What is “Digital Transformation” and why is it important? Here, some basic aspects are pointed out, an explanation of the areas is given and also what the most important factor in the change is.
For many older and established companies the world has changed a lot in the last few years. Many thought that they would change their online presence a little bit and with that they have already done “Digital Transformation”. However, the market has changed rapidly, new business models, new competition from other sectors, new geographical coverage and digital advantages are turning many industries into a battlefield. This is exactly why there are now only a few companies that do not feel this and do not know how to deal with the “always-on”, mobile customers and the digital transformation, because it was not what they originally meant.
Additional article: Digitalization vs. Digital Transformation – What is the Difference?
The Definition of “Digital Transformation
Everyone understands it differently, so I take the Oxford Duden and stick to its definition of transformation.
A marked change in form, nature, or appearance’. Essentially, it is a fundamental change that, when applied to a business, means wide-scale change to the foundations of that business, and it is usually driven by a previous inability to evolve to the marketplace’s requirements. A digital transformation is one provoked by the failure to evolve with digital technologies, resulting in a complete re-alignment of the business’s technology and business models in order to effectively engage with digital customers.
In short, the market is changing fundamentally. Digital transformation is caused by the need to grow with digital technologies, which results in the need to adapt technologies and business models to effectively address the digital consumer.
Why is Digital Transformation not a bad thing?
There are different “degrees” of adaptation of digitization and not all need to be pursued simultaneously. Nor does it have to be that the company fails in the market before it can take advantage of the benefits, because digital transformation is to be understood both as a danger and an opportunity. Digital transformation can increase reach, increase revenue, create new products, and it is even possible that there are new opportunities that have never existed before.
There are three important areas that can be addressed and should help to focus the company on the exciting world of digitalization:
- Customer Experience
- Operational Processes
- Business Models
That customers are the lifeline of companies should not be new, but behavior, digital and mobile technologies, information channels and customer preferences have changed drastically – Has the company changed in the same way?
Understanding the customer is the most important task. Social media can help with this and it may be that there are already discussions about the brand or that there are already opinions on the Internet. Digital technologies serve all areas of a company, from sales and marketing to new technologies and their revenues. The preferences of the customers as well as the customer data can be used to communicate with them like never before. It is possible to create a personalized shopping experience that is specifically tailored to the customer and gives an advantage over the competition.
Of course there is no store without the product. Digital technologies also change the daily business. It does not necessarily mean that jobs are lost. Automation can also create new jobs for specialized workers and for strategic tasks, the technology helps to free up time for the work that drives the growth and expansion of the company.
But digital transformation also helps in the daily work. How we deal with information, how we work together, how communication works and how knowledge is shared. Everything depends on a common global view of the company. For example, a common process for strategic planning using online tools can ensure that questions are collected more effectively and inputs are better received, leading in the long term to more participation, better commitment and a more efficient process.
However, digital transformation is not just about how to use technology, it is also fundamentally changing the way companies operate. Digital platforms, products and services complement or substitute existing products. This makes it possible to open up new business areas and to enable completely new business models. Through the internet it is even possible to expand your business worldwide, which might have been possible only with great effort before.
The key to successful digital transformation
Digital transformation enables new ways of analyzing data, increasing productivity, addressing and dealing with customers, even in non-digital industries. From experience, the most important factor for a successful digital transformation is leadership. Most companies do digital transformation on a small scale, leaving only the CMO to make decisions at his level for his area. Successful digital transformation starts from the top, and it takes a united front to bring about the change between “now” and “where we want to go” to take advantage of the opportunities of technology and online markets.
Always work digitally!