Digital transformation. It’s a term that we often hear but what exactly does it mean?
Digital transformation refers to the integration of digital technologies into all aspects of business – it changes the way you operate and how you service your customers. While digital transformation will look different for each business, the common thread is that digital transformation changes business – how value is delivered, how business operates and how responsive the organisation is to continuous change and improvement. Digital transformation focuses on two aspects: how the business faces its customers, and how the business deals with internal operations – the latter also includes how the business faces its employees. Using technology to transform both of these aspects can help to improve business performance and mitigate the threat of disruption.
When it comes to digital transformation, you need to ask yourself a few questions. And like Simon Sinek recommends, we need to start with “why”...
Start with why
Being customer focused
Leadership is key
Team buy-in
A business approach
The only way to get work done
Ultimate survival
The stages of digital transformation
Don't get left behind
Why should your business be digitally transformed? It may be that you want to improve your customers’ experience, increase productivity or reduce stress points and bottlenecks. It could be that you want to boost profitability. Or it may be something more aspirational, like wanting to be the best in your industry. The supplier of choice. The go-to for your customers.
Many times, the reason for digital transformation is however much more basic – it’s a matter of survival. The pandemic has shown that those businesses not ready for and adaptable to change, are unlikely to make it in the long term. Dealing with disruptions to supply chains, changing customer demands and market pressures can break your business. The pandemic has also shown that unexpected challenges can be a driver for innovation. Many organisations were capable of quickly diversifying their market offerings – consumers leapt at the chance to shop online and have deliveries to their door, rather than to opt for traditional ways of shopping. This necessitated rapid digital transformation across several businesses and industries.
If the reason you want to digitally transform is based on your business wanting to increase customer centricity, your focus is really on products and services and how you make these available to your customers. How you give them the best possible experience when doing business with you, so that they want to come back for more. How you give your customers this outstanding experience will entail changing your business – automating your processes, getting people to use new and improved systems, building and applying new business models. Included in this change are certain enablers, like technologies, software and data analytics.
The drive for becoming more customer-focused is however not in the technology alone, but in the culture and leadership of the business. To successfully drive digital transformation you need to have a commitment at the heart of the business – leadership support is vital if you want to reap the benefits that digital transformation can bring. In business process review projects, it is absolutely essential to have a project sponsor from the C-suite that supports and actively participates in the project. In the same vein as setting the tone at the top in terms of good corporate governance, leadership needs to embrace and drive the technological transformation of the business. To have the greatest impact, transformation should be ingrained into the business and championed from the leadership level.
Another element required for a successful technological change within any business is to have your employees join you on the journey. It is important to help them realise the benefits of improving the business systems in their day to day operations – they need to see and experience the tangible benefits. This may involve demonstrating to your sales team that the digital transformation will improve the net promoter score - that value delivered to customers will be enhanced, your customer support base will increase through referrals and recommendations to friends and colleagues, and in turn, lead to growth in revenues. Growing business revenues can contribute to long term sustainability within the business, which in turn bodes well for the team as a whole. While change is often tricky, a solid change management process, driven by leadership, can contribute to increased employee engagement and user adoption.
Bringing about a successful change in your business is not simply through implementing a new IT system. It should not be viewed as yet another IT project but rather as a business project – something that is aimed at improving the entire business process. While IT plays a crucial role, digital transformation is based on a business partnership, where all role players can see the future “to-be” state and what advantages this will bring.
A lot of the confusion surrounds the word “digital” – some interpret this to be going paperless; others might think of data analysis and artificial intelligence; project managers might interpret it to mean agile teams. If you are going to step on to the journey of digital transformation, you need to make sure everyone has a clear understanding of what is meant.
With the rapid movement to work-from-home options being widely embraced by employees the world over, digital technology is no longer seen as simply a “nice-to-have”. In many cases, employees are insisting on increased flexibility in how and where they work - making digital transformation an absolute necessity. Businesses now also have to contend with making the employee experience a better one – taking into account the physical, cultural and technological work environment. Key employee experiences that are enabled by a better-designed digital workplace include:
Many employees are still struggling with feeding manual systems or using cobbled-together ad hoc systems and apps - not the most effective use of technology or human resources at all. Through digital transformation, you can help your team to focus on more strategic aspects of work – driving effectiveness and getting the work done. This includes connecting processes, information, applications and people together in a more seamless manner:
Studies by MIT Sloan Management Review and Deloitte have shown that companies at different levels of maturity of digital transformation also approach innovation differently:
Ultimately, digital transformation is not only about technology and what it enables businesses to achieve. It also cuts across the spectrum of strategic thinking, human capital, culture and technologies to meet growing customer and employee demands. Businesses that want to survive – and in fact future-proof themselves – need to adopt digital transformation from end-to-end as a way of reducing operational costs, enhancing revenues and improving customer and employee experiences.
Unfortunately, many businesses are falling behind on digital transformation. The Boston Consulting Group estimates that only 30% of companies are successful in digital transformation. Ever-evolving digital technologies and increased customer (and employee) demands to mean that those companies which do not keep up the pace will inevitably suffer the consequences. Brands that do not operate online - whether in the customer service or e-commerce space – will be left behind. Employers who do not offer resources for enhanced collaboration between employees and customers, and refuse to offer remote working opportunities, are likely to see a bigger turnover in staff.
To successfully navigate digital transformation, you have to be aware of the digital learning curve involved. Each stage of digital transformation offers different opportunities of organisational learning. The key is to take a step-by-step, rather than a big bang, approach - this will increase your chances of success.
Start by simplifying your existing processes. To simplify, you need to first understand what each process entails. Documenting and analysing your existing “as-is” state of business can help towards laying a solid foundation when you want to start your digital transformation journey. Once you unpack the risks you currently face, you can then start identifying how to mitigate these. Once you have a solid process in place, you can add automation, build efficiencies and drive digital transformation.
Next, you need to consider an enterprise-wide transformation which works on aligning traditional silos in the business with proper governance structures, and cross-functional optimisation. This stage brings more complexity as it involves various stakeholders from across the organisation. For example, if you are a retailer, you can approach digital transformation from the perspective of having a fully integrated customer experience across all physical and digital platforms. The desired outcome? A better customer experience that ultimately grows your business and enhances revenues.
The third stage entails new business creation – increasing revenue and generating additional revenue streams. As a retailer, you may wish to offer your customers additional services on top of the traditional products offered – a subscription-based business model is one such example. By utilising data analytics, you can more accurately predict customer behaviours and operational performance.
All things considered, in today’s VUCA world of Volatility, Uncertainty, Complexity and Ambiguity, businesses need to change the way they think and operate. If you want your business to survive, you need to bring solutions to the problems of a digital and dynamic world. You need to drive customer and employee experiences on the journey to growth and you can achieve this by keeping up with digital transformation.
If you want to find out how Velocity can help you achieve this, contact us about partnering with you on business process review, design and automation. We are your portal to people.