Is Digital Transformation Difficult?

Over the last few weeks, I had the opportunity to interact with several senior executives of the pharmaceutical industry in India. Among other things, I was keen to understand how their organizations were preparing for or participating in the digital era.

As I gently broached the topic, I expected animated discussions on the need for such a transformation in pharma, but was pleasantly surprised that none were required. Of course the concerns stayed the same – navigating internal compliance mandates, defining return on the investment, building the required capabilities within their teams and shrinking promotional budgets. How does an organization lead a transformation while facing such headwinds they wondered? The transformation process is a slow one and not an overnight change as most people perceive it to be.

This is because leaders perceive that jolting a time-tested structure that supports a multi-crore business is risky. So why create more risk than what the environment already presents? Yet, leadership acumen is put to test more often than not, because success depends on anticipating market trends and responding quickly. It lies not so much in the structure of the organization but in the way that structure behaves and responds to emerging market trends.

Transforming an organization to make it digitally capable is not as overwhelming a task as most leaders perceive. As illustrated below, it can be done in a four-step process that does not disturb any ongoing activity and yet can gradually transform a business into a more digitally capable one.

 Digital Transformation - 4 steps

 

  1. Use existing structure to begin digital activities

Assuming the existing structure is digitally naïve, it will have the hierarchy oriented in an old-economy framework with little experience of promoting via newer online channels, and the huge size of the business adds its own complications. Leaders can look at using existing strengths in this model to gradually initiate digital activities. Sales teams love to interact with each other and would probably already have vibrant message groups on WhatsApp or similar IM tools. Encourage them to do more of it. Appeal to their competitive spirit by letting them know how their performance compares to the best teams in the country. Think of ways in which more can be done using digital channels that teams are comfortable using. For example, we know marketing teams are comfortable using emails. Can they make (at least a part of) their communication IM-friendly to leverage the comfort of the sales teams instead of expecting them to read long, boring emails?

  1. Encourage experimentation to build digital capabilities

A key aspect of the strategy-execution gap is often a one-size fits all approach. Sales leaders always talk about rigidity in the strategy that doesn’t allow it to be applied in the most effective manner. Leaders can attempt to solve this by allowing a bit of “managed improvisation” of a digital plan therefore bringing in a mindset shift on two critical success factors – a) dropping a one-size fits all approach b) encouraging marketers to give up control. Partially giving up control is a very essential feature for success using digital channels since the idea is to engage and converse with customers rather than ‘push’ messages to them. Why not encourage marketers to experiment? Ask them to co-create a digital plan with the sales teams and encourage them to improvise as they implement. This managed improvisation could be partial to begin with and more control can be imparted as the team gets comfortable doing it. As a leader, ensure that governance strictures don’t get in the way of these experiments.

  1. Create digital innovation team in parallel

This step is a bit tricky and a few of the executives I spoke to pointed it out to me. Why waste time with the first two steps if real digital innovation will happen in parallel? Why not jump straight to this step? The answer is simple. Digital transformation is as much about building capabilities as it is about embedding them deeply within the organizational DNA. An organization can only metamorphose with some gene editing. The innovation team can help with that. It can create some serious imagination that the organization otherwise lacks to understand the full scope and power of technology. After all investing in capabilities means building support systems that span the traditional BU structure. Something to be wary of is not to get caught in cost-benefit metrics. Defining the benefit of a new capability is not easy to do and the discussion therefore must be on the value that it brings to achieving strategic advantage.

  1. Gradually embed innovation into the existing structure

Through a clever mix of experimentation (through the existing structure) and innovation (with the new one), an organization gets used to doing things better as well as doing better things. It takes a lot of effort to overcome organizational inertia, to re-orient and re-calibrate and to pull oneself away from engulfing yet mundane activity. Some quick and early successes can help to set the mood to adopt new practices. Modify governance structures to support and enable customer engagement in innovative ways.

This four-step method that I suggested during some of the conversations seemed to get the executives to wonder whether they were doing enough of all this in their organizations. They promised to think hard on how much of the difficulty in transforming their companies was really true and how much was merely perceived. Nothing about transformation is easy but it isn’t impossible. It requires an adaptive environment which empowers individuals and allows constant improvisation. The environment is a constantly evolving one. Can companies help but transform?

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