What is digital transformation strategy?
Digital transformation is a complete change in the way a company does business—using a customer-first approach to transform all levels of the organization to use digital technologies. A digital transformation strategy takes this concept even further, focusing on transforming the business itself. It’s about using digital technologies as a force function to fundamentally transform how all aspects of business are done, to more efficiently serve customers, save money, provide a better customer experience, and more.
Why do companies need a digital transformation strategy?
Successfully enacting a digital transformation strategy gives a company a competitive edge in the marketplace. Digitally mature companies are fundamentally more efficient and responsive to customer demands. Additionally, companies with a realized digital transformation strategy—one that is supported all the way up the management chain—are more successful at attracting and retaining better employees.
So, what are the characteristics of a business with a successful digital transformation strategy? Read on to find out.
Willing to take business risks—and to support employee risk-taking
To stay afloat in today’s competitive marketplace, companies need to constantly evolve. Change is an ever-present reality. In order to keep up with changing consumer desires, businesses need to take—and embrace—risks and, ideally, to help shape those desires rather than just meeting them.
From the top down, managers need to communicate that risk is not only accepted but also actively promoted and rewarded—and that employees won’t be punished for innovations that do not pan out the first time. A successful digital transformation strategy is supported all the way up the management chain. Changing how a company does business is much more ambitious than simply digitizing some of the business processes to gain efficiencies.
Imagine a coffee cart company that transforms its entire operations—how it serves customers, how its employees work, how it interacts with suppliers—by implementing an online ordering and delivery system. On the inventory side, the company now uses eSignatures for its supplier contracts. On the customer side, orders now come in to a central location and are digitally sent to the baristas. The system uses the customers’ location data and other GPS info to have the order ready at the nearest cart when the customer arrives. Since it’s already paid for, the customer just taps their device to a QR code reader and grabs their coffee.
The company changed how its interacts with customers and suppliers. As a result, it needs fewer customer service people at each location and it gained substantial efficiencies in its supply chain and at the point of sale. The quality of the coffee remains, but everything else is transformed, resulting in dramatically increased revenue and customer satisfaction.
In this example, the company changed how they do business. If the changes had been limited to digitizing their point-of-sale transactions, that would have improved one process, but would not constitute implementation of a digital transformation strategy. To successfully enact such substantive changes, the company, from the owner to the baristas, needed to embrace change. Which brings us to the next characteristic.
Willing to build skills to meet objectives
If a company is going to fundamentally transform how it does business, it needs to invest in employee training. And it needs to have employees who are willing to change how they work. Employees and employers must all be on board with developing new skills.
Looking beyond the core industry
Where do you look for inspiration on what and how to change? Successful companies don’t just reimagine business in terms of what they deliver right now. Instead, they think of how other industries, completely different than their own, are changing and how similar changes could impact their business. And, rather than performing this exercise out of fear, they are curious about opportunities. They use company-wide, cross-team strategies, like brainstorming sessions that involve employees from different divisions, to develop fresh ideas and innovations.
Fostering a collaborative work environment
Transformation flourishes in a collaborative, socially engaged work environment but falls flat in a workplace that silos information. Companies that successfully implement a digital transformation strategy value their employees’ ideas and foster collaboration among their workers. When a company is rebuilding, staff members need to trust their coworkers, be inspired by them, and in turn, be motivated to inspire.
Putting it all together
Creating and implementing a digital transformation strategy is no small undertaking, but it is essential to remaining competitive in the marketplace. And the rewards are great. Companies that successfully enact a digital transformation strategy have a much better track record of attracting and retaining the best employees. They save money with more efficient business processes, and they provide a superior customer experience. Transforming the way a company does business opens new opportunities, provides exciting new direction and attracts new customers.