Leveraging Digital Strategy to be and stay competitive
Understanding Digital Transformation
Sal Sribar, Senior Vice President at Gartner, told a group of executives in 2017, “Many businesses are stuck running digital projects. Some of them are very large, but digital projects are not a digital business.” The idea of digital transformation has been around for a few years. Mr. Sribar stated in 2017 “Four years into the digital shift, we find ourselves at the ‘peak of inflated expectations, and if the Gartner Hype Cycle teaches us anything, a trough is coming. Disillusionment always follows a period of extreme hype.”
This quote exemplifies the frustrations many executives feel with pushing forward digital transformation. They know it needs to be championed and come to fruition, but there are stumbling blocks along the way, including a broad resistance to change. And taking the steps towards this transformation means developing a plan. Unfortunately, a 2017 CIO study found more than half of surveyed CIOs did not have in place a formal digital transformation plan. Many of the respondents noted they’re working on digital projects, but the lack of a plan is telling in terms of them not seeing the transformation as a broader cultural undertaking.
What Exactly is Digital Transformation
Digital transformation is essentially a disruption. And the need for this disruption is often coming from new entrants to the market, or competitors that are doing things differently and are grabbing customers.
It changes how a company operates, how employees look at their work, and the ways the company relates to its customers. It means adding digital processes, systems, and other tools to the company’s entire operations with the goal of enhancing customer experiences, reducing risks, and finding new revenue-generating opportunities.
Companies that embrace digital transformation are looking to build a more agile, customer-centric, and efficient enterprise. They want to be able to put in place new opportunities quickly (perhaps a new mobile app) to help them disrupt their market and capture customers. The pressure for this transformation is increasing because many industries are commoditizing, and therefore providers need digital tools to stand out. They have to offer the most streamlined app and ordering processes. They have to respond to customer queries through any type of channel in order to become known as the best service provider. Companies are desperate for differentiation.
The need for a digital transformation strategy is also influenced by the customer’s expectations for immediacy which are driven by a changing demographic that is growing up with mobile and connectivity. While some CIOs and other C-suite executives might find the customers’ expectations to be unreasonable, they’re still the customers, and that means firms must “adapt or die.” Operational flexibility, fast access to innovation, and an improved customer experience are all drivers of digital transformation strategies. And these must all come together harmoniously if firms are to succeed.
Why Digital Transformation Matters
Digital transformation is important because it will positively impact key metrics, such as customer lifetime value and operational efficiency metrics. It’s a strategy that pays dividends across the organization, as internal teams are more connected to each other and data, operational tasks occur faster, and customers are engaged more deeply. Digital transformation means accepting the realities of today’s connected consumers. It involves offering multiple channels of communication, blending the in-store and virtual experiences, using social to connect people to the brand.
Ask the founders and investors of Blockbuster if they wished they pushed forward with a faster digital transformation. There are myriad other cautionary tales of companies that held significant market shares but didn’t move in time with the pace of change. Consider a brand such as Nike that makes money selling shoes, clothing, and equipment. It’s moving into digital through its own branded fitness trackers and even the launch of connected footwear which will further inform athletes about their progress and training. The company also features Nike+, a social community with running clubs, coaching, and events that blend together digital data and real-world experiences. Such digital transformations on the customer-facing side allow companies to stay relevant with Millennials and even younger demographics.
Digital transformation matters internally because it involves centralizing data and then putting in place new ways to become more agile and innovative. It promotes involvement by everyone in the organization, by giving them collaborative tools to let their voice be heard and to perform their tasks in more efficient and customer-facing ways. It also means gathering input from employees, before, during, and after transformation, so it can be confirmed the new processes are working properly “on the ground.” Digital tools can promote more autonomy among staff members, as they’re empowered by information access, and have the context they need to make data-based decisions.