10 must-have criteria for Digital Transformation success

WHY & WHAT – Your ‘North Star’

1. Focus on customer needs: Put your customers at the heart of everything you do. This means going beyond traditional sales models and truly understanding their entire journey, from initial brand awareness to post-purchase experience.
Consider the case of Heineken, a global leader in brewing. Facing a rapidly changing digital landscape, Heineken sought to become a consumer-centric, high-velocity organization. By adopting a future-back approach, they developed a shared vision of the ideal customer journey, encompassing every interaction from brand discovery to consumption. This holistic perspective enabled them to identify critical touchpoints and develop strategies to enhance the customer experience across all channels. Through cross-functional collaboration and data-driven insights, Heineken successfully transformed its business model, driving growth and strengthening customer loyalty.

Heineken’s transformation highlights the power of envisioning the future customer journey. By understanding customers' evolving needs and desires, organizations can create innovative solutions, break down silos, and foster a customer-centric culture.

2. Be clear on business objectives: In today's digital world, there's no such thing as a "digital strategy." Instead, your business strategy should harness digital tools and technologies to achieve your core business goals. These goals will vary depending on your specific context (e.g., market leader vs. challenger), business objectives (e.g., profitability vs. topline growth), and value chain dynamics (e.g., competitive landscape and potential risks). Understanding these factors allows you to tailor your approach for each market and make informed investment decisions, focusing resources on initiatives with the highest potential impact.

Analysing the value chain within each market is crucial for identifying and mitigating risks such as channel conflicts. A prime example is Henkel Adhesive Technologies, a global leader facing the challenge of serving diverse customer segments effectively. By mapping out customer journeys and analysing organizational capabilities, Henkel identified opportunities to optimize their digital approach. Through pilot projects, they tested new ways of working, ultimately developing a scalable digital transformation strategy. This approach not only mitigated risks but also enhanced customer satisfaction and drove business growth.

Both focusing on customer needs and being clear on business objectives create a ‘north-star’ vision. This north star serves as your objective/goal and guides the decisions you make along the journey. Importantly, the north star is not static but is updated based on learnings from your journey, allowing for continuous alignment with evolving market conditions and business insights.

HOW – Navigating towards your North Star

3. Drive growth through continuous improvement: Embrace a culture of continuous learning and experimentation. Digital transformation is an ongoing journey that requires constant adaptation. Unlike traditional businesses like Wehkamp, digital natives such as Zalando thrive on rapid iteration, quickly testing new ideas and scaling successful initiatives. This approach is essential for staying ahead in today's dynamic market.

Harness data from your digital platform to constantly refine your approach. Track everything, empower cross-functional teams to test and iterate, and integrate successful ideas. Every tweak, no matter how small, leads to a better customer experience, higher margins, and loyal customers. Forget risky launches – embrace continuous improvement.

Consider Eneco, a leading Dutch energy provider. They faced significant disruptions and partnered with us to transform their approach. By adopting a dual-track strategy and developing Minimum Viable Products (MVPs), they were able to iteratively refine and successfully launch their Dynamic Pricing product. This phased rollout and continuous feedback loop helped them achieve significant growth and customer retention.

4. Organize for the highest speed of learning: Empower cross-functional teams with clear goals and decision-making authority. Traditional business structures struggle to keep pace with the rapid evolution of the digital world. Siloed departments and slow decision-making can stifle innovation. To thrive in the face of a rapidly evolving marketplace, businesses need to embrace agility. Our framework prioritizes the creation of cross-functional "business domain teams" with clear customer-focused goals. These teams own the entire ideation and testing process, empowered to make data-driven decisions without endless escalations. After all, the data often reveals the best path forward, regardless of seniority. Ideas, tests, and insights flow freely from the ground up, accelerating innovation and ensuring everyone is working towards the same objectives.

Capture these learnings in a central library for faster growth across your entire organization. This data-driven approach ensures you stay ahead of the curve, just as Eneco did by becoming a self-learning organization ready to adapt to market shifts.

5. Ensure technology enables speed & business growth: Modernize your IT infrastructure to support rapid innovation. Legacy IT systems can be a major roadblock to achieving continuous improvement and fast learning cycles. Instead, aim to build a modern, flexible IT architecture that adapts to your evolving needs and fuels rapid innovation. This includes implementing standardized back-ends to streamline operations and freeing up resources to focus on crafting a differentiated customer experience. This ensures your business can stay ahead of the curve and adapt to the ever-changing digital landscape - for example how PostNL drove a transformation from a predominantly mail company to an e-commerce logistics company.

6. Ensure high-quality, harmonized data: Establish a solid data foundation for informed decision-making. Data is the lifeblood of successful digital transformation, so you should focus on building a strong foundation of trusted data across your organization - like how Heineken leveraged shop data in order to make better, data-driven decisions on investments in shops. Harmonizing your data starts with defining your data goals, whether you're aiming to improve cost efficiency, boost margins, or enhance customer satisfaction. A clear understanding of these goals guides how you collect and utilize data. A clear understanding of these goals guides how you collect and utilize data. It's important to eliminate data silos and inconsistencies by ensuring clear and consistent data definitions, policies, sources, and ownership across all departments. This approach eliminates confusion and ensures everyone is working with the same reliable information.

GETTING IT DONE - Realizing your North Star

7. Develop a balanced digital initiative portfolio across 3 horizons: Balance short-term wins with long-term bets on future growth. Digital transformation isn't a one-size-fits-all process - it requires a balanced approach that addresses both present needs and future opportunities. Our framework utilizes a 3-horizon model to allocate resources across different timeframes, each with distinct characteristics. Here, you might explore entirely new markets, products, or services that could disrupt your current industry. By adopting a balanced portfolio across all three horizons, you can ensure your digital strategy addresses present needs, prepares for the future, and mitigates risk by having a diversified innovation pipeline. This comprehensive approach positions your organization for long-term success in the ever-evolving digital landscape.

8. Organizing initiatives by horizon: Traditional organizational structures often hinder innovation and growth. To overcome these challenges, consider organizing initiatives based on their horizon:

Horizon 1: Optimizing the core business for efficiency and profitability.

Horizon 2: Building new business models and revenue streams.

Horizon 3: Exploring disruptive innovations for future growth.

By segregating initiatives based on their horizon, organizations can allocate resources effectively, reduce risks, and foster a culture of innovation. Dedicated teams or units, similar to Business Growth Labs, can be established to focus on Horizon 2 and 3 initiatives, providing a safe space for experimentation and rapid iteration. This approach allows for the simultaneous pursuit of short-term gains and long-term growth, ultimately driving business transformation. Want to know more? We discuss this in further detail in our article series on Corporate Venturing.

9. Drive a disciplined, centralized transformation program: Secure executive backing and establish a clear multi-year plan. A successful digital transformation journey (like that of Coop or De Bijenkorf) requires strong leadership and a well-defined plan. Our framework emphasizes the importance of securing strong backing from senior leadership to ensure a shared program vision with clear goals, unified terminology, and a well-defined implementation plan. This leadership team will provide ongoing guidance and flexibility through a steering committee, especially during the transition period with new roles, responsibilities, and performance measures. Additionally, our framework recommends establishing a multi-year roadmap with a detailed near-term focus. This plan should be reviewed and adjusted regularly to reflect changing priorities and learnings. Furthermore, securing multi-year support from leadership in the form of resources, budget, and potentially adjusted targets demonstrates a long-term commitment to digital transformation and increases the chance of success.

10. Invest in your people: Digital transformation thrives on embracing change. Instead of focusing on resistance, let's empower a "coalition of the willing" – our early adopters – to become change leaders. By celebrating their success and making digital fluency a requirement for future leadership, we can inspire others and influence the majority who are indifferent. This journey requires investment in our people. On-the-job education and experiences equip our workforce with the skills they need to thrive in this new environment. Digital initiatives shouldn't be seen as risks, but as stepping stones. Those who champion these initiatives, even if they face initial setbacks, will be rewarded and fast-tracked. Building a clear career path in digital capabilities, alongside established tracks in finance and marketing, shows our talent that embracing change is a career accelerator, not a dead end. As we say in our latest book Disruption in Action, transformations are ultimately 20% about technology and data, and 80% about people.

Feeling inspired by the 10-point framework, but unsure where to take the first step?

SparkOptimus can bridge the gap between theory and action. We offer a range of services to empower your digital transformation journey. Our Digital Strategy service provides a customized roadmap, while our Gen AI value scan helps uncover hidden potential within your organization. Additionally, our Digital Transformation Review offers a comprehensive evaluation to ensure success, regardless of your starting point. We work collaboratively to tailor a solution that meets your specific needs, so you can take on digital transformation with confidence... and win!