Ten Keys to Successful Digital Transformation for B2B Manufacturers

“Digital transformation is the rewiring of an organization, with the goal of creating value by continuously deploying tech at scale.” - McKinsey & Co., What is Digital Transformation?

The path to successful digital transformation for B2B manufacturers is fraught with challenges. Still, by following these best practices, they can overcome these hurdles and ultimately achieve enhanced efficiency, market competitiveness, and sustained growth. This article looks at ten of twenty-one of McKinsey & Co.’s keys to unlocking successful digital transformation.

Digital Transformation Success Proves Elusive

“Less than 30% of digital transformation projects were successful.” - McKinsey & Company, Unlocking Success in Digital Transformation.

The survey mentioned above from McKinsey & Company reveals the difficulty of large-scale transformation of traditional businesses. Rewiring an organization by continuously updating traditional processes with technology is meant to build value, scalability, and agility in a company. Yet, many projects rarely realize this value.

Usually very large in scope and reaching multiple departments, many variables affect successful outcomes for digital transformation. 

• Insufficient buy-in for technology change from leadership.
• Budget constraints limit the change that can happen in a reasonable amount of time.
• Lack of communication leads to confusion around the reasoning for the changes.

Unsuccessful digital transformation is not unique to traditional organizations like manufacturers or B2B distributors. Even high-tech, media, and telecommunications companies report that only 16% of the respondents to the above survey saw increased performance and the ability to continue making the changes they needed to meet the expected outcomes from their undertaking.

The Impact of Incomplete Digital Transformation

Historically, digital transformation projects have been expensive, requiring people, money, and time to achieve ambitious goals. If these projects are poorly planned and executed, the results can be disastrous and potentially financially ruinous. Instead of fixing inefficiencies, companies can spend years bogged down fixing problems the project intended to solve.

Unsuccessful digital transformation leads to other, maybe less apparent, negative consequences as well:

Stagnation or loss of market share

“Eighty-seven percent of senior business leaders say digitalization is a company priority, yet only 40% of organizations have brought digital initiatives to scale. The gap between aspiration and achievement widens for enterprises attempting digital business transformation. Without a shared vision across the organization, digital transformation efforts will continue to stall.” - Gartner, Digitalisation Strategy for Business Transformation

Lack of confidence in decision-making

“A technology-first rollout means that solutions are deployed without a clear link to real value opportunities, business challenges, or capability requirements, undermining crucial buy-in from the people charged with making deployment work.” - McKinsey & Co., Capturing the True Value of Industry 4.0

Inability to upgrade legacy systems/processes

According to Deloitte’s Operations Transformation: Redesigning the interior of your business, 40% of global executives report that upgrading legacy systems and processes is a top digital transformation challenge, which reduces operational efficiency rather than improves it.

Ten Ways to Ensure Digital Transformation Success

Using these McKinsey & Company-recommended best practices and the help of an expert digital transformation agency like Acro Commerce,  you can mitigate the chances of your digital transformation project failing.

• Implement digital tools to make information more accessible across the organization. Communication of intended change, data and decisions should happen frequently, broadly and transparently.
• Engage initiative leaders to support the transformation. Your best allies in a successful transformation project are like-minded individuals from across all business units, either digital or nondigital initiatives that are part of the transformation. Rally support and give them a voice to keep your initiatives top of mind.
• Modify standard operating procedures to include new digital technologies. Improve documentation as part of the project to make it clear to employees how the change benefits them in their day-to-day jobs.
• Provide employees with opportunities to generate ideas of where digitization might support the business. Employees become invested in large-scale projects if their input is implemented as part of the whole.
• Implement digital self-serve technology for employees’ and business partners’ use.  Much like B2B buying behaviour has changed, providing ways for partners and employees alike to access the information they need without having to interact with someone else leads to a sense of accomplishment and improves user experience with new technologies.
• Ensure leaders in transformation-specific roles are more involved in developing digital transformation initiatives. Consulting frontline employees in the process and engaging subject matter experts within your organization ensures that all the fine details aren’t missed and promotes personal investment in the project’s success.
• Encourage employees to experiment with new ideas (such as rapid prototyping and allowing everyone to learn from their failures). Testing new technology and ideas should not be restricted to the main project stakeholders. When a feature is almost ready to go live, bring in an end-user to test it to their abilities. This allows for proof-of-concept validation or identifies areas where the solution can be improved.
• Ensure collaboration between business units and others across the organization when employees are working on transformation initiatives. Siloes of communication via job title can be avoided by engaging sub-C-level employees, such as warehouse workers or administration staff, in workshops that elicit feedback on initiatives that may impact their department.
• Engage technology-innovation managers (managers with specialized technical skills who lead work on digital innovations, such as the development of new digital products or services) to support the transformation. In this best practice, these managers do not necessarily mean your in-house managers. Consulting with experienced external experts can identify areas of improvement that your team may not recognize.
• Foster a sense of urgency within the organization for making the transformation’s changes. Open-ended timelines and far-off deadlines lead to project failures. By breaking down projects into sizeable chunks and working in an agile, iterative fashion, progress toward full digital transformation moves at lightning speed.

Modernizing business operations is at the top of, or near to, the to-do list for many B2B and Manufacturing COOs. And with good reason. According to PWC's Digital IQ Report, 35% of companies that have successfully executed these initiatives realized revenue growth of more than five percent over the past three years. Unfortunately, digital transformation projects are fraught with failure and can cost businesses more than just money. 

The good news is that by following these best practices and leaning on outside help from experts in these types of projects, your business stands a much better chance of getting the most out of digital transformation.