Many people often connect digital transformation solely with technology.
However, technology only represents a set of instruments that allows companies to create meaningful innovation that revolves around people and their needs.
When we talk about digital transformation, we do not simply mean implementing more software in a business. Digital transformation is a change in corporate strategy that affects every aspect of the company. Particularly, the strategy is linked to changes in the management mentality and the scope of operational and non-operational activities aimed at creating a flawless customer experience.
Needless to say, this process also involves the implementation of several different software applications to streamline and automate processes in several different key areas while meeting customer expectations. However, this only represents one aspect of change management.
Modern transaction models push companies to increase speed and efficiency as a response to customers who are fully empowered in terms of both information gathering and decision-making processes.
The Forces That Are Making Digital Transformation Necessary
Now more than ever, the digitization of core processes is no longer a choice. Due to structural changes in the markets and customer behavior, companies are required to react immediately.
The main forces, which are currently pushing the business environment towards new technologies, are both contextual (globalization, competition) and intrinsic (customer expectations).
Globalization has opened up businesses to new prospects, opportunities, and markets. Nowadays, enterprises have to expand their reach to customers, suppliers, and employees who are scattered everywhere across the globe..
In turn, this leads to complexity and detachment.
Complexity is driven by resources and ramifications within the processes. Digital tools are necessary to make informed and fast decisions. Every aspect of the value chain, from hiring to HR management, CRM, product design, promotion, and sales, needs to implement tools that enable rapid and accurate data-driven decision-making processes. These data need to be collected, visualized and analyzed. Artificial intelligence and machine learning offer solutions that are a thousand times faster and much better at finding correlations, making decisions, and, in general, coping with complexity.
Detachment derives from the fact that companies need to rely on agency and brokerage services to interact with customers and suppliers. However, the digital era requires companies to reconnect with the vertical segments. Digitization allows businesses to create tight links with remote workers, suppliers, and customers.
Every operational or strategic step, from collaboration to communication, product management or design, can be optimized to face the challenges connected to dislocation and intricacy.
Virtually every process can be automated to increase efficiency and speed.
It is relatively simple for new entrants to revolutionize a specific industry. Hence, for businesses to remain competitive and, generally speaking, surviving disruption, it is vital to introduce a digital strategy that enables corporates to predict imminent shake-ups and react quickly.
Studies [Dr. Didier Bonnet – Leading Digital Transformation] show that companies that have invested in a solid digital strategy and implemented it across the board are, on average, 26% more profitable than other businesses. There are no definitive correlation studies that prove causality, but this trend seems to be a typical characteristic of successful businesses. What we know for sure is that the time to act is now. Leaders in digital transformation are moving fast and are dictating the new rules within their respective industries.
In general, we know that automation and digitization lead to higher productivity, which, in turn, leads to higher output and faster cash flow.
Customer expectations have changed dramatically with digital products and services intertwining with more aspects of their lives:
Control: In the digital era, customers need to feel in control of all the elements within their journey, from discovery to implementation, while being guided through the process.
Independence: Customers are now used to interacting with businesses through several different touchpoints and being able to access products and services whenever they want and wherever they want on demand.
Instant Gratification: Every aspect of the customer journey needs to be instantaneous and ubiquitous.
Individuality: Acquisition and implementation need to be provided through on-demand solutions while customers need to be fully aware of the fact that they will be able to work with customizable solutions that will be shaped according to their needs.
These necessities are strictly connected to a wealth of resources and niche solutions.
Every sphere of customers’ daily lives is currently in the process of being digitized.
Software applications were once important assets that would involve time-consuming processes linked to acquisition and implementation.
Nowadays, applications are turning into commodities that are fantastically easy to acquire, trade, and dismiss. Instruments for retention are not solely intrinsic to the solution itself, but are now spread across every interaction that brands have with each customer individually.
Hence, every element of the customer experience becomes a precious occasion to solidify the bond between the company and its clients.
Adapt or Perish
To compete in this fast-paced and hyper-competitive environment, mid-sized and large companies need to guarantee that every aspect of the customer journey occurs in real time and with very little friction.
This development necessitates that corporations implement agile processes that allow them to carry out operations that comply with the current standards. Driving digital transformation within a corporate business involves:
- Changing leadership and management mentality
- Adapting structures and organizational activities
- Revolutionizing processes
- Displacing services to offer local support
- Working with virtual solutions to scale up operation
- Quickly implementing software solutions that are designed to enable digital transformation
- Innovating at a much faster pace than in the past
- Pushing new solutions at a much faster rate
- Streamlining decision making processes
- Working with agile tools
- Allocating time, resources, and tools specifically for this purpose
- Being able to interact with and reach out to each single customer individually
This climate seems to be more favorable for smaller and newer companies. The trend is evident when looking at the sheer amount of newcomers that quickly outperform Fortune 500 firms in terms of valuation, revenue, growth, and innovation.
Larger enterprises are having a much harder time adapting to the new environment. Whereas startups are currently being shaped specifically for facing the challenges of the market, well-established corporations have to reconfigure their entire structure to adapt to the rules imposed by the fourth industrial revolution.
Additionally, lean structures within startup businesses can easily be rearranged and adjusted, while complex matrix-based units within large businesses are much harder to reorganize.
That would lead us to conclude that a startup business will always have an advantage over enterprises in terms of speed and innovation.
However, the good news for large corporations is that startups often lack financial resources that are crucial within the scope of research and innovation.
If implemented wisely, these assets would allow large businesses to lead digital transformation, just as it happened with companies like Nike and Samsung.
How to Be in the Winner’s Circle
One of the biggest obstacles to digital transformation is resilience.
Structural and software legacy create a familiar environment for companies in which they operate freely according to well-rehearsed processes and rules.
Moving into a new territory is both difficult and risky.
In this case, we might conclude that experience doesn’t represent a form of competitive advantage for corporate businesses anymore. Startups rely on the know-how and competence of the founding team, employees, and often coaches, mentors, and investors.
Big firms can work with a large team of experienced managers, advisors, and consultants.
The problem here is that the new generation of startup teams is tech-savvy and born in the digital transformation era. Their approach is thus already fine-tuned to the new market conditions.
Habits and notions, which are integral components of pre-existing managerial structures in large enterprises, can represent obstacles to innovation instead of being key to the new paradigm shift.
That’s why digital transformation is firstly approached as a change in management mentality rather than a simple series of roll-out programs for digital platforms.
There is some more good news, though. Digital transformation may force businesses to move into a new territory, but it also offers new decision-making and risk-profiling procedures that enable managers to make informed strategic decisions.
Data-driven marketing and sales tools allow companies to improve targeting and create customization. Digital transformation is currently being driven by marketing elements that range from product management to customer care, and this derives from an increased need for customer intimacy.
The first step is, therefore, implementing solutions and processes that allow businesses to get in touch with their customer persona, design tailored solutions for their needs, create a smooth customer experience throughout the whole interaction with the brand and product, and support them at a personal level.
Every operational change needs to be reflected in a structural change. When the Internet era bloomed in the nineties, Microsoft approached the new environment by firstly restructuring the whole organizational chart and horizontal structure of the company. They combined departments that were once separated units into single entities while creating or acquiring whole new divisions that were specifically designed to deal with online solutions.
The same holds true for companies that restructured their vertical and horizontal matrixes once mobile became a hot topic for driving innovation.
These changes can occur in small steps or be implemented at large scale with the support of experienced consulting companies that are now focusing all their efforts on leading digital innovation. It appears, however, that rapid adaptation and smart inception of new units is playing an important role for the competitiveness of the business.
At the same time, companies are also changing their hiring processes in order to acquire internal resources that can cope with modern patterns and procedures.
All in all, digital transformation does not only involve single departments like R&D or marketing. Companies are expected to transform their day-to-day operations in every unit, from HR to accounting, procurement, key account management…
It’s a huge revolution that needs to start from the executive level and be communicated clearly to all the management and clerical units.
People need to become familiar with the new mentality and tools and must also be open to change and accept the new rules of the game.
Without a change in mentality, there can’t be any change in processes.
And such processes should be aimed at improving both customer and employee experience.
Technology is designed to serve our needs, not the other way around.
And software should adapt to people, not the other way around.
This is one of the core beliefs here at Userlane. That’s why we decided to change the way software interacts with people. We think that nobody should be forced to learn how to operate software applications.