The seven deadly sins of digital transformation in manufacturing
By Mascha Tamarinof, Global Vertical Lead B2B at Valtech
Driven by customer demand and current economic pressures, more manufacturers are investing in digital transformation and embracing new digital services to enhance their offerings. In fact, 80% of CEOs are increasing digital tech investments to battle current economic pressures with 16% of CIOs in the manufacturing industry viewing digital transformation as a top enterprise priority.
But getting digital transformation right is easier said than done. Global manufacturing IT teams and digital leaders must be aware of the crucial mistakes often made when rolling out digital projects. These can prevent them from achieving the returns senior leadership demands from their investments.
With that in mind, here are the seven deadly sins you should steer clear of if you want to successfully transform your business:
1. Becoming obsessed with the tech
Many manufacturers are making considerable investments to stay ahead of the digital curve. According to Valtech’s Voices of Digital Leaders (VODL) in Manufacturing study, 47% of manufacturing leaders said they increased their digital investment budget by up to 20% in 2023. However, when spending this budget, it’s easy to fall into the same tech trap – believing flashy gadgets, big platforms and shiny technology will provide the silver bullet to overtaking competitors and boosting client satisfaction.
But no matter how savvy the software is, a well-thought-out, human-driven strategy is arguably the most crucial component of any business plan. To thrive in a tech-driven world, it’s essential to see technology as an enabler as opposed to a standalone solution.
2. Diving in headfirst
In the pursuit of digital transformation, some organisations plunge headfirst into action before establishing clear goals and assessing the multitude of risks involved. This can lead to misaligned business objectives, process inefficiencies, and compliance issues.
Rushing digital transformation is a common mistake. Effective futureproofing requires clearly defined short-term goals that contribute to the larger, overarching mission. For this, it’s important to establish a clear strategy. Make sure you set a “North Star” that will help you make decisions when the going gets tough.
When engaging in digital initiatives consider asking yourself:
· What small wins can we work toward to support our main goal?
· What obstacles are likely to arise?
· How does this step support the bigger picture?
· How can we minimise risks and overcome challenges for better operational efficiency?
3. Not including your clients in the transformation process
Not including your clients in your digital transformation is a crucial error. You need your clients’ input and experience to help solve their problems. There are a few reasons why some B2B organisations struggle to effectively include their clients such as:
· Fear of perception: Not wanting to “burden” the client with follow-up questions out of concern for brand reputation.
· Distracted focus: Honing in on internal complexities such as stakeholders, political and managerial structure, and relationship management, forgetting to prioritise the clients’ needs as a result.
· Conflict aversion?: Avoiding critical discussions that dispute the client’s proposed strategy due to fear of conflict or strained relationships.
Typically, manufacturers have a very close relationship with their, often long-term, clients. Fostering this collaborative and transparent environment creates even more honest and valued client connections. Aim to strike the right balance between respecting your client’s time and ensuring the final product or service aligns with their needs and expectations. Apply critical thinking where necessary and help the client understand why your digital transformation initiative will benefit them long-term.
4. Going for ‘the big bang’
Rather than a single ‘big bang’ implementation, digital transformation is often more effective as a series of smaller, iterative rollouts. The ‘big bang’ can be achieved, but it demands rigorous risk assessment and meticulous planning. It’s also important to recognise that this approach can quickly become outdated if not managed effectively.
Rather than putting all your eggs in one basket, consider building a holistic strategy that carefully outlines projects and prioritises them in order of importance. Gradual, iterative digital transformation initiatives are easier to manage for both you and your stakeholders, allowing for more flexibility and adaptability as the digital landscape evolves.
5. Skipping KPI 101
Even with clear goals in place, it’s important to create a baseline measurement strategy to evaluate the success of your digital transformation strategy as it develops. This will typically include some elaborative and qualitative research initially, as some processes are not yet fully digitised (think, call, fax, and emails). KPIs are the heart of any business plan. They’re the pulse of your strategy, telling you whether your digital transformation initiative is working or has fallen flat. KPIs should be measured continuously, so be sure to consistently check the data and adjust them accordingly.
All sensible KPIs link to tangible business outcomes, such as revenue growth, cost savings or increased customer satisfaction. Often, an unbiased third party can bring valuable expertise to the table when it comes to setting KPIs. They can help identify critical considerations, set realistic expectations, and provide guidance on applying data effectively.
6. Running out of fuel
Digital transformation doesn’t happen in a day, and often requires significant resources. Valtech’s VODL in manufacturing study found that 19% of manufacturers are struggling to integrate new technologies into their legacy IT infrastructure and 9% are not getting the C-level support they need to execute their transformation projects.
With so many aspects to consider, be sure to check whether you have the resources you need to follow through with your project. It’s easy to bury your head in the sand, but optimism alone isn’t enough to get you through a project successfully! Instead, carefully evaluate what you need to comfortably execute your plans.
7. Outsourcing your digital strategy
There’s no denying that you’ll need external people and partners to help with your digital transformation initiative. However, this doesn’t mean you should outsource key roles. Digital is more and more getting at the heart of your business strategy. You cannot simply outsource that.
Remember that no-one understands your organisation better than internal stakeholders. To triumph in digital transformation, you should own the process yourself and take the reins in actively orchestrating it. It shouldn’t be something to spectate; it should be a tango between your company and third-party teams. This collaborative approach will help create a solution that’s tailored to your business, rather than settling for a generic, one-size-fits-all approach.
The need for flexibility
Recent events have taught manufacturers that building resilience is key to futureproofing their business. Frequent interruptions in the supply chain, worldwide emergencies, and ongoing fluctuations between inflation and recession have motivated numerous businesses to create backup plans and implement adaptable strategies.
With thorough preparation, data-backed strategies, a composable approach and a patient yet proactive mindset, manufacturers can weather the storms of digital transformation and emerge more resilient in the face of future challenges.