Steps for an Effective Digital Transformation

Digital transformation is the process of reimagining and reinventing business processes, culture, and customer experience with new technologies to meet and exceed the changing needs of the market.

Companies that undergo successful digital transformation are more agile and adaptable; better able to innovate; more responsive to changes in the marketplace; better able to meet customer expectations; and more productive and efficient in basic business processes like manufacturing and marketing. Outcomes include increased profits, reduced costs, and greater resilience to market fluctuations.

A great many prizes, then, for companies whose digital transformations go well. But according to a report from McKinsey & Company, only 16% of respondents report successful digital transformations at their place of work. In traditional industries like pharmaceuticals, success rates are even lower: between 4 and 11%.

Fortunately, a sufficient number of companies have undergone successful digital transformations for the general shape of their success to become clear. In this article, we look at 5 key, evidence-based steps for an effective digital transformation.

1. Assess where you are and define clear goals for where you want to go
The term “digital transformation” tends to have broad, wide-sweeping definitions (like the one above). This is due, at least in part, to the fact that digital transformation can mean very different things for different industries, companies, even individual leaders. Add to this the fact that different businesses—especially in the healthcare industries—have widely varying starting points, and it becomes clear the pathways to digital transformation are manifold.

It is thus critical for businesses to correctly assess their starting point by determining not only the degree to which digitalization has been already been adopted, but also where executives, senior and junior leaders, and employees fall in their levels of knowledge and enthusiasm. Culture, as we’ll see, is a critical component of digital transformation and cannot be overlooked during this assessment.

Such an audit almost certainly will require hiring outside help, either as a permanent position or in the form of a service from a digital transformation agency (like those proposed by Eularis). According to a McKinsey report, fewer than one-third of businesses hire a chief digital officer (CDO)—but those that do are 60% more likely to be successful, due in part to having an accurate picture of where the company is on its journey towards digital transformation.

Just as importantly, businesses must decide for themselves the desired outcomes of their own digital transformation. In healthcare industries, digital transformation can manifest in a variety of ways, including reimagining products with digital components; building processes to leverage data intake and analytics; increasing connectivity; transforming manufacturing and supply chain with automation and machine learning; adding digital self-serve technologies to empower employees and customers; and improving marketing and sales initiatives.

Deciding which elements are most important for your business requires careful thought and extensive market research. Again, success will almost certainly depend on hiring experts in digital transformation to guide the process.

2. Build the team you need—through hiring and training
Having the “right, digital-savvy leaders” in place is one of the keys to transformation success, according to the aforementioned McKinsey report. As already stated, the addition of a CDO increases success rates greatly, but this alone cannot carry the transformation. Leaders and employees at all levels need the right knowledge and attitude to make it happen. The McKinsey report found businesses were three times more likely to succeed with the right digital talent.

Unfortunately, the digital skills gap is very real and poses a true threat to transformation efforts. Digital skills are in high demand, too, which means businesses hoping to reduce that gap through hiring need to offer a rewarding workplace experience. One study by Capgemini and LinkedIn found that nearly 60% of highly digitally skilled employees are likely to jump ship if a more attractive offer comes along, especially one that puts their skills to good use.

Of course, hiring alone cannot respond to all the needs of a transforming company. Existing employees must be offered opportunities to improve their skills. The Capgemini report found that businesses that “create an environment that prioritizes and rewards learning” and which “chart a clear career development path” see excellent outcomes in digital literacy among veteran employees.

To bridge the gap between tech pros and learners, successful transformers have found the role of “integrators”—those who “translate and integrate new digital methods and processes into existing ways of working” to be invaluable.

3. Establish a narrative and road map; communicate it and seed championship
One of the most critical components of any successful transformation is the story or narrative being supplied to stakeholders at all levels, from executives and employees to customers and partners. Creating a compelling change story is key to helping employees and leaders weather the frenetic, sometimes confusing, often frustrating storm of a digital transformation.

And you’ll need everyone on board. Success is 3 times more likely when stakeholders both understand and acknowledge the advantages to digital transformation. Senior leaders should also “foster a sense of urgency” when it comes to transforming, which also helps convey the importance of the journey. As a general rule, the richer the story, the more successful the transformation.

4. Empower people to work in new ways and provide them with the tools to do it
Supplying that narrative is an important part of effecting the kind of cultural and behavioral changes necessary to digitally transform, but providing the right digital tools to do so is also essential. Employees should be encouraged to take part in digitization and given a voice on when and where it happens. They should also be given a platform to critically challenge old ways of working and provided with opportunities to experiment. (Keeping in mind, of course, that failure is inevitable; it should be learned from but not punished.)

Of course, access to innovative new digital tools and technologies—ones that genuinely improve the experience of leaders, employees, partners, and customers—is key. We already mentioned the benefits of so-called “self-serve technologies” that empower stakeholders and enable them to accomplish more with less intervention and oversight.

Investments in connectivity, including the Internet of Things (IoT), smart automation, and machine learning will also come with significant pay-offs. A wide variety of technologies are actively changing the pharma value chain, from drug discovery and clinical trials to supply chains, sales and marketing, and regulatory compliance. Such technologies relieve employees of repetitive or complex tasks and allow humans to do what they do best: innovate, invent, and make decisions. Such technologies empower people to work in new ways and are the second half of the cultural changes necessary to transform.

5.Start small, win early, and build on it
With a clear roadmap and the right talent in place and stakeholders empowered and onboard, your business is ready to begin its digital transformation. Start small, but move rapidly. Early successes are key to maintaining the momentum created by your change narrative and essential for keeping key stakeholders—not least of whom are your customers—excited about the changes. But it also helps convince any of your leaders and employees who may have been sitting on the fence—or downright nay-saying—of the value of transformation.

One effective way to do this is to begin with a small and agile team responsible for “lighthouse” or “path-finder” projects that carry high reward with low risk (something your initial assessment will help highlight). Another way is to encourage team members to seek out “quick-win” opportunities for success and then share these stories with their peers through new or existing communication channels.

Continue building on these wins by redoing what worked well and abandoning (or at least reimagining) anything that didn’t. As your transformation gains momentum, stakeholders will become more accustomed to change, more knowledgeable and experienced in leveraging digital tools, and more ambitious and courageous in doing so.