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Digitization is driving change in every business. More transformational investments are now funded than ever before, as companies that are more successful at digital transformation grow earnings around 2x over competitors (Bacular et al., Forth et al.).
Executives typically focus on a few key components when greenlighting a transformation such as return on investment, timeline, and risk. However, the most successful leaders focus on one additional component that often drives even better results: digital business adaptivity.
Companies with the capability to continuously adapt to changing conditions outperform their industry average at least 80% of the time (Worley et al.). Regardless of ROI, timeline, or risk levels, if a business is not adaptive and set up to actualize the benefits of a digital transformation, it will not realize the projected returns.
In organizations with low digital business adaptivity, only 30% of transformations are considered successful. For organizations with high digital business adaptivity, the success rate is 80%.
Enabling digital business adaptivity is not a one-time shift, but an always-on muscle that ensures your business is ready for the future no matter what new challenges arise. The following six principles, identified through deep transformational experience, will help enable digital business adaptivity and improve transformational success rates across your organization.
6 principles of digital business adaptivity
These principles not only drive sustainable success rates but also create agile cultures with superior ways of working. Each can be measured at the resource, team, department, or enterprise level. Together, they enable adaptivity as a capability.
Clarity on Business Objectives
Strategic clarity comes from deeply understanding the goals and objectives of a program or workstream and aligning on drivers before investing heavily. Regular communication across the business helps all departments and stakeholders (both directly and indirectly involved) understand the “strategic why” behind bodies of work.
By ensuring all teams understand why an investment is being made and the intended business outcomes, employees can steer and influence day-to-day tasks in support of the overall goal. Without clarity on business objectives, team leads or individual contributors just complete work in service of a timeline or leaders' approval—or miss the point of why the work was done altogether.
Low maturity with this principle leads to the following challenges:
An execution workforce that doesn’t understand how a given project impacts the business
Poor output that does not meet strategic needs
Excessive review cycles and iterations to “get it right”
Distributed Decision Rights
Set up the right person to make the right decision at the right time. Those who are closest to the customer, or to a given problem you’re trying to solve, are often the best choice.
Trust and empowerment are imperative here—distributing key decisions across the business allows everyone to feel a sense of ownership, visibility, and influence into a given project. Promoting accountability and a flatter organizational structure where all departments have a seat at a table will prevent cross-functional misalignment and other negative impacts.
Low maturity with this principle leads to the following challenges:
Significant delay in time-to-market
Reduced transformational success due to centralized decision-making
Disengaged employees
Minimize Time-to-Value
Digitally adaptive businesses have a strong culture of experimentation and a high tolerance for failing fast. Understand your customers’ tolerance levels to minimize the time it takes new consumers to derive value from your products and services—whether they are internal or external users.
Utilizing minimum viable products, or MVPs, is a great way to provide value without overinvesting. This entails the release of a new product or major feature, with only basic capabilities, to validate customer wants and needs before developing the fully fleshed-out version.
Companies can also minimize time-to-value by embracing a mindset of “let’s see what our users say and do” rather than “we know what is right”. This approach not only expedites value creation but helps identify the most important value drivers to deliver next.
Low maturity with this principle leads to the following challenges:
Overinvesting without validating incremental product-market fit
Reduced opportunities for customer feedback and lower customer loyalty
Purposefully Adaptive
Change for the sake of change doesn’t work. Companies need to define the changes they’re making, embrace change as a constant, and understand why a specific shift is right to drive desired business outcomes. By being flexible to customer demands and macroeconomic trends, companies can set themselves up for success in ever-shifting marketplaces.
Purposeful adaptation also considers levels of change fatigue, the mental and physical tiredness that employees can feel when organizational change is too constant or vague. Communicating changes and new expectations as clearly as possible helps prevent employees from feeling apathetic or overwhelmed.
With too much change, work never gets completed. With too little, work never advances. The right amount of change is driven by principle #5.
Low maturity with this principle leads to the following challenges:
Loss of wallet share and relevancy as markets evolve
Reduced ability to shift enterprise priorities due to macro and market trends
Customer and Business Outcome Focus
Serving customers and the business is a balancing act, and a focus on either end of the spectrum reduces digital transformation success. By overly focusing on the business, consumers are left to the wayside and likely to shift to competitors that have invested more in the customer experience. Alternatively, by overly focusing on the customer, executives risk a growing cost of goods sold (COGS), low operational maturity, and poor shareholder value.
Assets like customer journeys, buyer personas, and ideal customer profiles play a vital role in fine-tuning transformation strategies by using customer centricity to inform business decisions.
Low maturity with this principle leads to the following challenges:
Investments in products and services that do not yield business results
Missed opportunities to refine customer value propositions
Data Oriented Ways of Working
Data availability, quality, storage, and structure all play a massive role in how effectively teams can leverage data to improve decisions and processes. Democratizing data and aligning on a standardized taxonomy will ensure team members can easily access quality data to support their perspectives and actions.
Low maturity with this principle leads to the following challenges:
Teams operating on opinions and low decision maturity
Loss of data monetization revenue
Looking ahead
Enacting a digitally adaptive culture across your organization drives high transformation success rates and long-term financial performance that outpaces industry peers.
You’ll also maintain a more prepared, motivated workforce ready to tackle whatever changes come next.
