Digital Business Transformation: How to Stay Ahead of Your Competitors in 2021
‘Digital business transformation’ is a phrase that’s thrown about a lot at the moment, particularly as the world continues to adapt post-COVID 19.
‘Adapt or die’ commentators say. ‘If you don’t digitally evolve, your competitors will react quicker, provide better service and ultimately, become a more attractive proposition for potential customers.’
But if everyone is pushing digital business transformation as a survival tactic, is there any way to do it uniquely?
The answer here is a resounding ‘yes’ – because whilst analysts and CEOs everywhere seem to be obsessed with the idea of digital business transformation, there are few companies that do it that well.
Around 70% of digital transformation initiatives fail. That means that out of $1.3 trillion spent on digital transformation in 2018, $900bn was spent with no immediate business benefits.
Your ticket to standing out from your competitors – and not wasting precious budget on initiatives with lukewarm results – is taking a different approach. Rather than fixating on specific technologies, effective, lasting digital business transformation involves a goal-first approach to digitalization. It also involves creating a company culture that thrives on innovation and new ideas.
If that sounds easier said than done, don’t worry – that’s what this guide is here for.
- What digital business transformation is
- Why digital business transformation gets you ahead of the crowd
- Setting the right goals for digital business transformation success
- Creating a culture in which digital transformation can thrive
Understanding Digital Business Transformation
It helps to start off with a definition. We like Enterprise Project’s for its simplicity, emphasis on complete change at an organizational level and customer-led definition of success:
“The integration of digital technology into all areas of a business, fundamentally changing how you operate and deliver value to customers.”
Digital business transformation encompasses every single area of your business. Here are a couple of examples of what it could include:
- Digital process transformation – automation of tasks across operations to free up employee time for value added activities
- Digitalization of design and manufacturing processes using new AR technology
- Improved financial forecasting using Big Data analytics and BI tools
- Improvements in customer-facing technology, such as e-commerce platforms
Because digital transformation reaches every single area of your business, we think it’s also helpful to view it as an ongoing evolution of your organization, rather than a one-off process.
Unless you are a very early-stage startup, you’re not going to be able to transform your operation in one go – so don’t start with that goal in mind. Pick specific parts of the business you know you can improve and work from there.
Digitization vs Digitalization: Understanding Both in the Context of Digital Business Transformation
When people talk about digital business transformation, they often talk about ‘digitization’ and ‘digitalization’. These are not the same thing – but both are essential processes in overall digital business transformation.
Digitization is simply transferring analog data into a digital format. You might digitize sales records, customer complaint forms or employee vacation allowances
Digitalization (with the extra syllable) is the use of this digitized data and new digital technologies to change how you work. If you digitize your customer complaint records using a customer experience (CX) tool to identify trends in the data using keyword analysis, that’s an example of digitalization.
In other words, digitization gives you data to act on whilst digitalization is the process of gaining insights from that data, in conjunction with new tech. Digitalization is part of the wider process of digital business transformation, which is a broader, organization-wide process.
Let’s take a warehouse as an example:
- The operations team digitizes the warehouse maps, so that where stock is stored in the warehouse is available digitally.
- As a result, they can invest in warehouse robotics solutions. This is an example of digitalization.
- This change takes place in the context of a wider push towards adopting new technology across the business (better BI, route optimization software for deliveries etc). This makes it part of the company’s overall digital business transformation.
How Does Investment in Digital Technology Give You the Upper Hand in 2021?
When looking to digitalize parts of their business, decision-makers are taking increasing notice of up-to-the-minute technologies like:
- Data processing and analytics tech: using mass amounts of data to inform more accurate business decisions
- Cloud computing: increased IT flexibility using third-party, offsite data centers
- Process automation: automating previously manual processes using advances in robotics technology
- AI and machine learning: using artificial intelligence to process tasks and information quicker and more effectively
- Augmented reality (AR): combining video and computer generated graphics to enhance real-world objects or settings
But why not stick with your existing tech stack? It’s worked this far, after all.
It’s all about how powerful these technologies are. These new technologies don’t just improve workplace efficiency, customer engagement and forecasting accuracy. They improve it so drastically that companies that don’t implement it simply won’t be able to keep up.
Could you react to opportunities quicker than a competitor that can process all of its transactional data immediately into real-time analytics reports?
How could you deliver products quicker than your competitors whose automated warehouses run at peak efficiency round the clock?
How can you design and manufacture products as good as your competitors’ when their product teams use AR and virtual design environments to create faster, more accurate prototypes at a fraction of the cost?
If you want to outperform your competitors in these areas, the only solution is to invest better, faster, more up-to-date digital solutions than them to keep ahead of the curve. By doing this you set customer expectations rather than chase them, and create a standard that it’s difficult for others to follow.
The COVID 19 Effect
Previously, much of this technology has been considered ‘ahead of the curve’ – something to plan future investment around, rather than an immediate concern.
In 2020, however, the global COVID 19 pandemic fundamentally changed how we work, live and do business. In the resulting scramble to react to this, adoption of the technologies above has skyrocketed.
For example, the necessity of shopping online has accelerated e-commerce trends by five to ten years since last March. Meanwhile, over 75% of respondents in PEGA’s 2020 Future of Work report said they were planning more investment in AI and automation because of how their workforces were affected by the pandemic.
This means that we’re rapidly approaching a crossroads. It’s vital you make your move on the right side of it.
Invest now, and you’re still ahead of the curve. Whilst adoption of new digital technologies has risen significantly, a large number of traditional companies forced online are still finding their feet. There’s significant gains to be had whilst they do so. Invest later, and you’ll be playing catch up.
How To Plan Digital Business Transformation Successfully
Before diving into the latest case studies on AI or Big Data applications in your particular industry, pause for a moment.
Figure out what you’re chasing first.
Lead with the Problem, not the Technology
One of the main reasons so many digital business transformations fail is because companies get so fixated on one particular technology.
For example, a company might design an ‘AI strategy’ before they even know where to apply it. This can result in wasted time, wasted spend and inefficiencies in bringing your business forward.
This is an easy mistake to make, with our collective obsession over where tech is going next.
Instead, identify your key business goals – like you would for any other business project – then consider how new and on-the-horizon digital technologies can help you meet these.
The case study of global supply chain management company Li and Fung, used in a recent Harvard Business Review article, demonstrates this point nicely.
Li and Fung needed to develop a strategy for serving a market in which mobile apps were just as important as physical stores. This led them to focus on three broad areas of speed, innovation and digitalization rather than taking a technology-first approach. These goals were broken down more specifically into:
- Reduction of production lead times
- Increase in speed to market
- Improving data use in its global supply chain
It was only after developing these concrete objectives that they started to focus on the tech. These included virtual design technology (design to sample time reduced by 50%) and real-time customer and vendor analytics (which helped increase working capital efficiency by $200m).
Digital Business Transformation is Nurtured by Organizational Culture
Successful digital business transformation is as much about creating the right environment as it is choosing the right technologies.
Purchasing the latest in customer-facing AR solutions gives you possibilities. Those possibilities count for nothing if your workforce sees digital transformation as an unwanted imposition from above.
Is your culture truly innovative?
By which we mean:
- Do you encourage creative thinking and problem-solving in every employee, regardless of position or seniority?
- Do you tolerate failure as an inevitable consequence of progressing, rather than making it a sackable offense?
- Do you promote involvement in digital business transformation among internal staff, rather than hiring short-term consultants to do the work?
Ultimately, it’s a question of staff involvement and transparency. If you don’t involve your workforce in identifying areas for digital business transformation and bringing those changes about, your team is not going to be invested in the outcome.
They’re even less likely to engage if they fear repercussions if their projects don’t succeed in the first instance.
You may need to rely on a consultancy to some extent- if you need a custom web app, for example, it’s far quicker and less risky to outsource than hire an in-house development team and grapple with a development process you’re unfamiliar with.
The problem is that if external consultants overrule expertise already present in your organization, you’re missing opportunities and alienating your workforce at the same time. Your internal team knows your business better than anyone else, so they’re excellently placed to identify where digital solutions could help you stand out. Keep them onside.
To address these potential pitfalls and create a culture in which new ideas can thrive:
- Acknowledge and reward innovative approaches
- Promote regular stand ups across the business, so that everyone feels informed and included in digital transformation initiatives.
- Conduct listening sessions with teams in areas affected by new technologies. Reach out to them for ideas, get their feedback on proposed suggestions and address any concerns about change openly and honestly.
- Create discussion threads to collect employee feedback and ideas about digital transformation projects.
- Celebrate milestone achievements (successful software implementation, for example) and acknowledge the efforts your employees put into them.
- When using external expertise, set up regular drop-ins and joint planning sessions so that your internal workforce see it as a collaboration rather than an imposition.
Keep Digital Transformation Customer-Focused
Ultimately, digital business transformation is about attracting and maintaining customers.
This can be in a very direct way – by offering them AR tools that help them visualize large purchases in situ, for example – or it can be less immediate. Take process automation: by automating tedious manual tasks, you free your sales staff to spend more time building relationships with customers, resulting in more sales, higher averages spend and increased customer retention.
Either way, the end goal is a customer more willing to invest time, emotion and money into your products. The latter, process-driven example simply takes more steps to get there.
Sometimes, because of these extra steps, it’s easy to lose this customer focus. This means that companies end up spending thousands on digital transformation initiatives without tracking whether they impact the customer experience.
To stand out from the crowd, start and end with the impact of digital business transformation on your customer base. Ask yourself:
- What do our customers struggle with right now?
- What solutions would our customers like to see to these problems?
- How have our customers reacted to our efforts now we’ve implemented them?
Good news: in an era of social media, online review sites and 24/7 customer service, you’ll have plenty of data to work with here already. Mine these sources for common issues and ideas for new features or services.
Don’t stop there. Once you have identified some key areas to work with, get your customer base involved further as beta testers or user panel members, and ask for further thoughts via customer survey.
If you’re doing digital business transformation right, it should be contributing to a general upwards trend in whichever customer experience metrics you track. If it’s not, it might be time to tweak something.
Find the Right Partners for Digital Transformation
Armed with a full understanding of what digital business transformation is and the potential benefits it offers, you might now be thinking ahead to how your own organization could benefit.
If you’re looking to get ahead of the crowd, but don’t know where to start, that’s where we come in. At Tivix we’re all about creating custom digital solutions that help your company deliver unbeatable value to customers.
Get in touch any time for a friendly chat using this web form.
We can’t wait to hear from you.