This article was first published in the summer edition of The Retailer magazine
Digital transformation is broadly defined as the integration of digital technologies in all areas of a business, from creating new paths to market, to delivering better customer experiences and improving operational process efficiency. Most companies’ transformational efforts are largely underway; thanks in part to Covid-19 and the eCommerce acceleration effect. Leading digital transformation activities has become a retail leader’s top priority. In fact, it is expected that digitally transformed organisations will be contributing more than half of the global GDP in 2023.
It’s unquestionable that new technologies play a crucial role in the digital transformation journey – I.T. spending reached $3.9 trillion in 2020 and is expected to grow to over $4.4 trillion by next year. In retail specifically, the use of digital solutions largely powered by data, artificial intelligence, augmented reality and cloud technologies are high on the agenda – from automated warehouse operations to data-driven inventory management, customer-centric store layouts, multichannel shopping experience and beyond.
However, what many companies don’t realise soon enough is that digital transformation is less of a technology step change than it is a business transformational challenge.
Technology can be implemented and offline processes moved to the cloud, but for digital capabilities to be successfully embedded across an entire business, leadership must also accommodate the need for a cultural shift to more agile and more intelligent ways of doing business.
Driving Sustainable Change
Making fundamental changes to your business processes and culture is often a long and difficult journey, especially when you are implementing a step change to your operating model. Which is why the key principles of change management must be applied to any retail digital transformation journey. These principles underpin a successful delivery of both the organisational and process changes required to really embed digital across your business.
Here are our 4 pillars of success:
Digital transformation demands fundamental and often extensive change to many, if not all, aspects of the business. Leaders must be committed and aligned to the entire change journey – they are the ultimate advocates for change, providing confidence from the top down that the business is taking the right steps for the future. And it doesn’t end there. They must deliver on-going ‘hands on’ support through day-to-day leadership. This will help guide the business through the toughest days of the transformation – and there will be many.
Top tip – Ensure the leadership skillset at the top has the right balance between strategy and operations. You must continue to run the business and transform at the same time.
2. Preparation & Planning
Companies worldwide cite a wide range of major challenges that affect success in their pursuit of digital transformation – from skills gaps and cultural difference, to lack of clarity on strategy and alignment. What is most important is to build the foundation for sustainable change. This means starting your planning early and this time and effort will not be wasted. Careful preparation allows for a comprehensive change management strategy, impact assessment and for detailed plans to be put in place, increasing the chances of your transformation being successful.
Your transformation journey must have direction, in that it must be aligned with the business strategy. This direction must be visible in the planning stages. The focus of change management in the planning phase is to identify what change should be delivered, why, when and to whom. A good well prepared change management strategy includes cultural transformation – changing mind sets is as important as adopting new processes.
3. Delivery, Adoption & Evaluation
Delivering change is never straight forward and minimising impact on the business is critical to the success of the transformation. Effective management of the change journey allows you to anticipate delivery and adoption risks, identify where you need to build new capabilities, and ensures you can respond to these challenges with minimal impact. Implementation (go live) is not the end point either, continual evaluation of the delivery and listening to end users will increase the success of adoption.
Having main stakeholders and senior executives agree to the benefits of the transformation is one thing, but the change will affect employees working in all areas of your business. Many companies fail to deliver clear communication of the benefits and listen to the feedback from their teams. Your people, and their knowledge of your business, are a key ingredient to foster sustainable change.
Careful and considered communication at all levels improves the understanding of those that will be impacted by the change. Communications must be relevant, frequent and genuine (reporting the bad as well as the good) and personalised to the different stakeholder groups. It’s good practice to establish a feedback loop for recipients of communication to help improve the quality of what is being communicated and how.
Common Pitfalls To Watch Out For:
- Lack of clarity: Have you identified the business need for transformation? Developing an understanding of your threats, weaknesses, opportunities and strengths allows you to establish a need for change.
- Lack of customer engagement & feedback: Do you really know what your customers’ digital needs are? The customer is everything in retail. Without focused customer engagement, the customer experience may not be as tailored, and localised, as you want it to be.
- Lack of leadership: Is everyone onboard with the need to transform? Leadership misalignment or disagreement has significant impact to those trying to deliver the change.
- Lack of adoption: Is everyone living the change & committed to it? Colleague engagement is critical to transformation success. Being clear with people at the start of the journey will drive success in training, implementation and adoption.
Remember… it’s an evolution, not a revolution
The spirit of change must be part of the DNA of your organisation. Change is constant and building a mindset of change is of the utmost importance.
Digital transformational challenges are difficult to navigate at the best of times. But in today’s climate, with remote working an added obstacle, the right people in change management roles can help ensure your company secures buy-in from all stakeholders and acceptance of new ways of working across the business.
AUTHOR – Hugh Nightingale, Principal Consultant, Change Management Group (CMG)