How should business leaders deal with digital transformation? The digital transformation is still seen by many as a buzzword, but let us be very clear: technological developments such as Artificial Intelligence (AI), Augmented Reality (AR) and robotics means that many business processes will be automated in the coming years. These developments will trigger a shock in many sectors.

Digitization will lead to another way of customer involvement, radical opportunities for cost efficiency and fundamental new business models. And that will bring enormous opportunities to distinguish yourself from the competition and to create business value. It is therefore worrying that many companies are hardly concerned with the impact on their business model. But what should be on the agenda of management? Based on a report from Boston Consulting Group, we discuss five pillars to digitally transform an organization.

Digitizing the customer relationship

The digital trend changes radically how both B2C and B2B companies relate to their customers. The company of the future will have to exceed customer expectations with highly personalized interactions and 24/7 access. This applies to companies in the private sector, but certainly also to the public sector, such as the government and healthcare institutions. Every organization therefore faces the exceptional challenge of investigating what the relationship with their client will look like in the future and what that means for the projects that they have to implement.

Recruiting digital talent

The organization of the future will look very differently and work in very different ways. The role of talent within the company of the future will be accompanied by higher levels of interaction with smart technology, and the organizational structure will play a key role in redefining traditional roles.

Without talented employees who are able to use existing digital technologies and adapt to the new methods and approaches, companies will struggle. Companies need people with digital design and technical skills, including UX / UI experts, people-oriented design talent, data scientists and data and technology engineers. However, employees who are flexible, able to learn and adapt are expensive. To attract, develop and retain the people they need, leaders must adapt their organization.

In concrete terms, this means that companies must already zoom in to their current workforce and determine which employees have or can develop the required skills. Recruitment policy and training programs within an organization must be examined in order to have the right talents within the organization in time.

Building the digital organization

In addition, a new organization model is needed that is based on person-machine processes and centralized data and technology platforms. Human capacity will increasingly have to be used to design, control and innovate processes instead of operating them. The current organization model that emphasizes hierarchy, role definition and waterfall planning models will have to be adjusted or replaced. Multidisciplinary “agile improvement teams” will work with machines to improve the company’s customer experiences and business processes. As this will lead in many areas to fully machine-automated processes (which are continuously optimized using machine learning), this will have a serious impact on the workforce.

Harnessing data and advanced technologies

For companies of the future, data will become a huge asset and learning will become an essential opportunity. Data is literally the “senses” of the machines and AI of the company. Companies must invest in the collection of data (via sensors, data ecosystems and partnerships and by obtaining the consent of the customers).

Companies will have to determine in which cases data can create enormous value. They must review the data with AI and advanced analysis, convert it into business actions, track results and create a continuous Plan-Do-Check-Act cycle. There are many examples: predictive maintenance or machine control in production; advanced production flows or stock management or transport in supply chain. Companies that understand “fast learning” will make better decisions and create value and competitive advantage.

To get the maximum benefit from all the data that is collected in the organization, systems are needed that span comparable business units. This is a major challenge for companies with different legacy systems across the business units. Phasing out these systems and implementing a global technological architecture is a huge project, but it is indispensable to optimally translate the digital possibilities into business success.

Digitizing and automating the operation

Machines can do what people do: detect (with cheap data sensors), remember (with cloud and data lakes), make decisions (with AI and advanced analyzes), provide on-site input (with mobile applications) and take action (using robots and autonomous vehicles). Increasingly, this can all be achieved at a reasonable price. Once developed, machine and AI automated or improved processes will perform better than people because they are cheaper and more robust. The most important thing is that the learning of these processes is recorded in a more systematic and effective way than is possible with operations that are only carried out by people. The speed of learning will give organizations applying these processes a real competitive advantage.

In order to fully exploit the benefits of AI and learning and to make the investment in technology work economically, companies will be forced to adopt common end-to-end processes worldwide, supported by common technology platforms. The governance structures of these global processes and platforms also require a more central and global structure. Being able to upgrade and improve common systems instead of the different local and small-scale systems will lead to a huge cost reduction.

In summary, start no wand make the right choices!

In short, the digital transformation influences every organization and is indispensable on the management agenda. Within each sector, a new ranking will emerge in the coming decades based on which organization has been able to reinvent itself. Project portfolio management is given an enormously important role in this. How are the projects selected from the flood of initiatives that this trend entails? Whoever has a good process for project prioritizing, following up and adjusting the project portfolio, will gain a good position in that ranking.