Digital Transformation: from buzzword to imperative
The COVID-19 crisis has prompted a wave of digital transformations across companies. Many have had to rapidly adapt their business models, or introduce new digital tools to increase the flexibility of their operations and ensure the continuity of business in a remote working environment.
There is a reason that digital transformation has become so prevalent in top-line corporate strategy over recent years. Many employers may not realise it, but by adapting their practices and adopting new digital tools to cope with the current crisis, they have most likely accelerated the digital transformations that have been on boardroom agendas for years.
Different types of digital transformation
Digital transformation can be defined as the process of using digital technologies to create new — or modify existing — business processes, cultures, and customer experiences to meet changing business and market requirements.
This definition demonstrates that digital transformation is a multi-faceted process. Furthermore, an organisation can often make great strides in one area of digital transformation whilst making very little progress in another. As a result, companies risk leaving significant value on the table if they don’t know where to look.
There are four types of digital transformation that we will consider further: business model, business process, domain, and organisational.
1. Process Transformation
Business processes have become a significant focus of corporate activity. Enterprise software, data analytics and various other technologies offer corporations valuable new ways to reinvent processes — with the goal of lowering costs, reducing cycle times, or increasing quality. Process transformation can create significant value and adopting technology in these areas is becoming ever more crucial.
2. Business Model Transformation
Whereas process transformation focuses on defined areas of operations, business model transformations aim to take a more holistic view of a company and how to best deliver value in light of evolving digital technologies.
3. Organisational Transformation
Lasting digital transformations require a redefining of organisational mindsets, processes and talent requirements for the digital world. Best-in-class corporations recognise that the digital age requires agile workflows, continuous innovation, decentralised decision-making, and a greater reliance on business ecosystems.
4. Domain Transformation
Finally, an area where we see surprisingly little focus—but enormous opportunity—is the area of domain transformation. New technologies are redefining products and services, blurring industry boundaries and creating entirely new sets of non-traditional competitors.
Principles for successful digital transformations
Now we have more of an idea of the different areas of digital transformation, we can turn our attention to some of the principles that underpin successful digital transformations:
1. Lead with objectives
Evolving digital technologies pose a myriad of questions to businesses. Should they transform their existing business models or build entirely new ones? Should they drive down costs or focus on customer engagement? Should they abandon one initiative to focus on a greater priority? Successful digital transformations lie in answering these questions in ways that ruthlessly align with a clearly defined set of corporate objectives. Know your goals, and if a digital transformation doesn’t further them, go back to the drawing board.
2. Maintain flexibility
Digital transformation is an ongoing process, and the pace of the evolution of digital technologies may often require businesses to redefine the parameters of digital transformations throughout the process. Maintain flexibility and view digital transformation as an ongoing commitment.
3. Create a culture of agility
If the current crisis has taught businesses anything, it’s the importance of wholesale adaptability. Just as a digital transformation’s parameters must be adaptable, so too should its execution. Successful digital transformations enable input from employees across a variety of capabilities, underpinned by a culture of innovation and collaboration across the entire business.
4. Enable remote working
Business continuity requirements have seen businesses invest considerable resources in ensuring that their employees can work effectively from home. Older systems have been replaced with cloud-based solutions and as we continue to further refine the technical elements of home working, we are increasingly seeing its merits. You can read more about this in our previous article.
The common theme in all successful digital transformations: Organisational Health
It is not only the need to embrace new technologies that makes the current crisis such an exceptional time for digital transformation, it is also the change in business mindset.
With the need to enable remote working, the adoption of digital technologies has seen every individual upgrade their use of digital tools in one way shape or form. It has also shown the benefits of rethinking business habits and giving employees the responsibility to innovate, creating the culture of challenge that digital transformation relies on.
Ultimately, digital technologies are simply tools; the transformations lie with the people who use these tools. If a business has the right collective mindset and a culture that enables change, transformations will surely follow.
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