Governance is critical to the success of digital transformation efforts, which is why organizations should incorporate a governance optimization program into their digital change efforts.
In this article, we will explore:
- Why governance matters in digital transformation
- The keys to successful governance
- How a governance optimization program can improve digital change results
- Tips for designing a governance optimization program
To start with, let’s explore how governance and optimization are linked.
Successful Digital Transformation Depends on Effective Governance
Digital disruption and digital transformation are altering the business landscape dramatically. New technologies are giving rise to new business practices, new ways of thinking, and entirely new industries.
To be effective, every digital transformation program should focus on:
- Utilizing resources to their fullest extent
- Minimizing risk
- Maximizing the outcomes of the transformation initiative
These imperative strongly imply a need for governance.
And they also suggest that the better the governance, the more efficient and effective the digital transformation effort.
Keys to Successful Governance
There are a number of characteristics that define effective governance programs, such as:
- Efficiency and speed
- Talent management
- Democratize and delegate responsibilities
In addition to these types of attributes, a report by Capgemini also identified three governance mechanisms that are common during digital transformation efforts.
- Shared digital units. Cross-functional teams would handle functions specific to digital transformation, such as the development of digital services or developing digital skills.
- Governance committees. Different types of committees would serve different purposes. Steering committees would guide decision-making around digital technology. Innovation committees would focus on using new technology to innovate, pursue new opportunities, and adjust to environmental changes.
- New digital roles. New job functions are emerging within the digital revolution. In the Capgemini report, these included functions such as “digital czars,” who would be responsible for a great many aspects of the organization’s digital functions. Another common role was the digital liaison, who would take on leadership or knowledge-sharing roles within local business units.
Mechanisms such as these – along with some of those covered below – can greatly improve a governance program and ultimately the outcomes of a digital transformation program.
Tips for Creating a Modern Governance Optimization Program for Digital Transformation Programs
A governance program can significantly upgrade the performance of a digital transformation effort, if it is implemented properly.
Here are a few tips for optimizing and enhancing governance systems for any digital change effort:
- Develop the three governance mechanisms mentioned above. The governance mechanisms mentioned in the Capgemini report provide a good starting point for optimizing governance systems. It is important, of course, to evaluate each of those mechanisms carefully and develop mechanisms customized to one’s own circumstances
- Install innovation hubs to tackle problems creatively. A report by Altimeter noted that a number of companies were building innovation hubs to assist with their digital transformation efforts. As the Capgemini report also mentioned, such committees can be very useful for governance – not to mention other digital transformation functions, such as product design.
- Create a modern employee training program. For a digital transformation program to actually produce results, employees must be proficient with new tools and workflows. Digital employee training, therefore, is a must. Modern training programs should leverage digital technology, such as digital adoption platforms (DAPs), which are superior to many traditional training approaches.
- Add new job functions to take on new tasks and responsibilities. A digitally maturing company will inevitably transform its operations and its structure. The introduction of new business units and functions will inevitably require new governance, so organizations should be prepared to introduce new job roles when necessary.
- Follow change management principles and methods. Change management is an essential discipline in the modern organization. And it is also ideal for businesses undergoing digital transformation, since most change management models have governance systems baked into them. Prosci, for instance, very clearly defines a number of governance elements, from how teams should be structured to change project roadmaps.
- Leverage modern data-driven technology to gain insight and continually improve the governance program. Optimization, at least in a business context, usually refers to the systematic improvement of a business process or practice. In the digital workplace, this usually means defining metrics and KPIs, tracking performance, and making regular enhancements based on that data.
Given the complexity of governance programs and today’s continually changing organizations (particularly those undergoing digital transformation), it is crucial to continue optimizing governance systems over time.
That is why the last point is perhaps the most important.
By constantly collecting and analyzing data about a governance effort, organizations can use performance data to drive improvements and fuel new ideas.
Ultimately, the key to optimization is staying flexible, agile, and adaptable – there are a myriad of potential governance structures and options, so organizations should continue searching for ways to enhance performance and efficiency.