The focus of digital transformation is a paradigm shift in how business and technology work together. Despite the business vertical or the scale of the business, it is becoming increasingly apparent that business which are not able to integrate with the digital world has no real place in the marketplace.
What is Digital Transformation? — Transforming businesses through the shift of operational processes, business models, and customer experiences using digital technology.
To view how large companies work better with and through technology we can use several businesses which have successfully implemented digital transformation strategies or as Dr. Didier Bonnet would put it “Digital Masters”. Well-known names including Starbucks Coffee, Nike, Asian Paint, and Codelco Mining are among these masters. It’s important to note that nearly every industry has successful digital masters to look to, and case studies which can be used to identify the best way to move forward for your own company.
How to transform digitally? — A successful transformation relies more on how firms manage digital transformation than simply on implementing new technologies.
Companies which have successfully implemented digital transformation strategies focus not only on the ‘What’, but also on the ‘How’. There is little to be gained in pouring money into purchasing the latest technology, if there is no buy-in from the company leadership to also spend time and money to research on how best to implement these technologies and use them to transform the workplace and customer experience. Lack of vision and investment in this aspect is a leading cause of failure in technology projects and a main reason that many companies find themselves losing faith in technology. This is really a shame as this can be easily avoided by having the right people to guide the business through the digital transformation journey and the right frame of mind to take the best out of the old practices and dare to create a new future with it.
An important question that arises when considering digital transformation is usually the financial gains which can be expected, or if there are any major financial pitfalls to watch for.
Research shows that masters in digital transformation are 26% more profitable than their industry peers and generate 9% more revenue from their assets. In comparison, beginners trail their competitors by -24% in profitability and -4% in revenue-generation efficiency.
— “Leading Digital” (George Westerman, Didier Bonnet, and Andrew McAfee).
Understanding Digital Transformation
To dive deeper into understanding digital transformation we can first look at the digital capability of companies. This can be segregated into three main areas.
1. Improving customer experience
The first stop for any business if making life better for customers. From a financial standpoint, the happier the customer the more profit the company stands to make. To this end improving customer satisfaction through technology proves one of the most, if not the most, important steps of this journey.
Understanding the customer and designing a compelling customer experience is the key driver for this step. This is assisted by gather quality customer data and identifying different customers in order to provide personalised experiences which resonates with each different customer. The use of well-designed applications in hotels, which use data gathered about the customer to personalise their stay, and the use of augmented reality technology in clothing stores is a good example of identifying different customer needs and specifically catering to them.
Investment in this area has major payoffs throughout the digital journey.
2. Digitising operations
Digitising operations encompasses two main areas.
Digitising the core business processes
Be it manufacturing or pharmaceuticals or aviation, each business has its own line of business (LoB) processes and applications which need to be studied and merged seamlessly to work with new technologies.
Digitising administrative processes
Any company, apart from the core business processes, must concern itself with the day to day running of the business. Human resources, finance, marketing, and sales etc are supporting processes which keep companies afloat and able to focus on their main business. While it seems obvious that most of these departments are already digitised research shows that many companies still don’t leverage technology to its maximum potential and bring clarity and simplicity to these processes.
When talking about operations we must also give thought to worker enablement and performance management. The concepts of Enterprise 2.0 as described by Andrew McAfee go a long way to explaining the expectations of technology in the modern workplace.
Using technology, we can connect and collaborate with our workers while providing them with more data and information to carry out their tasks with less direct supervision. Leading to higher employee satisfaction and lower turnover rates. Further, with the proper use of technology, we can gauge the performance of the company down to each employee by the gathering and interpretation of quality data. This helps to maintain transparency and provides stimulus to the employees and leadership to strive for higher goals.
3. Business model transformation
Changing your business model with the help of technology is really the last step of this journey and is also the most important.
We feel that many companies in secure business verticals may not even consider this step in detail. That said we can see great examples of how this has transformed the world around us. Including how large companies no longer even exist after not paying attention to the digital transformation going on around them.
A well-known example of this would be Blockbuster and Netflix. There are many more popular examples of how technology has changed the business model or introduced brand new models. Uber and Airbnb are also proven to be smart players in this area.
In Conclusion
A few last thoughts to wrap up: Digital Transformation is proving a major disrupter in the business world today. Companies that are not able or willing to incorporate technology into their life find themselves losing business, customers, and money to digital masters. Customer Experience, Operations, and Business Model are three main areas in which companies apply the digital transformation.
How can we help?
At Amplifyn we work with corporates and startups who are ambitious in transforming the traditional business to improve financial performance. Over the years we have developed processes, skills, tools, and right people to do just that.
You can read more about our work at https://amplifyn.com or email us at about your ideas on hello@amplifyn.com
