Digital transformation has moved from strategy to a matter of survival, according to Australian executives and analysts.

So who is doing it well and what do they have in common?

In an examination of Australian organisations who are getting digital right, some common themes emerged: digital transformation is no longer optional, and success hinges on people and leadership.

“Every business on earth is a digital business, most just haven’t figured that fact out yet,” Cambell Holt, Chief Customer Officer, Mercer, told Which-50.

While Gartner analyst Jenny Beresford thinks “it’s actually more extreme than that.”

“The whole world has been changed … It’s not just that every business needs to be digital, but the way that we operate has changed by digitisation,” she said.

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Beresford travels the world talking to boards about digital transformation and how they can enact it. She explained that organisations need to understand that digital enablement is changing the world at an increasingly rapid pace.

“If they don’t figure out how they may be affected and actively look at how they might adapt they are likely to be left behind or wiped out completely,” she said.

Looming disruption 

Survival into the future was at the forefront of Holt’s mind when Mercer began its transformation.

The superannuation industry isn’t known for its exceptional customer experience, but in the face of looming disruption, business transformation became critical.

“We knew we had to change the ways in which we did business in order to survive the next 20 years of competition, and to enable our clients to thrive and grow with the organisational capabilities we could impart to them if we changed our own business model,” Holt said.

Rising consumer expectations and increasing competition meant digital presented the superannuation giant with “big problems to solve and high stakes”. But it quickly became apparent to Holt that digital technology alone would not be enough.

“The early learnings we took, and the mistake I see a lot of people making with their own transformations, is that the mere application of modern technology does not create an effective business transformation.”

Holt said Mercer initially underestimated the importance of people in a digital transformation. While digital technology can create a “whole new world of possibilities,” it requires a change in people and culture first.

“We coined a framework for digital transformation at Mercer that features the three pillars of people, process, and technology, in that order,” Holt said.

“Solving for the people and process related considerations of transformation earlier on I think delivers a better chance of early success and more effective business outcomes.”

So what are some of those business outcomes? Mercer ended up re-platforming five of its core customer platforms including migrating many of them to the cloud. It now leverages SaaS to minimise cost and maximise the utility and strategic value of new technology, Holt said. It’s culminated in a twelvefold increase in customers’ digital responses, a 15 per cent incremental uplift in retail sales and an 11x increase in ROI from marketing campaigns.

It’s “astonishing when done right” and can produce demonstrable results very quickly, Holt said. Managing the people and culture change first meant when the technology changes came it was a faster and smoother transition.

“[It] helped build conviction around the technologies and our approach to digital technologies internally and across our client base, which in turn helped us go faster, further, and deeper into the organisation with effective digital transformation than we might have imagined at the outset.”

Start at the top, seriously

Mercer’s acknowledgement of people and its accomplishments is something Beresford sees in digital success stories around the world. According to the Gartner analyst, victors are the ones who get the culture and leadership right.

“Digital transformation is a cultural transformation. Or as one astute banking executive leading a digital transformation effort said to me recently, ‘this is a social experiment’.”

READ MORE: Who is doing digital transformation well? Let’s start with L’Oreal

According to Beresford, a digital transformation follows the adage ‘start at the top’ but it has to be genuine. Too often leaders lack genuine belief and buy-in to the process, only paying ‘lip service’ to digital transformation.

“If the leaders don’t believe it, just pay lip service, tell others to change but privately think they are immune and can stay the same, then it won’t work,” Beresford explained.

“They have got to the top of their corporate ladder by doing the things they learnt to do, so it’s hard to see that what got them there may not take them into the future.”

Beresford said that in the last decade technology had caught up to its promises and while it was bringing about a radical shift, leadership remained a key differentiator for leaders in digital transformation.

“It sounds almost cliche to say it’s about leadership, but it is. This isn’t a process change. It’s not an operational change. It’s definitely about culture, because that’s the fastest way to implement change: get people to change.”

She said it was no coincidence that the digital giants of the world all had visionaries at the helm.

“They have leaders. They have visionaries. They’re not operational leaders. They are totally visionary and they bring their people along behind them,” she said.

“It’s not new. That’s the only thing that isn’t new. The technology’s new, the digital environment’s new. But the leadership issue isn’t.”

Another potential pitfall hampering digital transformations is the belief that they start and end with technology, according to Beresford. This fallacy is often what separates success from failure.

It’s a point McKinsey has also made in its report outlining the ‘Four Ds’ of digital transformation.

“Simply taking an existing product line and putting it on an ecommerce site or digitising a customer experience is not a digital reinvention. Reinvention is a rethinking of the business itself,” the authors wrote.

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