Updated: Jul 27, 2022
Digital technology – and the ways we use them in our personal lives, work and society – have changed the face of business and will continue to do so. This has always been so but the pace at which it is happening is accelerating and faster than the pace of transformation in organizations.
Digital Transformation is the cultural, organizational and operational change of an organization, industry or ecosystem through a smart integration of digital technologies, processes and competencies across all levels and functions in a staged and strategic way.
Why this is happening?
Present and future shifts and changes(e.g: Covid-19 Pandemic, Digital Economy), leading to the necessity of a faster deployment of a digital transformation strategy, can be induced by several causes, often at the same time, on the levels of customer behavior and expectations, new economic realities, societal shifts (e.g. aging populations), ecosystem/industry disruption and (the accelerating adoption and innovation regarding) emerging or existing digital technologies.
The 4 Main Areas of Digital Transformation
The pace of digital transformation differs across industries and business needs. You may be trying to automate one department or rethinking an entire business process. There are many areas in a business where such change can happen. But for simplicity's sake, we will stick to 4 considerations you should evaluate before you embark on this initiative.
Process transformation means modifying your business process in order to achieve new goals. Most companies engage in a business process transformation when they require a radical update. Undergoing such a transformation will modernize an organization’s processes, integrate new technology, save money, and better incorporate core systems.
Business Model Transformation
This means pursuing digital technologies in order to transform their traditional business models. Some examples include Netflix's reinvention of video distribution to Apple's reinvention of music delivery (I-Tunes), to Uber's reinvention of the taxi industry. By reinventing and adding to their current model for success, corporations can achieve a renovation that leads to significant new opportunities for growth. This compels more companies to try to follow a similar path.
An area that doesn’t receive a large amount of attention, but which has proven itself to have enormous potential, is domain transformation. New technologies have the ability to redefine products and services, blur industry boundaries, and foster opportunities for non-traditional competitors. This form of wholesale transformation offers incredible opportunities for businesses to create new value. An excellent example of how domain transformation works is the case of the online retailer, Amazon, which expanded into a new market domain with the launch of Amazon Web Services (AWS). Currently, AWS is the largest cloud computing/infrastructure service provider in the world, in a sector that was previously dominated by high-profile behemoths Microsoft and IBM.
A successful digital transformation demands more than just updating technology or redesigning products. If an organization fails to align its digital transformation efforts with its internal values and behaviors it can have a knock-on effect on an organization’s culture.
Negative repercussions range from slow adoption of digital technologies to loss of market competitiveness and inevitable failure of the initiative and lost productivity and revenue. On the other hand, a comprehensive and collaborative effort can help shift the culture to understand, embrace, and advance digital transformation.
My Organisation is doing well, why embark on Digital Transformation anyway?
Two Words : DIGITAL DISRUPTION
Mainly used in the sense that an industry, way of doing business or ecosystem (e.g. taxi hailing) is significantly challenged by existing (mostly tech) companies, newcomers or incumbents who have mastered digital business skillsets and came up with solutions, business models and approaches that cause a significant shift in customer behavior and market context, requiring existing players to change their strategies as well.
Disruption in the end is about people, customers. So, deciding not to change as a business and be far more customer-centric is a deliberate choice or sign of weakness, lack of care, politics, ego, wrong budget allocation (e.g. too much focus on acquisition and not enough on retention/satisfaction, continuing to pump money into legacy systems that aren’t fit for the present and future instead of looking for more adapted ones) or lack of business and customer intelligence (among other possibilities).
You now also have a choice. Or at least, you can’t deny you have one and always had one.
Even if making choices and change are hard. We can’t fully change as humans. But determinism is a choice, not a reality. Certainly not in business and towards customers. You can disrupt or be disrupted.
As the empowered customer rises to prominence, the uncaring organization climaxes (Gerry McGovern, The Caring Economy, Business Principles for the New Digital Age, 1999)
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