Digital transformation (DT or DX) is a buzz term often floated around today’s business strategy meetings by CIOs and IT gurus. It is used as a way to address the need to adapt to the growing demands of modern business. But the term is loaded and comprises various approaches, definitions, and strategies. Often, people don’t fully understand what is meant by ‘digital transformation’ and think it refers to simply placing everything in the cloud. This is not the case.
In this article, we will dispel the confusion and explain precisely what it means for a business to undergo proper digital transformation, and provide a basic framework for business DX.
What is digital transformation?
The process of business digital transformation involves the organisational, operational, and cultural evolution of an organisation through the strategic integration of smart technologies and processes across every level and function. Digital transformation’s primary goal is to leverage smart digital technologies to create value and new service offerings. Usually, as a way to innovate and quickly adapt to changing business landscapes.
Digital transformation requires a fundamental shift in mindset and approach from existing business processes that organisations were once built upon in favour of new, innovative, and often risky practices. In order for businesses to fully benefit from digital transformation, it is crucial that relevant stakeholders and change drivers foster a company-wide culture change that continuously challenges the status quo and embraces experimentation and calculated risks.
What is NOT digital transformation?
Many people think that digital transformation merely involves injecting digital technologies into existing business processes. This is false. In fact, the DX process is rather more about doing away with outdated processes and legacy technology than simply slapping new code together. It’s about enabling innovation through the recalibration in approach to business processes.
When a business undergoes a digital transformation, it does not mean offering the same products/services with the addition of tech. It means a complete re-evaluation of the entire business model and company culture that fully embraces and leverages new technologies to improve and find new ways to meet the demands of customers and the challenges of business changes.
DX is not a detailed digital ads campaign, nor is it a robust social media strategy: these are just digital tools. In fact, DX requires the intrinsic awareness and understanding of new customer needs and behaviours, the latest business models, dynamics, and challenges, and the desire to leverage new business opportunities created by tech.
Tom Goodwin, co-founder of innovation and transformation consultancy All We Have Is Now, eloquently describes proper business digital transformation as such: “When you rethink your business model, reconsider your product, or make leapfrogs in how your company is structured, then this is digital transformation. If you restructure everything, put new ways of working at the core, then you have digitally transformed.”
True digital transformation is thereby the process of business metamorphosis: a rethink of the entire business model and company culture to embrace agile methodologies and digital technologies to future-proof the business by being able to quickly adapt to challenges of the future.
Why is digital transformation so critical?
It is evident that digital technologies play a vitally important role in a business’s ability to adapt and evolve along with the ever-changing market landscape. These technologies also drive added value to customers through efficiency and accuracy.
While organisations will adopt digital transformation for several reasons, the most likely is due to the fact that if they don’t, they will not survive. The current pandemic has quickly shown that a business’s ability to adapt quickly to various disruptions, time to market pressures, and changing customer expectations has become critical for survival. Businesses are now required to rethink their entire business and old operating models, experiment more with new technologies, and adopt an agile approach to meet new business challenges — this is true digital transformation.
A basic DT Framework
Digital transformation within a business context is likely to vary based on the challenges and demands specific to each company. However, there are some common areas that almost all businesses should consider tackling first when undergoing the digital transformation process:
- Customer experience
- Operational agility
- Culture and leadership
- Workforce enablement
- Digital technology integration
The unifying factor to bridge each of these business areas concerns is a company culture that enables management and C-suites to drive innovation and calculated risk when leveraging agile methodologies and new technologies in a push toward company-wide optimisation.
Within each of these categories, it is crucial to appoint the right digital adopting leaders at the helm of each department to drive the transformation process. It is also important to build the capabilities of team members and empower them to adopt new work approaches and embrace technologies to create a transformed workforce for the future.
However, this can only be achieved by frequent communication with each team member and department to align the entire organisation to the common goal of digital transformation. Digital transformation requires bold and effective leadership that works off the same vision for the future of the company.