Digital Transformation: How To Convince Executives and Leaders to Start the Journey

Written By: Eric Kimberling
Date: June 14, 2023

When considering a new digital transformation, organizations often face challenges in presenting the idea and demonstrating the value of transformation to their executive teams. So, how can this be achieved? How can you effectively sell the idea of digital transformation to your executive team? 

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Selling digital transformation to executive teams is of great importance. Occasionally, digital transformations are initiated by the executive team itself as a top-down approach. However, more often than not, the need or desire for digital transformation is identified at lower levels of the organization and eventually presented to the executive team for approval.

The issue arises when many project teams and employees within organizations recognize the need for digital transformation but lack the knowledge on how to effectively convey the idea to their executives. They may struggle to communicate in a way that resonates with the executive team and highlights the most crucial points. Therefore, in this article, I will discuss the key strategies that we have observed to be most successful in selling the idea and demonstrating the value of digital transformation to executive teams

Technical Debt

One of the primary reasons why organizations are undergoing digital transformations in the 2020s is due to the concept of technical debt. While technical debt may be considered a buzzword coined by industry analysts, it holds significant relevance for executive teams. In essence, technical debt refers to the lack of investments made in technology in the preceding years leading up to the present.

Understanding the importance of technical debt is crucial because while you have not been investing in technology, other organizations, including your peers and competitors, have made significant advancements. The concept of technical debt arises from the growing gap between the technology you currently possess and the technology you could have attained had you continued to invest in it.

Over time, as this divide widens and the disparity between your existing technology and future technological capabilities expands, you accumulate a substantial amount of technical debt. Eventually, this accumulation necessitates some form of change. This aspect can serve as a compelling starting point to sell the idea and highlight the value of digital transformation to your executive team.

However, it is important to note that relying solely on this concept will not suffice. It is merely one component of effectively selling the idea to executives. In fact, other points that I will discuss in this video will prove to be more crucial in achieving successful buy-in from your executive team.

Customer Experience

Another area of business value that often resonates with executives is the improvement or enhancement of the customer experience. Deploying technology should not be solely for the sake of technology itself but as a means to deliver greater value to customers and stakeholders. To effectively sell the idea of digital transformation to executives, it is crucial to quantify and recognize precisely how technology and digital transformation, in general, will enable the provision of better service to customers.

By having a clear vision and focus on customer experience, along with measurable business value, you can effectively communicate the benefits of the transformation to executives. This approach speaks volumes and conveys the value of the transformation more effectively than merely emphasizing the technology itself. It is essential to concentrate on the ultimate outcome that digital transformation is expected to achieve, particularly in terms of enhancing the customer experience.

Employee Engagement

Another effective way to sell the idea of digital transformation to your executive team is by emphasizing its impact on employee engagement. Highlight how it can increase employee retention, boost morale, and create a more positive work environment. Although this may initially sound subjective or intangible, it ultimately offers tangible business benefits.

Consider the scenario where an organization is attempting to recruit recent college graduates, yet still relies on an outdated green screen mainframe system. Such a disparity creates a significant disconnect and results in a negative employee experience, especially for the younger generation who may be unfamiliar with antiquated technologies like green screens and transaction codes.

While this example may be extreme, it illustrates how an organization's lack of technical maturity can hinder talent attraction, retention, and engagement. Therefore, by focusing on the end result expected from the transformation, such as improved employee engagement, you can effectively convey the business value that your transformation can provide to executives.

Operational Efficiency

Another significant business benefit that strongly resonates with executives when considering a capital investment like digital transformation is operational efficiency and the overall scalability of the organization. Many organizations undergo digital transformation while experiencing growth and undergoing organizational changes. At some point, they outgrow their existing technologies, which become bottlenecks and hinder the organization's scalability. In other words, the current technology hinders effective growth.

To convince executives, it is crucial to demonstrate how digital transformation will measurably enhance operational efficiency and improve the organization's overall scalability. By illustrating how the transformation will enable future growth with fewer resources or investments, you address the concerns and priorities that executives consider when making such decisions.

An additional aspect to consider is proactively addressing executives' common concern regarding operational disruption during the transformation process. This opportunity allows you to address their worry about deploying new technology without disrupting ongoing operations. While everyday challenges and learning curves may affect operational efficiency temporarily, the focus should be on mitigating significant disruptions that can prevent product shipments, hinder financial processes, or impact customer order tracking.

By proactively addressing these material operational disruptions, you build executives' confidence and assure them that you have carefully considered potential challenges and devised a clear strategy to manage them. Consequently, it demonstrates your understanding of their concerns and establishes trust in your ability to navigate potential operational disruptions.

When considering operational efficiencies and the expected outcomes of the transformation, it is crucial to not only focus on risk mitigation during the go-live phase but also emphasize the longer-term value of improving organizational efficiency and scalability.

Business Value

I have discussed several relevant areas related to business value and return on investment. However, it is important to note separately that you should specify and quantify all the different business benefits you expect to derive from the transformation. It is crucial to be realistic and accurately identify how you anticipate achieving that value and what you believe the value will be. Similarly, you must also be realistic about the associated costs. Conducting a cost-benefit ROI analysis based on reality, rather than relying on sales hype or inflated numbers, is imperative.

It is vital not to rely solely on input from software vendors who are attempting to sell their products. Seeking objective and independent perspectives is preferred when constructing your business case and understanding the business value. Objectively assessing what can realistically be achieved as a result of the transformation is key. Ultimately, we aim to sell this to executives and hold ourselves accountable as a team for achieving these long-term benefits.

Identifying business value and ROI and effectively conveying that information to executives are critical factors that influence their decision-making process regarding whether to proceed with the digital transformation. Executives commonly refer to these aspects when evaluating whether the transformation is worthwhile.

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Risk Mitigation

Finally, but not least importantly, risk mitigation is a crucial aspect for executives when considering digital transformation. They often focus on how to identify and manage risks to avoid being blindsided by potential failures that many organizations experience. By thoroughly thinking through our risk mitigation strategy, establishing risk identification and management processes, and implementing an effective project governance structure, we can proactively address executives' concerns. This proactive approach increases their confidence and likelihood of accepting and embracing the idea of digital transformation.

In reality, risks are inherent in any transformation, and simply managing the project well does not eliminate them. The key lies in identifying and effectively mitigating risks. The better we perform in these areas, the more successful we will be in our transformation journey.

It is essential to articulate the risk mitigation strategy to the executive team when selling the concept of digital transformation. However, we should avoid being overly optimistic or relying solely on sales messaging from software vendors or system integrators. Instead, we should be realistic, pragmatic, and acknowledge the potential challenges and risks associated with the transformation. By demonstrating that we have thoroughly considered the risks and challenges, executives will have greater confidence in our approach.

Additionally, it is crucial to educate ourselves about digital transformation. Understanding what to expect during the process, learning from the lessons of other organizations, and adopting best practices for deploying new technologies will enhance our ability to discuss digital transformation intelligently with the executive team. In addition to watching informative videos, I encourage you to explore the resources provided below to gain further knowledge on digital strategy, organizational change management, process improvement, project governance, quality assurance, and other relevant topics.

By incorporating these strategies and educating ourselves, we can effectively sell the concept of digital transformation to our organization and gain the support of our executive team.

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I would enjoy brainstorming ideas with you if you are looking to strategize an upcoming transformation or are looking at selecting an ERP system, so please feel free to contact me at eric.kimberling@thirdstage-consulting.com. I am happy to be a sounding board as you continue your digital transformation journey.

Be sure to download the newly released 2023 Digital Transformation Report to garner additional industry insight and project best practices.

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Eric Kimberling

Eric is known globally as a thought leader in the ERP consulting space. He has helped hundreds of high-profile enterprises worldwide with their technology initiatives, including Nucor Steel, Fisher and Paykel Healthcare, Kodak, Coors, Boeing, and Duke Energy. He has helped manage ERP implementations and reengineer global supply chains across the world.

Author:
Eric Kimberling
Eric is known globally as a thought leader in the ERP consulting space. He has helped hundreds of high-profile enterprises worldwide with their technology initiatives, including Nucor Steel, Fisher and Paykel Healthcare, Kodak, Coors, Boeing, and Duke Energy. He has helped manage ERP implementations and reengineer global supply chains across the world.
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