What is Digital Transformation?
Technology Advances Created the Age of the Customer
Technology Advances Created the Age of the Customer
It is up to businesses to use new technological capabilities and organizational change to create experiences that adapt to these changing needs. More and more, exceptional customer experience is a key differentiator in digital business, and the process of digital transformation should be guided by a customer-centric digital strategy.
Key Elements of Digital Transformation
MIT Sloan Management Review has identified three pillars of the transformation process for companies to focus on: customer experience, operational processes and business models. Companies also need to invest in and develop their digital capabilities, as this element enables digital transformation in each of the three main pillars.
Advances in marketing software and data-gathering capabilities allow for better customer insight and greater personalization in digital experiences. Enterprises are pursuing transformation in the following ways:
- Managing personalized experiences across channels that are easy and seamless for customers to use.
- Developing digital products and services for new devices, such as smart watches.
- Drawing in data at every touchpoint and using that to deliver more effective personalization.
It can be tempting to think of front-end customer experience as the main focus of digital transformation, since that’s the most visible part of the process. However, using technology to redesign operational systems has just as much, if not more, impact on a company’s ability to successfully provide great experiences.
For example, a customer getting their package sooner means a more positive impression of the company, and having a representative already know what specific problems a customer is having, because the product sends diagnostic information over the internet, allows for shorter call times and faster solutions. Companies are successfully transforming operations by:
- Breaking down departmental and data silos for better collaboration on digital projects, such as including both IT and Marketing on product teams so that both departments are fully informed during the process of design, strategy and development
- Automating processes through better software capabilities or with the creation of new tools, such as implementing automated purchase order systems in order to reduce paperwork and rejected orders.
- Making strategic decisions based on data with increasing levels of detail. Instead of reusing or modifying a previous year's distribution process, for instance, leaders are able to make changes based on real data, rather than assumptions.
Often, startups are able to disrupt long-standing brands because they use innovative business models that take advantage of new technology, without being weighed down by legacy systems. Established brands should look to models that offer services that wouldn’t be possible without new technology. Examples of new business models are varied, but can generally include:
- Expanding the scope of current business through digital services, such as a toy company that crowdsources designs online.
- Evolving with changes in customer behavior due to new technologies. For instance, when customers see a product in store, they may do an online search order to check reviews and end up purchasing it at a lower price somewhere else. Some businesses have countered this by creating an app that allows customers to scan the product and read the reviews, ensuring that they stay within the business’s platform instead of purchasing elsewhere.
- Rebuilding services to be digital-first, such as banks that create mobile apps for cashing checks, paying bills, applying for loans or other services.
Where to Start
To stay competitive in digital business, enterprises should look at where they are now and determine what core elements of digital transformation they need to focus on. Your enterprise may only be able to begin with one of the three pillars mentioned above; what’s important is that you start somewhere.
Though no one has a comprehensive roadmap for digital transformation, the following best practices have emerged over the past five years:
What to Avoid
- Poor Communication – Communication is crucial. Before entering digital transformation, ensuring your company is on the same page with your goals is essential. If your team is overwhelmed with too many projects, communication will crumble and the projects will as well. Ongoing communication and change management through the many stages of digital transformation is crucial as the process is always evolving. Even leaders like Amazon are continuing to transform and adapt today.
- Working in Silos – If your organisation is executing multiple digital transformation projects, it’s important to consider how it will affect the entire company in addition to the customer journey. While breaking down and rebuilding and organisation’s structure is not always easy to achieve, aligning your aims and objectives, working on communication flow and consolidating departments may increase cooperation and aid in the elimination of siloed culture.
- Ignoring the Data – When carrying out digital transformation, it’s likely your organisation will collect vast amounts of data. But often organisations make the mistake of ignoring this data. Whether upper management isn’t ready to make data-backed decisions or a team leader doesn’t agree with what the data is saying, failing to make calls based on this evidence could set back the digital transformation you’re after.
- Neglecting Mastery – Digital transformation is not simply installing a new software. It is an ongoing process that truly never stops. Taking an evergreen approach to transforming processes, priorities and positions can make a real difference in how your organisation continues to adapt to the digital landscape.
How the Pandemic has Shifted Digital Transformation
Because of the pandemic, some areas of digital transformation have been pushed higher for organisations, such as furthering customer support services by introducing tools like chatbots, automating common processes, and cleaning out redundant and conflicting systems.