How to Build a Digital Transformation Strategy

Far from merely implementing new technology, digital transformation is a fundamental re-imagining of how even the most basic systems, processes, and business models operate. Change on this scale—and this deep-rooted—necessitates a cohesive digital transformation strategy. Let’s start by defining digital transformation at a more granular level.

What is digital transformation and what does it look like for manufacturing?

Digital transformation is the use of digital technology to fundamentally disrupt and alter a given business or sector. This can include every aspect of the products themselves, how those products are produced, and how those products are consumed.

The three major areas of change for manufacturers are:

• Optimization
  Digital tools are vastly amplifying and extending the potential of, for example, Lean and Six Sigma-based productivity improvements.
• Orchestration
  For the first time, the entire supply chain is open to proactive orchestration—across and between silos, functions, sites, and organizations—with powerful consequences.
• Monetization
  New business models are emerging, with many manufacturers shifting from transactional sales to the outcome, uptime, or solutions-based leasing.

Industrial digital transformation is still in the very early stages, predominantly taking what came before and significantly multiplying it. As technology, culture, and mindset take root, the change will become more profound.

5 stage digital transformation strategy

A successful digital transformation strategy will comprise five macro stages, with many micro-actions in each.

1. Analyze the business
   Digital transformation is different for every business. Analyze your business’ operations and goals to understand your starting point and your immediate priorities. Identify areas for improvement, and the technology available to address them. Consult with stakeholders to understand what technology will be supported and what won’t. The biggest barrier to change is often cultural.
2. Identify business goals
   Digital transformation is only useful if it achieves tangible business goals. Identify these goals and how technology can intertwine. Define concrete markers of success—but also document potential risks. It will be important to recognize failure to insulate business priorities. Create a roadmap. This will be the benchmark against which you can measure progress.
3. Engage digital partners
   It’s highly unlikely you have the necessary expertise for digital transformation internally. If you do have significant digital expertise in your organization, you will at least need technology partners to assist in tailoring, planning, and implementing products, processes, and systems within their niche. Their advice may also be valuable in suggesting strategies and solutions outside of your knowledge and experience.
4. Start small and scale-up
   Each stage should be subject to proof of concept exercises. Implement a new process or system in one area, ironing out any pitfalls along the way, before rolling it out to the rest of the organization. Using this approach, it should be possible to avoid significant disruption from the transition.
5. Evaluate and repeat
   Once the roll-out is complete, conduct a full assessment. Evaluate success and failures. Measure KPIs and ROI. The knowledge will be invaluable for the next phase. However, it is important to note that digital transformation should be viewed as a cohesive, contextual, and ongoing process. Although it should be implemented step-by-step, not every step will necessarily have dramatic effects on its own.

Why you need a digital transformation strategy

Digital manufacturing is fast becoming the new normal, and it’s important your organization keeps pace if it is to remain competitive. However, it is important that change is not made for the sake of it. It must be made in harmony with your wider business goals. Having a coherent digital transformation strategy will help to guide your long-term evolution while protecting your near-term business continuity.