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Strong leadership key to digital transformation

New research from Microsoft reveals the success factors and obstacles Australian businesses face in the process of digital transformation.

The report, Embracing digital transformation: Experiences from Australian organisations, is based on detailed qualitative interviews with 30 senior leaders of business and government organisations.

Most organisations were opting for a test and learn approach involving discrete projects and experiments, rather than business-wide structured programs. These smaller shifts allowed for fast iteration, encouraged buy-in from the rest of the business and reflected the pace of change in digital technologies.

Leading organisations typically transformed the customer experience first, using data to win, grow and retain their customer base. They then moved on to other areas, including empowering employees, optimising operations and transforming products and operations.

Microsoft also found that digital transformation requires a pro-innovation corporate mindset ahead of the right technology. Buy-in across the business, strong leadership, an entrepreneurial culture and a pipeline to digital skills were the key factors in successful transformations.

Organisations that exhibited these traits were called proactive and embracing’ and made transformation a top priority and empowered their people to pursue it. Organisations that lacked these traits were called ‘motivated but constrained’ and found their digital efforts hampered by internal obstacles. All organisations shared concerns such as ensuring security and privacy.

“The most digitally advanced organisations had several common elements but the role of people, in terms of leadership, culture and ambition, was the most pervasive,” Microsoft Australia’s managing director Pip Marlow said.

“Our research shows successful organisations have leaders who embrace digital transformation and empower their people to innovate and fully explore the potential of new technologies,” she added.

Proactive organisations also recognised the importance of questioning existing business models and experimenting with news ones, but only a handful were acting on this as part of the digital transformation process.

“Transformation is underpinned by a digital mindset that is a unique interplay of technology, people and process. It is adopting this mindset that we believe truly puts an organisation on the path to digital transformation,” Marlow said.

While respondents said the pace of technological change presented ongoing challenges, most believed upcoming innovations including expanded cloud computing services, the Internet of Things, artificial intelligence and virtual reality would pave the way for future invention.

“Organisations expect digital technology to keep evolving rapidly, but they are also optimistic that it will create huge opportunities,” Marlow said. “There’s no doubt that harnessing the right technology can dramatically improve customer and staff experiences and lift productivity. It can even take organisations into whole new areas of business or allow new ones to emerge.”

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