-point in sight. As technology advances, strategies must alter accordingly to produce beneficial outcomes throughout the enterprise. Change is not dictated by CEOs or COOs; it emerges from the shifting needs of the market.

Instead of cutting costs to produce the same results year-on-year; business leaders must shift their focus towards achieving optimal outcomes. Essentially, you need to stop thinking about what your organization can do with the resources available, and start thinking about what your customer need. Then, build processes, systems and policies around servicing those needs.

Characteristics of a Digitally Reinvented Business

  • Implement strategies based on customer experience, rather than production.
  • Embrace technological change and disruption within the overall business ecosystem.
  • A commitment to consistent re-calibration and improvement.
  • Encourage innovation at an operational level across the enterprise.
  • Integrate physical processes with digital tools.
  • Functions across the enterprise should be streamlined for efficiency and value.

Understand that doing the right thing isn’t just about maximizing value for the customer. By formulating strategies from the outside-in, you can decrease your time-to-market, increase employee productivity, create leaner processes and get the most out of your assets. It’s a true win/win proposition.

Steps towards Achieving Operational Excellence

Craft a Digital Vision

A digital business builds agility into its long-term objectives. Today, the average lifespan of an S&P 55 listed company has 61 years in 1958, to just 20 years.  If you’re not keeping pace with disruptions inside and outside your industry, then you will be left behind. When crafting and communicating your vision don’t just follow precedents set by close competitors, examine disruptive trends in other industries and analyze how these innovations may filter through to working practices in your own through to your sector.

Communicate Your Vision

Implement your ideas throughout the organization by arranging digital seminars, working demonstrations and third-party training sessions and educational programs to bring your workforce up to speed with your new digital-first culture.

Connect Customer Understanding to Processes

Utilize analytics platforms to derive a better understanding of your customer data, compare your insights against current business capabilities and start reorganizing to work towards necessary outcomes.

Break Down Information Silos

Create cross-functional teams that can pool their operational knowledge to develop more effective, customer-focused workflows.

Appoint Digital Leaders

Recruit or promote technologically proficient employees with multi-disciplinary experience. These employees will be responsible for technological investments, implementation and digital-first process redesigns across the entire enterprise.

Building New Capabilities within the Enterprise

From redesigning workflows and cutting out manual bottlenecks to automating decision making off the back of performance tracking; a number of new capabilities will be required to turn your organization’s digital vision into a working reality. In the next article we’ll be looking at how processes can be digitized to enable a comprehensive enterprise-wide transformation.

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