In the digital age, digital transformation initiatives often flounder because they haven’t been clearly thought out, don’t have the right kind of up-front commitments, and don’t have the right leadership in place. According to Peter Bendor-Samuel, CEO of Everest Group, a management consulting and research firm, “A whopping 73 percent of enterprises failed to provide any business value whatsoever from their digital transformation efforts, according to an Everest Group study last year. Furthermore, 78 percent failed to meet their business objectives. Put another way, only 22 percent achieved their desired business results.”
It needn’t be that way, according to a Gartner study, “Leverage Business Models to Guide Digital Business Transformation.” In order to create effective digital transformations, the study says, “Executive leaders tasked with driving digital business transformation must use business models to increase the odds of success by holistically identifying, evaluating and refining new value propositions, customer segments, capabilities and financial opportunities.”
Among the study’s key findings are that enterprises need to transform their business models in order to do “new things in new ways that create net-new value for employees, customers, citizens and business ecosystem partners.” In practice, it says, executives must “Establish the level of urgency for business model change by identifying catalysts for change such as smaller returns on productivity investments, growth targets that exceed current product capabilities and industry disruption.”
In effective digital transformations, business strategies and business processes both need to be transformed to create a truly digital business. The report says that doing this requires using “business models to build a complete picture of the elements needed for digital business transformation.”
Key is that executives identify and favor new digital capabilities that not only deliver digital optimization immediately, but also enable digital business transformation in the future. Doing that requires that executive leadership “Work with key allies across the business, such as the head of corporate strategy or a digitally savvy cross-functional leader, to brainstorm and build leadership momentum for change.”
And while Gartner suggests the executives must move as quickly as possible with their digital transformation efforts, the study warns that the efforts must be carefully crafted as well. Its final recommendation is this: “Reduce the risk of digital business transformation by using business models to develop options, plan pilot projects, analyze results and make refinements.”
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