How to lead a digital transformation in your business

Follow these five steps to help create a culture of continuous innovation

5-minute read

A digital transformation can spark your growth, boost your productivity and rapidly increase your profits.

Digital transformation is about much more than getting new technological gizmos for employees. It means changing your company’s culture to use data and technology to make more informed, faster decisions and better meet customer needs. A critical element of the process is to adopt a mentality of continual innovation and quality improvement.

“We live in a society where people want things faster,” says BDC Business Advisor Jivi Cheema. “Consumers demand it. But very few businesses have the culture of innovation they need to keep up with the fast-changing marketplace. Employees often don’t feel encouraged to bring forth ideas about how to improve the business. Digital transformation is about fostering such an innovation culture.”

Cheema says entrepreneurs should follow these five steps to lead a digital transformation. (Cheema’s advice is inspired in part by Harvard business professor John Keller’s eight-step model for managing change.)

1. Prepare a climate for change

The first step in a digital transformation is to establish why you’re doing it. Sit down with key employees to do a pain point assessment—a review of each area of the business to see what’s working well and what’s not.

Does your company need to improve customer service or reduce errors? Do you have poor internal communication? Are you losing business to competitors or struggling to fill orders?

Cheema says you should ask the following questions:

Where is your business fragmented right now?
What is the current reality, and how is it working?
Where do breakdowns occur in each area of the business?
Does everyone understand their role and the business vision?
How well does information flow?

“You hear all the time that things are fine, but if you look more closely, you often find pain points calling for a solution,” Cheema says.

Also have an honest look at your current technology, how you use data and any gaps in competencies, resources or buy-in for executing a transformation. Then, explore how digital technology and better data can help your business. Be sure to look at what your competitors and other industries are doing with technology.

2. Create an action plan

Solutions to your pain points don’t necessarily have to involve technology. But as part of a digital transformation, you should investigate how technology and better data can help in each area of the business.

Create a clear action plan for acquiring and implementing the technological solution. The plan should include key milestones for progress and steps your business will need to take to transform itself to maximize the benefits of the technology or data. Also build in contingency planning in case a step doesn’t work out.

Try to include short-term targets for quick, easy wins to keep everyone motivated. These could be sure-fire projects that aren’t too costly or onerous to implement.

One of the things we hear a lot is, ‘We don’t want to do that because it’s going to be a really big project. Break it up into bite-sized pieces.

3. Establish a change team

Getting employee buy-in starts from the top. Management has to not only understand the action plan and the need for change, but lead the way in technology adoption.

“Change will not take place if leadership does not exemplify it,” Cheema says.

She also advises clients to create a “change coalition”—a team of influential employees from all ranks who believe strongly in the transformation and champion it to others. The coalition can include workers or managers most directly affected by the pain points, tech-savvy employees and even some who resist the change.

“You’re building peer-to-peer change,” Cheema says. “Change that implements fastest is peer-led.”

4. Engage and communicate

Create a communication plan to explain the change to your team, address employee concerns and quickly get feedback on hiccups. For example, you can give regular progress updates at company meetings, in newsletters or on a chart posted in the lunchroom.

5. Sustain a change culture

You can easily find yourself slipping back into old ways if change doesn’t become core to your business mentality. The aim is to foster a culture of continual innovation and quality improvement.

“Make change part of your everyday language and culture,” Cheema says. “You want to constantly be thinking about how you do things and how to do them better.”

A useful strategy is to regularly invite employees to come up with ideas for innovation—for example, with an ideas or suggestion box. Or go further and develop a structured innovation process. For instance, you can create an innovation team to regularly gather quality improvement ideas, brainstorm them and bring promising ones to management to consider developing.

Read about how to brainstorm for innovation.

It’s important to recognize and reward people for promoting change. You can recognize employees in internal communications and reward them with bonuses or points exchangeable for gifts. Celebrate hitting your action plan milestones.

You can also help sustain a culture of change by monitoring key performance indicators (KPIs). Use dashboards, newsletters and meetings to regularly inform employees about KPI achievements. “It becomes a cycle of constant improvement based on data,” Cheema says.