Digital transformation is no longer an option — it’s a requirement

The pace of change in the business world is exponential. Innovation and disruptive technology are constant themes across the whole world and no sector is immune. There are new ways to engage with customers, more innovation in the workforce and more opportunities to harness data insights as just a few of the benefits that digital transformation brings.

That means that many traditional companies now need to think more like technology innovators and disruptors, as technology becomes such a major focus of their business. In this digital age, all companies must change how they think, how they interact with customers, partners, and suppliers, and how the business works inside. Part of that thinking is to fundamentally re-imagine how you structure and operate your business. You must look at your business and your industry in the same way that a digital native startup will if they seek to attack you and steal your market. To stay competitive and relevant, it’s crucial for companies to begin and progress their transition to digital transformation.

Social, mobile, analytics, and cloud technologies ushered the first phase of this digital-driven consumer and business transformation. The next phase is being driven by the growth of the Internet of Things (IoT), wearables, big data, and the connectivity and convergence of applications and services. These technologies will once again change the way we work, communicate, and engage with customers and partners.

Transforming your business

“Customer expectations are far exceeding what you can really do. That means a fundamental rethinking about what we do with technology in organizations.” [1]

Digital transformation is not new, but it is entering an era of unprecedented change for businesses. It is an intensive process that begins by effectively building an entirely new organization from scratch, utilizing (a) all the latest digital technologies such as artificial intelligence, predictive analytics and business process automation, (b) the latest tools such as robotics and sensors and © the latest best practices such as business architecture, lean startup, business process management, and continuous innovation using a tool like design thinking[2].

Most importantly, digital transformation marks a radical rethinking of how an organization uses technology, people and processes to fundamentally change business performance. This process requires cross-departmental collaboration in pairing business-focused philosophies with rapid application development models and such extensive changes are typically undertaken in pursuit of new business models and new revenue streams, driven by changes in customer expectations around products and services.

Digital business transformation gives organizations the potential to go beyond simply “touching” every function in their organization; it allows them to “integrate” those functions to reach internal and external stakeholders with equal ease and optimal effect while maximizing the ROI on each technology implementation.

The ultimate power of a digital strategy lies in its scope and objectives. Before embarking on the digital journey, businesses need to ask themselves:

· If I were to build this business today, given everything that I know about the industry and its customers and all of the advances in people, process, technology and tools, how would I design it?

· From the customers’ perspective, where does the value come from?

· What structure and systems would deliver the maximum value with the minimum waste?

· What are the barriers to adoption and the obstacles to delight for my product(s) and/or service(s) and how will my design help potential customers overcome them?

· Where is the friction in my business that the latest usage methods of people, process, technology, and tools can help eliminate?

Customer experience is the foundation of digital transformation. Today, customers expect relevant content in relation to what they’re doing anytime, anywhere and in the format and on the device of their choosing. It’s their journey that dictates your strategy. And in order to keep up with this new kind of “always-connected” customer, your business must embrace technology to deliver an unmatched customer experience.

Product digitisation is also a key component of digital transformation. Today’s business landscape requires innovation and agility, especially when it comes to transforming the data businesses possess into powerful assets. Using technology to enhance your offer or service is of paramount importance. The example of Nike is relevant here: allowing runners to measure (via smartphone or watch), share (using social media), and track improvements (on the cloud platform) when competing or working out, Nike has transformed their product to become a sports or exercise experience.

Digital transformation means business transformation

An important element of digital transformation is, of course, technology. But often, it’s more about shedding outdated processes and legacy technology than it is about adopting new tech. A true digital value proposition isn’t just about digital, but requires in many cases a re-invention of major portions of the business including core technology systems, operating processes and business models. Here’s is where digital strategy comes in. The power of a digital transformation strategy lies in its scope and objectives. Less digitally mature organizations tend to focus on individual technologies and have strategies that are decidedly operational in focus. Digital strategies in the most mature organizations are developed with an eye on transforming the business. In addition, these strategies address the increasingly blurred distinction between the online and offline worlds[3].

For change efforts and projects to be successful, the organization must also focus on project planning and management, behaviour planning and management, and communications planning and management. The related projects, behaviours, and communications must all be effectively planned and managed in a way that keeps all three in sync.

Consequently, digital transformation efforts, should be accompanied by the following elements:

· Change Planning

· Change Leadership

· Change Management

· Change Maintenance

· Change Portfolio Management (encompassing all of the above)

The road to success

The best results when it comes to digital transformation come from a strategic step-by-step process. According to Altimeter Group there are six stages of digital transformation[4]:

· Business as Usual: Organizations operate with a familiar legacy perspective of customers, processes, metrics, business models, and technology, believing that it remains the solution to digital relevance.

· Present and Active: Experimentation drives digital literacy and creativity, albeit disparately, throughout the organization while aiming to improve and amplify specific touchpoints and processes.

· Formalized: Make experimentation intentional to drive initiatives that are bolder and seek executive support for new resources and technology.

· Strategic: Recognize the strength in collaboration as their research, work, and shared insights contribute to new strategic roadmaps that plan for digital transformation.

· Converged: The formation of a dedicated digital transformation team to guide strategy and operations based on business and customer-centric goals.

· Innovative and Adaptive: Digital transformation becomes a way of business and a new environment and culture is established to identify and act upon technology and market trends in pilot and, eventually, at scale.

Implementing a digital transformation strategy is imperative in today’s fast-paced and ever-changing business environment. Digital transformation is no longer a choice, it’s an essential driver of revenue, profit and growth. Despite the fact that we are many years into the digital wave of change, the stakes are growing faster than ever, the speed of change is getting faster than ever, and for many, the determination to drive large enterprises to the winner’s circle of the digital world is more profound than ever. Companies that avoid risk-taking are unlikely to thrive and likely to lose talent, as employees across all age groups want to work for businesses committed to digital progress.

[1] George Westerman, MIT principal research scientist and author of Leading Digital: Turning Technology Into Business Transformation

[2] http://www.limelightsolutions.co.uk/digital-strategy-vs-digital-transformation/

[3] https://sloanreview.mit.edu/projects/strategy-drives-digital-transformation/

[4] https://www.slideshare.net/Altimeter/the-six-stages-of-digital-transformation