Have you already “completed” the digital transformation?

Digital transformation has emerged as an umbrella term for efforts to use digital technologies and digital-age thinking to help an organization evolve. For some companies, digital transformation can be as simple as updating tools to make various operating units more efficient and effective. For other companies, digital transformation may involve creating entirely new divisions or entire companies based on digital-era business models.

While it may seem like a counterintuitive statement for a technology company, the “digital” aspect of digital transformation is actually less interesting than what is possible thanks to technology. For example, high-speed networks and collaboration software are certainly impressive tools. Yet the ability for companies to collaborate across the world in real time and access global talent, on or off the payroll, has reshaped the entire economy.

Unfortunately, many organizations view digital transformation as a discrete event. Just like updating a business software package or implementing a new online store, they create a digital transformation “project” with defined start and end dates and consider themselves “transformed” when they close the PowerPoint after the final project presentation.

True transformation never ends – and that’s okay

Perhaps it is human nature that we strive for a discrete beginning and end to what are ultimately continuous journeys. We celebrate birthdays and anniversaries as if they represent a discreet end and a beginning to ever-evolving lives and relationships. It seems like we are innately designed to arrive at a destination so we can cross something else off our list and move on to the next one.

This can be helpful in terms of accomplishing distinct tasks, as it maintains momentum and focus on a goal. Launching a new technology-based product without an end date or specific goal would likely be a disaster. However, transformation is an ongoing process and your goals today are unlikely to be the same in 6 to 18 months – that is, if you are doing the transformation “right”.

So, if transformation is a never-ending process, how do you measure success? One of the most effective techniques is benchmarking, both internally and externally.

Internal benchmarking involves identifying some key performance indicators, emphasizing “key”. Your selection of indicators may change over time, but avoid the temptation to capture dozens of them. This can result in a nice dashboard report and the opportunity to find at least some positive indicator at any time. Yet many metrics create such a lack of focus that they are no longer useful after a short period .

When considering which metrics are relevant to your digital transformation efforts, try turning qualitative metrics into something quantitative. For example, if a critical element of your digital transformation is improving employee engagement, this could be measured through retention or the percentage of offers accepted. If you are trying to drive innovation, consider measuring the number of new product or revenue launches in “non-traditional” areas outside your current lines of business.

As a runner, I find fitness analogies helpful. For example, if my qualitative goal is to “get faster,” I could use my mile pace as a more quantitative metric. If I were focused on improving speed and endurance, I could look at the average pace for the last 5 miles of a marathon. These simple, easy-to-measure KPIs reflect several complex factors ranging from nutrition and recovery to strength. With some creativity, you'll likely find a qualitative KPI that captures several nuanced elements of your transformation .

Throughout your transformation, these metrics should be reviewed and updated. My running pace has improved significantly since I started my “running transformation.” And just as I update my goals each year to reflect where I am on my journey, your digital transformation goals should also be evaluated and recalibrated.

Compare intelligently

External benchmarking has been a tool for evaluating the objectives and impact of transformation efforts, and is also useful for digital transformation when used intelligently. There is a tendency to look to “digital natives” as a starting point for benchmarking, which can be a frustrating exercise.

Just as Meta (Facebook) would benchmark so unfavorably that it would be ridiculous if it assessed its ability to conduct oil and gas exploration in comparison to a major oil company, so the oil company should avoid directly comparing itself to Meta in terms of digital capabilities.

Look at industry peers or analogous industries that may be further along in their digital journeys. If your industry is very similar, an automaker may find a suitable set of peers in medical equipment manufacturers. Identify companies and industries 6 to 24 months in advance of their transformation efforts, rather than a set of peers that are years or even a decade out, as is the case with many “digital natives.”

You can certainly learn from advanced companies and apply the lessons and methods they have developed after years of practice, just as any athlete can learn from some techniques and practices from professionals. However, just as a novice golfer wouldn't evaluate their swing against a tour pro, neither should your company look to digital natives as direct peers for benchmarking.

In the same way that you constantly evaluate and recalibrate your KPIs, you should adjust your external benchmarks at least annually . You may find that emerging industries are doing something interesting in their accelerated transformations while their current set of peers slows down or matures.

You may even find that you are ahead of your peers and need to select a new group to evaluate your performance.

Refocus and repeat

Organizations that consistently outperform digital transformation often focus less on using a specific technology and more on using a specific technology. developing digital “muscles” that allow the organization to quickly adapt and use any new technologies that emerge. As you advance in your digital transformation effort, you will find that your company's ability to identify and use digital tools and methodologies productively improves.

While an initial focus of your digital transformation may have been on cost reduction and operational efficiency, as you build on your strengths, you may want to refocus your efforts on driving innovation or advancing your corporate strategy. One of the key benefits of making your digital journey an ongoing evolution rather than a time-bound project is that you'll develop features that benefit other areas of your business, not just end up with some cool new technology.