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Optimism conflicts with reality in digital transformation, but startup partnerships show promise

May 31, 2017 | By Michelle Manafy, Editorial Director – DCN @michellemanafy

Today, business leaders across the US are aware of the importance of digital transformation, regardless of their industry. However, as most know, it is not an easy undertaking and needs to go well beyond buzzwords to truly change an organization.

It is helpful to understand how leaders prioritize digital transformation and how they evaluate their progress. To that end, digital consultant and company builder etventure, with the support of market research firm YouGov, has published the results of their study “Digital Transformation and Cooperation with Startups.” The aim of the study was to ascertain the current state of digital transformation in mid-to-large companies. It looks at the significance of digitization; progress and barriers; digital transformation activities; and the impact on employees. The report also examines cooperation with startups as a means to accelerate digital transformation in larger, more established organizations.

The State of Digital Transformation

The report identifies three levels of digitization: incremental, transformative and disruptive. Incremental digitization involves the digitization of existing business processes and customer experience. Transformative digitization involves new digital business models, while disruptive digitization is a radical reinvention of the existing business. Digital transformation, for the purposes of this study, include transformative and disruptive digitization. However, the report does not view incremental digitization as transformation.

Survey respondents recognize the importance of digital transformation and have made it a top priority. Unfortunately, while the overwhelming majority of companies surveyed rank digitization as critically important to their businesses, the study found that many of the activities classified as digital transformation are actually incremental changes. According to the report, “many businesses have a false sense of security.” They also find that transformation is often delegated rather than aggressively driven from the top.

Other key takeaways include:

  • There is a heavy reliance on IT teams to deliver transformation initiatives, even though many IT teams lack the entrepreneurial DNA required for true transformation.
  • Although survey respondents rank digital transformation as business-critical, only 3% of business state their CEOs are directly involved with management of digital transformation.
  • Nearly all survey respondents are currently undertaking some form of digital project. However, these projects are rarely disruptive or transformational.
  • Traditional business environments are poorly suited for digital transformation, as true transformation cannot be a part-time exercise.
  • Businesses lack an appreciation for how true transformation might lead to a fundamental shakeup of business, with a significant impact on employees at all levels.
  • The majority of businesses surveyed do not see startups as a threat.

Moving Forward

While it is heartening to read that leaders believe that the vast majority of their staff are equipped to undertake digital transformation, they point out that it is unrealistic to assume, as survey respondents indicate, that 90% of employees are ready for the challenges make an impact on revenue or market share in less than one year. Digital transformation isn’t just about digital processes and business models. Instead, true digital transformation requires significant cultural change. Thus, it is essential to help employees prepare for digital transformation.

While many businesses put all their energy into driving digital transformation themselves, another way of coping with digital transformation is to cooperate with the disrupters themselves: startups. Most startups are in dire need of what traditional businesses have – an established customer base, market experience and reach. For traditional businesses, collaboration with startups enables them to get on the fast track to true transformation – with low risk. Cooperation between corporations and startups brings together two very different cultures, which can be challenging. However, the report views corporate/startup collaboration as typically a win-win.

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