Defining Success: How To Measure The Impact Of Digital Transformation

by Ross Timms, Rufus Leonard

For many businesses, digital transformation is now a key business priority that requires immediate resolution. With 85% of enterprise decision-makers stating they have a two-year period to make significant inroads into digital transformation or they will fall behind their competitors and suffer financially and $1.18 trillion predicted to be spent globally on digital transformation technology and services in 2019.

The reality is that transformation is unique to each individual business, and often fraught with challenges. It’s expensive, time consuming, and changes may need to operate alongside existing legacy systems and BAU governance as they’re being introduced. With less than one in six organisations delivering successful digital transformation programmes, it’s clear that many companies struggle to get it right.

Ross Timms, Head of Strategy at Rufus Leonard, shares how businesses can overcome the two main barriers to successful digital transformation: definition and impact.

Choosing the right transformation

To be successful, you need to know why you want to transform, and therefore what kind of transformation your business needs. Following 30 years of helping business leaders transform their organisations – from BT’s first website in 1994 to BBC’s future of voice strategy in 2019 – we typically see three distinct types of transformation, each with their own characteristics

Change how you do business: responding to changing consumer demands, running the same fundamental business but delivering it in new ways, with new processes and through new technology.

Example: The Guardian – whose brand stands for quality, independent reporting and commentary through outstanding, relevant and important journalism – implemented a wholesale digital transformation by building a new reader experience without changing their core offer.

A key pillar of their transformation was deepening reader relationships. They realised that their readers were key to their long-term sustainability so focused on improving the experience for all readers, across the globe. This means redesigning all touchpoints and focusing on a mobile-first design, focusing on impactful, important journalism, as well introducing more touchpoints, such as the flagship daily podcast, ‘Today in Focus’.

The result is more people than ever interacting with Guardian journalism, with record digital traffic averaging over 1.1 billion monthly page views. They are now the third largest ‘newspaper’ in the world and have reduced their reliance on print revenues from 75% of overall revenues in 2012, to just 10% today.

Change your business: changing your business offering and responding to evolving needs and behaviours by solving problems in new ways.

Example: Rolls Royce (Aerospace) who shifted from an engineering, product-led organisation to a data, analytics organisation while still upholding their brand promise of “Pioneering the power that matters”.They needed to use transformation to overhaul the organisation and become an agile digital-first business. This meant transforming the culture. So they created a digital academy and selected digital-first champions across the business. This not only helped people to buy into the cultural shift but started to educate them on how they could adapt to deliver the transformation required.

Change your market: understanding how changing behaviours will create new markets and being there to meet that demand first.

Example: Netflix’s vision is to: Become the best global entertainment distribution service; Licensing entertainment content around the world; Creating markets that are accessible to filmmakers; Helping content creators around the world to find a global audience.

By aligning to that vision, they have grown revenues 8x since 2010, to $16.6bn in 2018. To achieve this, they have transformed from a DVD postal service to a data and analytics business (Investing $1.3bn in technology and development in 2018 alone, $1.05bn in 2017 and so on back through the last few years).

The drive to digital transformation needs to balance two things: the practical need and the requirement for a north star. The former is driven by pressure on profit and the need to move at the speed of the consumer. The latter is driven by your company’s mission, purpose or vision. Aligning your brand to your technology gives your platform a purpose, a role beyond the practical and a clear point of focus which drives transformation efforts.

Find your single point of focus

Defining the purpose of your transformation programme is integral to measuring its impact and success. Once you’ve defined your ‘why?’ you can distil this into a single point of focus that explicitly meets top-line commercial objectives.

Looking back at our three brand examples, all of them can demonstrate this single point of focus. The Guardian aligned everything back to their ‘Break-even Strategy’. Rolls Royce decided that they’ve ‘got to be a technology company, not an engine company’. And Netflix have always had a pinpoint focus on their vision. That single point of focus gave each of these businesses a clear steer on how to define both growth and performance objectives.

In turn, this single point of focus acts as a guiding star for how to leverage your brand, how to shape your customer experiences, understand what’s required of the organisation and your technology platforms. Ask yourselves, ‘how might we defend or improve our brand market position/ensure ongoing user relevance/create internal alignment/maximise platform performance?’.

Measuring the impact

Understanding this creates a clear platform to identify and align KPIs across the organisation. Do you need to increase brand value/equity or increase share price? Do you need to create channel shift through self-serve or improve customer satisfaction? Do you need to reduce employee churn or improve workforce utilisation? Or, finally, do you need to increase platform utilisation or ensure security of data and information?

This approach makes sure that a micro view on performance aligns back to the macro measurement of impact and progress. It gives the business the levers it needs to keep everyone on course over a multi-year programme of significant change. And, crucially, it provides a clear goal to galvanise everyone in the business.

In recent years, we’ve helped brands like the AA, Macmillan Cancer Support and Lloyd’s Register tackle large-scale digital transformation. As a result of facing off the challenge of delivering successful transformation, we’ve created the Business Impact Matrix. Built on the principles explored here, the tool establishes a clear point of focus for all business units, aligning growth and performance activities. It ensures that all customer facing and colleague facing activities align to a shared goal and clearly aligned objectives. The tool drives a process of prioritisation, helping to align separate agendas and providing a clear framework to decide what to first, second and so on.

However, you chose to define success, bringing both vision and impact into a single tool is the biggest single step any organisation can take to make sure they are part of the 15% of companies that are successful with their transformation ambitions.