The term digital transformation is one we’ve all heard in recent years. But what does it really mean?
When organizations mention digital transformation, it’s usually about making their business more digital. Digital transformation is redesigning how they work with customers, how they operate internally and what types of skills their employees need.
Technology has changed the way the world works, making a digital transformation strategy for business vital today. Services can’t be digitally transformed without changing old processes and mindsets. It’s becoming increasingly difficult for organizations to survive in a knowledge-based economy without constantly pushing themselves beyond their boundaries.
But it’s also important to keep in mind that digital transformation is not only about the technology itself. It’s about how technology is part of workplace culture and how employees adjust to it. Every employee, from the CEO down, must be ready to embrace changes for digital transformation to succeed.
Let’s take a closer look at the specifics of what digital transformation means.
Importance Of Digital Transformation
Digital transformation is the process of making a business more digital or at least more digitally adaptive. The old ways of doing things are replaced by new ones. It’s not easy to implement a comprehensive digital transformation strategy. Some areas that might need an overhaul include:
1. Product Design
Digital transformation doesn’t just involve technology, it also includes all the human-oriented elements of design. This means thinking about how customers will interact with a product and what features they want and need. Also consider different formats for the same product to make it available in different ways—for example, an e-book, print book and audiobook all flow from the same product.
2. Customer Service
As is clear from digital transformation examples, it helps provide a seamless experience for customers. That’s what keeps them coming back for more. Meeting customer expectations involves understanding both the current preferences and developing new ones.
3. Customer Relationship Management
Customer relationship management (CRM) is all about making the right connections with the right people at the right time. That means improving communication and tracking customers and contacts. It also means incorporating customer feedback so products and services can be adapted to meet their needs.
4. Data Management
Data is the lifeblood of digital transformation. Data has given rise to advanced analytics to improve operations and product design. It can also help organizations provide new services that customers want.
5. Business Model Transformation
Business models tend to become outdated once the marketplace is transformed by digital technologies. A new model may be able to get more leverage from existing assets than an older one. It’s also possible that digital transformation will actually reduce the need for certain business models altogether—for example, when more potential customers can interact with the brand online, physical retail will shrink.
6. Geographic Reach
Digital transformation could mean geographic reach is broader than ever before. Goods and services can now be sold to people all around the world, even if they live in countries where they’ve never before had a presence.
7. Talent Development
This involves investing in education to make sure employees have the skills it takes to keep growing with the organization. It also involves hiring people with the skills for the digital aspects of the business.
These are all important digital transformation examples. They’re the key points to focus on when trying to make a change to a business model or strategy that’ll lead to more profitable growth over time.
The Path To Digital Transformation
When digital transformation examples involve transforming the entire organization, it’s hard to know where to begin. Business executives often think that digital transformation means getting on Facebook and Twitter. They may not understand how to make good investments now to ensure their business is poised for future growth. Here are the steps to follow:
1. Get Everyone On Board
There are some business leaders who don’t see any immediate need for adopting new technologies or improving information systems. That’s why the first step of digital transformation is getting everyone on board with the idea. This makes it easier to take the next, necessary steps.
2. Identify Goals
The next step is setting direction. Not all businesses want to change for the same reason. Discover the why first to know what needs to be done. This will make those changes as painless as possible. It also means determining what technology will be needed because that can have a huge impact on the business—and the bottom line—going forward.
3. Implementing Change
The final step is implementing the changes needed. It’s important to remember that digital transformation is a process, not an event. It can’t, and needn’t, happen overnight. It may also be a slow and deliberate process.
By taking these steps in a considered way, you can overcome the pain of digital transformation challenges.
Types Of Digital Transformation
There are two kinds of digital transformation strategy. The first focuses on business model transformation, which involves changing the way an organization conducts its business.
The second kind of digital strategy involves using technology to create a competitive advantage for your organization. Such a digital transformation strategy is usually less expensive to implement but still helps an organization become more flexible and efficient.
These two kinds of digital transformation strategy aren’t mutually exclusive. A good digital transformation strategy may combine both.
Sometimes these types of digital transformation can be described as tactical or strategic. Tactical transformations are about immediate business needs, whereas strategic transformations are more comprehensive and may involve changes across the entire organization. In general, most companies will need both kinds of transformations to address their strategic planning and day-to-day operations.
Significance Of Digital Transformation
Digital transformation is vital today for various reasons. Let’s take a closer look:
- Digital transformation examples show that it helps reach customers more effectively, sell more products and services and reduce costs. Many businesses that take steps in this direction report better customer satisfaction, greater growth opportunities, lower risks and reduced costs
- Changing business models to become digitally-focused leads to greater efficiency, productivity and profitability
- Digital transformation is cost-effective and scalable. Digital transformation can be introduced in stages and evolved over time, with investment decisions able to be scaled up or down depending on the success rates
- Digital transformation is about enhancing the customer experience. The more digitally engaged an organization is, the more likely it will be to achieve customer loyalty and brand recognition
- Digital technologies provide businesses with access to new markets. This can also help companies become better at serving existing customers who are increasingly taking their business online
Despite these benefits, digital transformation challenges do exist. However, customers and employees both benefit from it, if conducted well.
Digital Transformation Examples
A number of organizations have already weathered the digital transformation challenges head-on. Some of the most successful businesses are eager to share their experiences, including how they did it, what went wrong and what went well. These include:
The leader in e-commerce has introduced a number of retail innovations to help it stay ahead of competitors, including streaming TV and video via Prime, used book sales and the Kindle lending program. One of Amazon’s most recent innovations is Alexa, a virtual digital assistant.
Netflix began as a DVD rental service, but when viewership patterns changed, it evolved into a video streaming platform. It has also introduced original programming to attract viewers. It even started producing films and televisions shows. Netflix’s success may help to open the door for other streaming services like Hulu or HBO Go to offer exclusive content that subscribers can’t find elsewhere.
Apple was one of the first to offer an MP3 player, a tablet and even a smartphone. These devices have all become mainstream now, with millions of people using them on a daily basis. This shows that digital transformation can bring about new products and services that customers love.
Uber is another business that has succeeded in part thanks to its digital transformation efforts. The organization pioneered the concept of car-hailing apps, allowing users to order taxis through their smartphones. This has since become a global phenomenon.
Nike has had a strong history in digital transformation. Through its Nike+ iPod App, the organization has served its customers with expert running tips, increasing brand engagement and loyalty.
Ford has worked to keep up with changing customer needs by increasing efficiency in manufacturing and marketing. The organization has also increased productivity through UBS, its business process management system that enables employees to work across major functions more efficiently.
The importance of digital transformation can’t be denied. With a clear understanding of digital transformation challenges, organizations have a chance to take a leap ahead. With Harappa’s Creating Solutions course, managers will gain the skills and confidence to charge into the future with their eyes wide open. They’ll learn how to analyze problems, find their root causes and tailor solutions. World-class faculty teach frameworks and techniques to make even the most daunting business challenges solvable.
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