Thursday, February 23, 2017

What’re on your Digital Transformation Scoreboard

The digital transformation scorecard allows you to focus on the most important things. Without scorecards, it will become like searching for a needle in the haystack.

Forward-looking organizations are on the journey of digital transformation. How would you calculate the digital maturity score of your organization? Which management metrics should you apply to measure the progress of changes? Proactive or reactive? On the track or too slow? Healthy or sick? The balanced scorecard is a strategic performance management tool that can be used by managers to keep track of the execution of activities by the staff to monitor the consequences arising from these actions. So, what is on your digital transformation scoreboard?

The performance indicators of Digital Transformation: “Digital Master” refers to those high-performing, highly innovative, and high-mature (less than 15%) digital organizations; they have both clear digital vision and well-crafted digital strategy; they are courageous to be in the vanguard of digital transformation with a quantum lead. But they also proactively develop more advanced and unique digital capabilities step-by-step and build a digital premium into their very foundation of businesses, such as digital mindsets, culture, agility, intelligence, and structure, and they achieve high performing results through strong digital governance discipline and reach its zenith as the digital world continues to expand and diversify. Hence, a well-defined scorecard for digital transformation should contain a good mix of outcome measures or long-term strategic value along with performance drivers to track the progress in the short term (operational measures). The balanced scoreboard is a concise report about strategy execution. A scorecard assesses the progress to strategic goals, it provides the business management a holistic view about the progress of digital transformation offers a way for a corporation to gain a wider perspective on its strategic decisions about digital transformation by considering the impact on finances, customers, internal processes and employee satisfaction. A well-defined scorecard should include digital capability & capacity vs. digital transformation performance. The performance indicators could include:
- Strategy execution capability and capacity
- Risk management
- The level of customer satisfaction
The degree of employee engagement
- The level of digital maturity and measurement

Scorecards help greatly with prioritization: The scorecard helps you a lot when it is into execution mode, not in the paper mode. The success of the strategy is not only based on how well you have planned but how well it is executed. A balanced scoreboard is very useful for facilitating discussions and ensuring decision makers understand the various trade-offs. You also need to consider, among other things, the overall strategic balance, dependencies, and constraints between components, individuals, and overall risk exposure; and it is to provide the “balanced” view of trade-off variables. The Balanced Scorecard framework is a great way of selecting, scoping, and aligning specific projects with overall strategic objectives and the budget. At the corporate level, there's one crucial clarification in: Are you intending to evaluate the capacity/potential to change or innovate, or the level of past performance  (more of a performance measure)? So the additional indicators may include things like:
- The organizational structure and process tuning
-Innovation management
-Performance management

How to score the organization or individual as a Digital Master: First, you have to clarify what/who you are referring to by Digital Master? Are that individual digital master (people who have high mature changeability) or companies/organizations/ conglomerates. How would you calculate a Digital Master’s score? Some factors that could be used to measure digital transformation score within a company could be resources invested (human and financial), employees motivation (Top management encouragement and support, challenging activities being involved, level of autonomy given), number of projects/initiatives being launched, and organizational culture (Mission, vision, structure, networking collaboration with partners), etc. Set “SMART” goals to link individual performance to the strategic initiatives. Measuring the success of strategy execution comes from experience. Good organizations do follow a process and tick the boxes. Better organizations measure the important issues as they go along and adjust the plan/objectives /goals accordingly. Logically, it is as simple as achieving the execution of the strategic initiatives and the benefits arising from them. The complication is that this achievement is managed through the activities of individuals whose goals are linked to the strategic initiatives, so each of these individuals and their goals (SMART) must be actively managed to achieve the success of digital transformation.

The digital transformation scorecard allows you to focus on the most important things. Without scorecards, it will become like searching for a needle in the haystack. It helps you search for things really matter. One of the strengths of the scorecard is that they enable practical use of the success factors and performance management concepts. It puts these key success enablers in the spotlight for all team members and unifies their efforts to achieve common goals. The indicators vary depending on who is doing the measuring, and how they are measuring. It is contextual, from individual to culture to organization as a whole, the well-designed scoreboard should motivate changes and innovative actions, and inspire talented people and the business to become digital masters.


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