For years, digital transformation has been a crucial response to the rapid disruption technology has brought to companies throughout the world. For the majority of businesses, digital transformation has been fueled by growth opportunities, while 41% cite increased competitive pressures and 38% attribute their transformation to data security regulations like the GDPR.
Now, in the wake of the COVID-19 pandemic, digital transformation has become not just a strategy for competitive, future-forward businesses, but a mandatory and rapid requirement for survival. A considerable 70% of companies have increased or maintained their investment in digital transformation during the pandemic with a mind to foster resilience.
While the rapid changes brought about by COVID-19 have started many businesses in the right direction, these organizations must implement a robust digital transformation strategy in order to stay ahead of future disruptions.
What is digital transformation?
Digital transformation is a means through which businesses reinvent or adapt their customer offering using technology and the latest business practices to respond to market pressures. This can include finding new ways to engage the customer, selling new (typically digital) products or services, or automating internal processes to improve the customer experience.
Generally, digital transformation can look very different from one company to another, as it must be unique to the company’s values, goals and offering. Digital transformation is not a one-size-fits-all approach, but a roadmap or journey that asks companies to look inward and identify opportunities of improvement in their people, processes and technology.
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Getting started with digital transformation
Companies must first identify their vision before commencing a digital transformation. To begin actively investing in this journey, you first need to understand where your business is now and where you want it to be.
This means outlining your Strategy and Aspirations, and Prioritizing Outcomes. Your vision should illustrate a greater, overall outcome wherein your company has a culture of continual development and the tools and processes required to achieve that.
Look at your business in terms of its people, processes and technology. Ask:
- What human talent/skills does my business require to achieve my vision?
- What manual processes can be automated?
- What processes are creating more obstacles than they remove?
- What technological tools are available to my team?
- How can technology deliver value to my team and customers?
- What data could we be collecting to inform strategic decisions? How could we use technology to collect this data?
With a strategy and aspirations in place, you can begin to follow a robust digital transformation framework. A strong framework provides a structure for examining, enhancing and ultimately transforming your business’s key capabilities in parallel to one another.
Two practical steps you can take immediately to start transforming:
- Investigate remote working opportunities within your organization. What tools are available to you? Do your people have the infrastructure at home to be able to support remote working? Can you modify day-to-day habits (i.e. stand-ups or other get-togethers) to be entirely virtual?
- Look again at your organizational short- and mid-term goals. Can you still achieve them in a pandemic or post-pandemic environment? You may need to redefine them.
Capability 1: People
There are two key areas of progress in developing people: talent management and change management.
Talent management begins with defining the talents and skill profiles required in your company, and taking stock of which skills are missing.
This leads into identifying candidates for professional development, company-wide digital skills training and opportunities for new role creation. Ultimately, the goal is establish high-caliber talent throughout the company and create digital leaders in key management positions.
Meanwhile, change management is necessary to proactively address negative responses or gut reactions to transformation in the business.
As you introduce new roles, allocate professional development, reinvent processes and adopt new technologies, it’s likely that people within your company will respond with fear, confusion or uncertainty. Change management requires continual communication and empowerment of people to reinforce new ways of working. Your people need to understand that digital transformation is about evolving and augmenting human capabilities, not replacing them.
According to McKinsey, almost twice as many organizations that adopted the following workforce and talent practices were successful in their digital transformation, compared to those that didn’t:
- Offer leadership development programs focused on leading cross-functional teams.
- Offer programs to develop skills for coaching others in new ways of working.
- Identify skills required to deliver digital products and services in the organization’s portfolio.
- Set hiring goals based on specific skill needs.
Through talent and change management, you can build a culture of continuous improvement, where staff are excited about change rather than fearing it.
Practical steps for transforming your people:
- Begin by defining new required roles and responsibilities.
- Elevate digital skills within your leadership team.
- Empower your people to work in new ways by investing in upskilling in digital capabilities.
- Guide your people into using upgraded digital tools for day-to-day tasks.
- Communicate about change frequently via traditional and digital methods.
Capability 2: Process
Your processes control the efficiencies and inefficiencies of your company.
Consider both the inputs and outputs of a simple process: Does an application for a minor purchase or invoice require countless approvals from your finance department? Is the amount of work going in disproportionate to the value of the result?
Companies should adopt a Process Optimization Model that aims to transform standard processes into adaptive processes. This requires constant reassessment of processes throughout the phases of digital transformation.
Look at what your existing processes are, the expected inputs and outputs, and how processes interface throughout the company. Through this model, you can identify areas for improvement where processes are siloed, inefficient or overly complex. The aim is to understand what can be automated and where processes can be connected for greater efficiency. It’s also important to understand where tools can be integrated into processes to enhance operational activities.
Practical steps for transforming your processes:
- Begin by identifying and understanding your existing processes.
- Start to adopt agile methodologies to improve adaptability and robustness.
- Develop platform-based operating models supported by technology.
Capability 3: Technology
When thinking about technology, begin like any other capability: assess what’s already there and determine the space for improvement. Depending on the maturity of your company, you may have existing technology or you may be using barebones tools such as disparate spreadsheets or even manual bookkeeping.
A core part of developing your technology capability requires scouting for suitable technological enhancements for your processes and value proposition. Ask what technology will generate rapid value while also supporting your vision for digital transformation. Example tools include cloud solutions, IoT, robotics, mobile and web technologies, 3D manufacturing and automation.
Using SAMR to identify right-fit technology
The SAMR framework helps organizations identify the right IT platforms that are functional for the business, and integrate them without breaking the chain of your people and processes.
So what does SAMR mean?
- Substitution: Technology is integrated into the workflow, acting as a substitute for operational workload.
- Augmentation: Users begin to work with the technology, noticing functional improvements to their day-to-day activities.
- Modification: Users learn to adapt their own workflows to accommodate and better utilize the technology.
- Redefinition: Full automation/digital workflows are achieved, with technology enabling the creation of new tasks.
Practical steps for transforming your technology:
- Recognize that your business model needs to transform.
- Introduce technology to begin delivering your products or services digitally.
- Further develop your digital offering by introducing additional products or services.
- Modify your business model by emphasizing your digital portfolio.
- Redefine your business model to prioritize or shift entirely to the digital format.
Capability 4: Artificial Intelligence and Data Science
While artificial intelligence is, of course, a type of technology, its application goes a bit further than the technology capability itself. This fourth capability focuses on providing continual evolution opportunities for your company, supported by data science and using AI as a tool.
With AI technologies collecting, collating and analyzing key data from your digital offerings and beyond, you can begin to discover new opportunities for your business that you might not have imagined before.
In addition to identifying market trends and analyzing customer behavior, AI can generate predictions so you can see the trajectory of your business and your customers. From there, you can predict customer demand and better inform strategic business decisions and partnerships.
Practical steps for integrating artificial intelligence and data science into your company:
- Collect and prepare the data sets your company requires.
- Create data models and inform machine learning.
- Establish artificial intelligence platforms that are capable of providing accurate business predictions.
When does digital transformation end?
The short answer is: it doesn’t. Setting an end date for your digital transformation is essentially the same as stopping it altogether.
While you may have gone through the basic groundwork of establishing a digital business, digital transformation itself is defined by a culture of continual improvement. To achieve true digital transformation, you must be prepared to adapt, evolve and grow as market demands change and data reveals new opportunities.
Remember, when you decide to “stop” digital transformation, the rest of the world and your competitors continue to grow more responsive, more customer-driven and ultimately more competitive.
Don’t get left behind. With your key capabilities developed and artificial intelligence providing data-driven insight into the trajectory of your business, you should be poised to continue pushing your business into the future indefinitely.
Take the next step to true digital transformation
Staying competitive isn’t just a smart decision. In many ways, it’s the only decision.
At dig8ital, we understand that digital transformation is a process that requires decisive leadership, strategic planning and a clear vision. We work closely with companies to reorganize their customer journeys and evolve their digital capabilities to compete with digital natives and equip their leadership with the framework and tools for continued growth.
Contact us today for a free digital transformation consultation.