Digital Transformation Governance: Key Principles to Catapult Your Digital Transformation Journey to Success

Editor's Note: Take a look at our featured best practice, Organization Design Toolkit (103-slide PowerPoint presentation). Recent McKinsey research surveyed a large set of global executives and suggests that many companies, these days, are in a nearly permanent state of organizational flux. A rise in efforts in Organizational Design is attributed to the accelerating pace of structural change generated by market [read more]

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Executives in all industries are using digital advances such as analytics, mobility, social media and smart embedded devices to transform their businesses. They are changing customer interactions, internal business processes and even their business models to take advantage of new technological capabilities.

The constantly evolving digital landscape necessitates executives to dynamically design and govern their portfolio of Digital Initiatives.

Recent research findings published in “World Wide Digital Transformation Spending Guide” suggests that most of these Transformation efforts fail to meet or exceed expectations.

Governance related concerns stood has a “high priority” for people leading Digital Transformation efforts in most companies as per an MIT Research conducted in 2019. This data reflecting feedback from 1,030 digital executives shows that ineffective Structure and Governance of Digital Initiatives is the prime reason for them to either fail or deliver below par results

CIOs often lament that business executives lack digital acumen. Drucker School of Management in one of their publications on the topic, provides an insight that Monofunctional Perspective is an impediment to successful Digital Transformations. One of the interviewees in their study said with a touch of desperation that “90% of our general management teams don’t understand technology at all. The average Board Member doesn’t understand more about technology than anybody on the street.”

Effective Digital Transformation Governance will satisfy the needs of different stakeholders across an organization.

Based on a study of more than 100 companies on their digital challenges and interviews with 55 digital executives, we have distilled out 7 key governing principles that link Digital Transformation to impactful success.

1. Centralize Shared Information – Centralize information about Digital Initiatives rather than the initiative themselves.

2. Decentralize Governance of Digital Initiatives over Time – As digital maturity grows, move from Centralized to Decentralized governance of initiatives.

3. Decentralize Ideation. Centralize Idea Evaluation – Decentralize Ideation but Centralize Idea evaluation and prioritization.

4. Ensure KPIs Measure True Impact – Make sure that KPIs measure the real impact you want to achieve with each initiative.

5. Focus on Compatibility, Consistency, and Continuous Integration – Avoid Siloed solutions by ensuring data compatibility, technical consistency, and continuous integration of new initiatives with existing systems.

6. Implement a “Fit-for-Purpose” Mapping System – Implement a “Fit-for-Purpose” mapping system that recognizes value potential and degree of feasibility for each initiative.

7. Perform Scenario Analysis – Evaluate different scenarios to proactively steward Digital Initiatives toward full scale impact.

Interested in gaining more understanding of 7 key principles and Digital Transformation Governance? You can learn more and download an editable PowerPoint about Digital Transformation Governance here on the Flevy documents marketplace.

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