Digital transformation is no longer a luxurious fad. 42% of businesses consider digitally enabled new entrants as their main competitive threat. For most companies, digital transformation is a matter of survival.
There is no set playbook for successful digital transformation though. The process depends on the peculiarities surrounding a business.
Follow these five broad steps to embark upon a successful digital transformation.
Step 1: Articulate a Solid Idea
Effective and successful digital transformation starts with clarity over purpose. A competitor might launch a new technology disrupting the market. Inefficiencies or out-dated processes may retard profitability or increase the cost to the customer.
Often enterprises seek digital transformation when competitors unleash disruptions. For instance, when AirBnB or Uber enters a market, the business will never be the same for hoteliers and taxi operators.
Businesses toy with innovations to secure competitive advantage. The basic requirements for innovation is a step-change in technology and using data in better ways. But embarking on digital transformation only because new technology is available is a sure-shot recipe for failure.
The customer experience (CX) trumps everything else. Traditional delivery models no longer match changing customer expectations. A business-as-usual approach when customers show a propensity to social and mobile is a disaster.
A sustainable digital transformation adds value and makes things better for the customer. The transformation aligns the value proposition of the business with customer expectations. The new way develops a relationship with the customer instead of merely executing a sale.
Have a clear vision of the need for transformation. Articulate the vision to the stakeholders.
Step 2: Focus on Strategies
Have clarity over the purpose, and focus on strategies to realise it. Estimate how the transformation will enhance the current experience. Analyze how to change comfortable status-quo to meet the intended purpose.
Put a strategy in place, covering all details.
Success requires a methodological approach. Identify the gap between the actual state and the desired state. Develop a roadmap outlining core activities and dependencies, to reach the desired state. Document a way to bring the vision to life.
Ask and seek answers to the following questions:
- What is the present state? What is the ideal state?
- What are the strengths and weaknesses?
- What is the desired result?
- How to use technology such as cloud, mobile and social to reach the result
- Who will work towards the result?
- When will the changes take place?
- Where will the changes take place?
- How will the changes take place? What are the concrete actions towards change?
Make sure the strategy enables the company to fend off threats from its digitally savvy competitors. See how the planned transformation will compare with the experience delivered by competitors.
Focus on small discrete deliverables at a time. Adopt a “building blocks” approach, with each “block” delivering value, and adding up the blocks delivering synergy. Make the blocks modular for simultaneous developments.
With the right strategy in place, processes fall in place by itself.
Step 3: Get Stakeholder Buy-In
Success requires stakeholder buy-in. Resistance to change by employees and other stakeholders can doom transformation even with the best plans in place.
If the C-suite and decision-makers do not support the initiative, transformation remains a non-starter. Digital transformation needs regular, uninterrupted access to funds. It also requires the authority of the top management to change business systems, processes and products.
Never underestimate the human resources driving the transformation. Develop a transformation team with the right skill-sets and the right attitude. Empower employees to take the initiative. Train them to keep abreast with the latest developments and overcome skill-gaps.
It is not enough the digital transformation benefits customers. Customers must understand the benefits and accept it. Change of status-quo, even if beneficial, may unsettle many. For instance, changes in the web interface, even when improving the UX and offering new functionality, may disorient. Inform customers of changes in advance, and convince them of the benefits. Beef up customer support to hand-hold customers through the change.
Convince stakeholders what is in them with the change. Empower them and give them ownership to drive the transformation forward.
Step 4: Embrace Emerging Technologies: the Cloud and Mobility
Technology passes through many waves. Converting the analogue to digital made waves a few years ago. Today, businesses seek to digitalise the entire value chain.
Many businesses create competitive advantage through data analytics. They use data to enhance customer experience, shorten time-to-market, and increase efficiency.
The spread of IoT makes most devices and gadgets, from cars to elevators, and from toothbrushes to refrigerators, emit data. Analytics requires different applications to access real-time data from such diverse and disparate nodes. Thus, moving data and applications to the cloud has become a basic need for a successful digital transformation.
Cloud and mobility go hand-in-hand. The smartphone is now a powerful tool for businesses to engage with customers, and for field agents to touch base. The always-on, always-connected nature of mobile devices facilitates real-time handling of data.
Effective digital transformation involves developing mobility assets. Cloud-based solutions, delivered to stakeholders through customised mobile apps improve efficiency manifold. An increasing number of customers expect enterprises to engage with them on their smartphones.
Step 5: Cultivate an Ecosystem
Today’s digital ecosystem has become complex. It is no longer possible or even desirable for any enterprise to do everything. Success rather depends on cultivating an ecosystem of strategic assets.
Successful digital transformation rests on collaboration among stakeholders and strategic partners.
Engage and allow third parties to contribute to the product or the platform. For instance, encourage developers to develop apps that add value to enterprise digital platform. The best example is the millions of third-party applications on the iTunes store, a major value enhancer for the iPhone.
Such ecosystems deliver major competitive advantage, difficult for competitors to dislodge.
Digital foists disruption. Smart and proactive businesses go about digital transformation in the right earnest. They strive to innovate and become the disruptor themselves.
