Digital transformation is not merely streamlining or automating touch points. It is re-defining the way the organisation engages with its customers and partners, to re-imagine channels to deliver value. To cement the change, organisational levers must align to the new value proposition. This involves consideration of structures, incentives and culture.
Boards are mandating “digital” and asking it to be accelerated as the world accepts change. CEO’s are appointing “Chief Digital Transformation Officer’s”. Are they right in doing so?
ACCELERATING DIGITAL TRANSFORMATION
Our point of view is: they are “sort of right”. There is an enormous amount of material and examples of how the world is becoming digital. We don’t really need to regurgitate here the rise and rise of Uber, Alibaba and Amazon, each of which is driven by digital technology at its heart. We live and breathe digital every day ourselves. During COVID, businesses fast-tracked their digital strategy and plans executed and scaled. We’ve learned to adjust quickly and learned what is and is not working. Companies have adapted to change through protecting their business. Savvy companies have optimised their digital offerings.
Using cash is trending significantly down, and the use of smart cards, phones, and watches for payments up. The smartphone in our pocket is a digital “Swiss Army Knife” that does much, much more for us than making phone calls. At a personal level, we already are “digital”. We communicate digitally. We access news services digitally. Most of us live in a digital world.
TRANSFORMATION UNDERPINNED BY DIGITAL
The solution is obvious, is it not? Take the existing business model, make all the processes more efficient using technology, and tell the clients “we are now digital”. Right? Wrong. This is where companies fail to understand what digital transformation is all about. It is not about using digital technology on existing processes. It’s “transformation underpinned by digital” and less about “digital transformation”. It is about re-imaging the business in the light of “what is possible”. Start with a deep understanding of the existing business model. Then projecting 20 years forward question if the model will even work in the future. Look to restructure the old model to give the company longevity, using digital technology in the process. And guess what? The business model we come up with in this process may bear little resemblance to the business model of today. And that’s OK – it gives us a new platform on which to build the future of the company, rather than the dinosaur of today.
We explore the strategy behind transforming your business model in a separate insight artice here..
https://www.thestrategygroup.com.au/business-model-strategy-during-covid-19/
KEY STEPS IN DIGITAL TRANSFORMATION
When it comes to corporate digital transformations, research suggests that only 5% are successful. In addition, many company leaders don’t even begin to understand the problem they face. Before commencing a “digital transformation”, an organisation needs to understand:-
- its current business model. The Business Model Canvas is an ideal tool for this if applied correctly
- how the digital economy is eroding its model. Do we appreciate the competitors within and outside the industry?
- the opportunities for transformation – again, within the industry and without.
- the timeframe in which it needs transformation given the pace of the industry
- the potential new portfolio business models – both the immediate and long term opportunities
- the culture change and the process for bringing the entire organisation along
This gives a very pragmatic view on what levers to shift and actions to take into the future. An organisation, faced with disruption, will benefit from the process of “digital transformation”. It takes time and careful thought, and can provide a platform for success over the next 20 years.
HUMAN-CENTRED DESIGN APPROACH
Find out more about the Strategy Group view of the future of human-centred digital design here.
At The Strategy Group, we take a Human-Centred Design approach to digital transformation. We develop strategies and plans that centre on the customers needs–their ‘desires’, ‘benefits’ and ‘annoyances’. The success of any digital transformation program lies in aligning products to needs. People must also recognise the value of change, their willingness to adopt and embrace the new ways.
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