How to Create a Digital Transformation Strategy and Plan

Digital transformation is no longer a buzzword. It's a critical business necessity. By creating a digital organization, you can remain relevant and competitive. It's tough to remain effective in business without going digital.

According to the research website Exploding Topics, 77 percent of companies have already started their digital transformation journey. The good news is that most organizations have embraced this critical imperative.

The bad news: Only 35 percent of organizations are successful in their digital transformation efforts.

Converging Trends Drive Digital Transformation

The convergence of trends and technologies that includes the cloud, artificial intelligence, the Internet of Things, business process automation, and other advancements have led to dramatic change. Not just in the technologies powering business, but in the cultures that underlie how successful organizations operate on a day-to-day basis.

True transformation is a journey. It requires a clear understanding of the market dynamics impacting your world, of your business objectives, and of the unique value you want to digitally deliver. It involves innovating business processes as well as business models. It's about creating new levels of efficiencies, customer experiences, and go-to-market strategies.

Take Microsoft's shift under CEO Satya Nadella, for example. The tech giant has successfully transitioned from a software-centric business into a cloud-based, service-based business model and organization. Microsoft set clear digital goals, assembled a dedicated cross-functional team, engaged stakeholders, and developed a robust digital strategy focused on Azure and Office 365. The implementation was carefully executed in phases, with continuous monitoring and adaptation to market responses and technological trends. Microsoft's shift wasn't just technological but also cultural, requiring a deep-seated change in mindset across the organization.

Another example of digital transformation in the manufacturing sector is General Electric. GE revolutionized its manufacturing by building its own digital platform, Predix, to predict when machines need repair before they break down. This smart system focused on preventive maintenance, and, combined with a virtual model that simulates a manufacturing line called a Digital Twin, helps GE make and improve products by running simulations. By focusing on digital software as a core capability, GE has made its factories smarter, preventing problems and saving time and money, changing the way the company creates and maintains its products.

Create Your Seven-Step Digital Transformation Plan

Digital innovators who want to tackle transformation don't have to boil the ocean. The best transformations, whether digital or not, focus on quick wins and early adopters to build momentum. While a bigger-picture strategy can be helpful, just getting started is what's most important.

Here's a seven-step approach for not just getting going with your digital transformation, but ensuring it's successful. It's based on my 30 years of strategy, change management, and culture transformation experience across dozens of Fortune 1000 companies, as well as mid-size organizations. Each step includes a core strategy supported by the three most critical key actions to take to drive the strategy successfully:

1.       Define Objectives 

Establish clear, measurable goals for your digital transformation that align with your organization's overall strategy.

Key actions:

• Conduct workshops with senior leadership to identify strategic objectives
• Translate these objectives into specific digital goals (e.g., enhancing customer experience, improving operational efficiency)
• Develop KPIs to measure the success of the digital transformation

2.       Create Core Team 

Assemble a cross-functional team with members from different departments to drive the transformation.

Key actions:

• Identify individuals with diverse skills (IT, operations, HR, etc.) and a digital mindset
• Assign clear roles and responsibilities to each team member
• Establish regular team meetings for progress updates and issue resolution

3.       Analyze and Engage Stakeholders

Identify and understand the stakeholders impacted by the digital transformation and strategize their engagement.

Key actions:

• Map stakeholders based on their influence and interest in the project
• Develop tailored communication plans for each stakeholder group
• Schedule regular updates and feedback sessions with key stakeholders

4.       Develop Digital Roadmap 

Formulate a phased strategy that outlines the approach, technologies to be adopted, and implementation roadmap.

Key actions:

• Evaluate current digital capabilities and identify gaps
• Define optimal digital processes and applications
• Create a phased roadmap with clear milestones and deliverables

5.       Create Implementation Plan

Develop detailed plans for the execution of the digital processes and applications.

Key actions:

• Define project scopes, timelines, and resource requirements for each initiative
• Develop risk management plans to address potential challenges
• Establish a governance model to oversee the implementation process

6.       Execute and Monitor 

Implement the transformation initiatives and continuously monitor progress against milestones and metrics.

Key actions:

• Execute initiatives according to the implementation plan
• Monitor progress using the defined KPIs and adjust strategies as needed
• Conduct regular team meetings to review progress and resolve issues

7.       Track and Optimize 

Assess progress, identify areas for ongoing improvement, and iterate implementation approaches to ensure agility.

Key actions:

• Gather feedback from stakeholders and analyze performance data
• Identify successes and areas needing improvement
• Develop a plan for continuous optimization and adaptation

In today's world, if you're not digitally innovating, you're likely declining as an organization. Use these strategies to stay ahead.

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Soren Kaplan is the author of Experiential Intelligence, columnist for Inc. Magazine, co-founder of the AI-Powered Digital Transformation platform Praxie.com, and an affiliate at the Center for Effective Organizations at USC’s Marshall School of Business. Business Insider and the Thinkers50 have named him one of the world’s top management thought leaders and consultants. For press, media, and speaking inquiries, visit sorenkaplan.com