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Are You Driving Digital Transformation or Are You Being Driven by It?

Updated on January 9, 2019

Digital transformation is the profound and accelerating transformation of business activities, processes, competencies and models to fully leverage the changes and opportunities of digital technologies and their impact in a strategic and prioritized way, with present and future shifts in mind.

Although the impact of digitization is not new, the digital economy is entering a new age that presents unprecedented challenges for all CEOs. Digital tools are invading the business environment, provoking significant changes in the way we work, communicate, and sell. This has given rise to new opportunities and challenges, and has triggered the Digital Transformation of enterprises.

Digital transformation is imperative for all businesses, from the smallest to the largest enterprises. That message comes through loud and clear from seemingly every article or study related to how businesses can remain competitive and relevant as the world becomes increasingly digital. What's not clear to many business leaders is what digital transformation means.

Because digital transformation will look different for every company, it can be hard to pinpoint a definition that applies to all. However, in general terms, digital transformation is defined as the integration of digital technology into all areas of a business resulting in fundamental changes to how businesses operate and how they deliver value to customers. Beyond that, it's a cultural change that requires organizations to continually challenge the status quo, experiment often, and get comfortable with failure.

Digital transformation involves a change in leadership, different thinking, the encouragement of innovation and new business models, incorporating digitization of assets and an increased use of technology to improve the experience of your organisation’s employees, customers, suppliers, partners and stakeholders. It can extend the reach of organizations, improve management decisions, and speed the development of new products and services. At the same time, the excessively rapid adoption of technologies can disrupt traditional business models. Organizations need to carefully tread the path towards digital transformation with a concrete strategy to harness its strengths and mitigate its challenges.

So while management recognizes the importance of the digital transformation, technology has also accelerated at a breakneck speed, making it more difficult for businesses to keep up with the curve, much less stay ahead of it. Businesses must think critically about how their digital initiatives will affect the experience of customers and employees, as even the most well-intentioned initiatives can have unforeseen impacts on people.

Digital is re-imagining the human experience. It is remaking how people live, work, play and connect. Everything is being rethought, simplified and improved - even things people have taken for granted throughout their lives. Most companies recognize that they cannot turn a blind eye to such a powerful force shaping human behaviour. What worked yesterday to attract, engage and retain customers may be fast becoming obsolete.

Digital transformation has become the ultimate challenge in change management because it impacts not only industry structures and strategic positioning but all levels of an organization (every task, activity, process). Leaders must constantly challenge their organizations to ensure that this technology-enabled change can unlock productivity gains and significant competitive advantage and understand where and how the fundamentals of their current operations could be unsettled by agile new entrants or new business models.

There are a number of reasons that a business may undergo digital transformation, but by far, the most likely reason is that they have to. If businesses want to evolve with the rapid pace of digital change today, they must work to increase efficiency with technology wherever possible. For many, that means adopting agile principles across the business. However, today things aren’t changing linearly; they’re changing exponentially. It’s not good enough that you were fast last year. If you’re not faster this year, you’re going to fall increasingly behind. Even though it is a massive undertaking, especially for larger, established companies, if done right, it will result in a business that is more aligned with customer demands and more resilient in the fast-moving digital future.

It starts with prioritizing a superior and relevant customer experience and aligning the organization, processes and technology to empower it. Every digital transformation journey will be different and dynamic because captivating customers means constantly and swiftly adapting to their changing needs. Leading companies are already re-imagining customer experiences with a strong focus on digital by giving customers rich experiences. Such efforts to become a customer-relevant digitally powered business are no longer options, they are musts. And for many companies, their ability to embrace digital is quickly becoming a matter of survival.

Companies should accept and embrace digital realities and think, rethink, and think again about how to be relevant to current and future customers - from creating new experiences and service models to transforming their businesses. They continually sense and respond to the ways that digital is turning everything around them upside down:

Customers are empowered at every turn, all the time - These customers have heightened expectations (by increasingly demanding and expecting anytime, anywhere service as well as personalised buying suggestions or offerings) for superior and relevant interactions across all digital and physical channels at all times.

Competitors are not what - or who - they used to be - Digital is changing the competitive landscape and across industries, traditional players are exploring new identities while new digital passionate competitors are entering the market.

Technology is enabling people - but disrupting business - There is no doubt that technology has a significant role in the digital revolution, yet, most companies are struggling to keep pace with the multitude of new platforms. The importance of technology is not solely a function of technology itself, but rather what it empowers people to do and how it alters the human experience

Companies should first consider the visible part of their business - everything that customers experience directly. With a clear picture of the customer journey, companies can then align the parts of the business that customers do not see - internal operations and technology infrastructure - because these elements make or break the customer experience. There are significant opportunities for companies that embrace digital realities and use them to drive customer relevancy:

  1. Delight your customer - Companies must understand customers to design delightful omnichannel experiences and services. Customer systems should be relevant, simple and elegant.
  2. Re-invent your business - Companies must tune brand management and the operating model toward customer-centricity and agility while infusing analytics into the core culture. Business systems should be effective, efficient and deliver return on investment
  3. Flex your platform - Technology systems should be robust, scalable and capable of being deployed quickly. Optimizing the marketing, content and commerce technology infrastructure, empowers customer experiences and business operations. This flexible technology solution will store data from multiple digital sources and provide a strategic business intelligence platform for analysis, insights and measurement of global digital marketing initiatives.

Making a complete digital transformation means aligning and executing these three elements together, even if maturity among them varies. This could mean accelerating the effectiveness and efficiency of the current business, driving growth, or it can be differentiating the business by launching new products or services that delight customers. Nevertheless, the security needs of businesses and citizens are rapidly evolving as well, driven by new technologies, our hyper-connected lifestyle and digitally-enabled ‘new ways of working’. Increasing amounts of (personal) data are stored online, many businesses are collaborating over the cloud, electronic payments are on the rise, more ‘things’ are connected over the internet every minute - all of these represent new security challenges. And the changes in security needs are further propelled by a plethora of economic, legal, societal and demographic trends.

There is little doubt that digital tools and technologies are profoundly affecting the way business is being conducted today. They have already disrupted many industries and are threatening to disrupt others. The stakes are clearly high, but the rewards are much higher considering that digitalization is one of the most fundamental drivers of transformation ever and, at the same time, a unique chance to shape our future.

© 2019 Joan Cuko

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