Despite the plethora of articles you’ll come across online, an accurate guide on organising and executing digital transformation is pretty hard to come by. With this article, we are starting the informational series Digital Transformation Done Right, which we hope will change that. Over a series of posts in the coming months, we will explain the steps in driving digital change in organisations, written by experts that have really done the work.
With so many different projects hyped-up under the banner of “digital transformation”, this initial article addresses a very basic but important first question: ‘how do we define digital transformation for an organisation?’. What categories of change is this made up of and how can we think about where the scope starts and ends for the different teams involved across the organisation? This article is intended to serve as an initial reference framework basis for our series of deep dive follow-up articles into different transformational topics.
After reading this you will be able to:
- Identify the breadth of change that is put in the scope of digital transformations and the differing perspectives that different stakeholders may bring to it
- Quickly distinguish between varied digital change objectives, why they are important and some focus areas for each type of change
Our future articles will take further deep-dives into the topics within digital transformation, getting more specific on the different aspects and how to be successful. But for now, let’s talk ambition!
Defining digital transformation
In its broadest definition, digital transformation involves embedding digital technology to improve a business to be more effective and/or efficient. However, the aim is not just to replicate processes and support them with technology, but also to re-design them so that the overall system or service is significantly better. Next to that the most successful transformations also tackle the organisational mindset at a fundamental level. Business and technology competencies are intertwined and a culture of continuous improvement and innovation is established. The process to rapidly enhance business through new technologies becomes systemic.
This is a high-level definition, so let’s get more specific. The illustration below outlines the typical areas tackled within digital transformation. Each have differing objectives and focus. Categories 1 and 3 are more focused on what digital output a business creates while categories 2, 4, and 5 are about how digital ways of working are embedded into the business to create its outputs. A digital transformation tackles a combination of these areas — ensuring it addresses not only what digital output is needed by the business, but also how digital ways of working will be incorporated to do that consistently, systematically and to high quality.
Now let’s take a closer look at each of the categories in turn.
1. Customer & Channels
Why is this digital change important?
Digitalisation has opened up a multitude of new ways for customers to discover and interact with businesses, leading to a shift in customer preferences and behaviour overall. Businesses can market to, sell to, and service their customers via digital channels such as web, mobile, social, and email; which need to work hand in hand with more analogue touch-points such as retail, customer deliveries and events.
The need to be able to meet and compete for customers via digital channels has been a major catalyst for companies to invest in digital capabilities. Early digital start-ups across different market sectors have spurred incumbents to also compete via digital channels despite their domination of traditional channels to market. Some examples include Amazon (which started with Books, CDs before mass merchandise), eBay (Print classifieds), ASOS (fashion) and Expedia (Travel).
Although this first wave of disruption started in the late 90s, this is still as relevant now as it was then, and for several reasons. First of all, customer preference to utilise digital channels continues to grow. This means that also business growth potential is greatest via digital channels. Secondly, digital innovation continues to increase in pace. Businesses must continuously up their game to compete, as the bar for digital competition rises higher and higher.
Most digital transformations today still include efforts to drive improvements in customer channels. If you are leading or supporting a digital transformation where digital channels are a key focus, then it may help to explore some successful examples. As a starting point, we recommend exploring John Lewis’s omnichannel transformation, or adidas’ digital strategy to grow. Especially because they are incumbent businesses which had the additional complexity of how to grapple with the combination of old and new digital channels to reach customers.
Three focus areas for driving digital change in customer & channels
As there are many change areas and interdependencies that should be explained, we will further deep dive this topic in a future article. But for now, here are 3 key change areas we would like to highlight as front and centre of a “digital channel transformation”:
- The customer is king. A customer-centric mindset is at the core of this change. Your business is growing in digital channels because customer prefer to increasingly use these as the medium to discover, learn, select, and buy the products and services needed
- Understand the customer and act on it. This digital change means increasing your organisation’s capability to learn, and optimise its approach towards the customer. In our experience, many business say they do this — but few really do in practice. This commitment to the customer is what separates average performance with industry leading growth. Success means adopting design thinking approaches, and building the capability to better capture, analyse, and utilisecustomer data/feedback. And not just talking about it but doing it
- Cross-channel collaboration. Stimulating collaboration across brand, marketing, sales, and service teams is essential to connect business thinking and action to deliver a superior customer experience. Not an easy task, but crucial to really make the shift you are looking for. And actually a lot of fun for the departments and people involved once they get the knack of it