There is no alternative to digital transformation. Visionary Companies will carve out new strategic options for themselves – those that don’t adapt, will fail. – Jeff Bezos, Amazon
Digital transformation, it’s become a catch-all term for various types of business change, but what does it mean? How can digital transformation help businesses and how can you benefit from it?
In this piece you’ll learn why digital transformation is important, the factors that drive the need for change, and how to effectively plan your digital transformation strategy.
What is digital transformation?
Digital transformation is the most recent in a line of technology-based movements that affect the way you do business. It affects how businesses relate to customers and conduct processes.
Digital transformation refers to a shift in an organisations culture, strategy and operations in an attempt to correlate with the ever-evolving business environment and consumer behaviour. This is possible through the integration of new technologies, processes and company culture.
As Kurzweil’s Law of Accelerating Returns stated over 20 years ago, technology scales exponentially. Although once only relevant to specific industries digital transformation is now becoming universally accepted as a reality for all businesses. New markets and opportunities seem to appear overnight. The catalyst for these shifts is technology, and the access businesses and consumers now have to it.
Companies adapting to change must innovate and invest in strategies to benefit from the impact of technological advancements. One heavily impacted industry is retail. The retail landscape has been flipped on its head by the emergence and growth of eCommerce which, of course, has recently been accelerated by lockdowns around the globe.
ECommerce is now treated as an industry in its own right but it is in fact the result of digital transformation. The case of transformation from retail into eCommerce most commonly takes place when an established brick and mortar store realises the growth potential that new streams of income, partnerships and exposure to customers can provide their business. However, any brand from brick and mortar to those with an eCommerce focus can also go through a digital transformation. One example is eCommerce brands that adjust their strategy from a sales-focused approach to a customer service focus.
Primary causes of digital transformation
The eCommerce industry has seen an influx of new market joiners that can build their business around the modern landscape and leverage their position. What then influences the decision to evolve and how can large corporations maintain contemporary and competitive?
Retail professionals are rapidly accepting that digital transformation is becoming a question of when not if. The realisation that something needs to change can come from anywhere, it may come as a result of a recent downturn in profits or perhaps even reading this piece you may be thinking “should we be doing more?”. The following are the two biggest influencing factors for digital transformation that you should be aware of.
1. Market competition or changes to an existing competitors’ strategy
The emergence of a disruptive new competitor or the introduction of a new technology can eat into your business’s revenue. This loss of market share because of competition often causes management to access the businesses situation and act accordingly. Those who choose to not act will eventually be left behind as seen in the unfortunately familiar case of Blockbuster.
2. A shift in consumer behaviour and demand
There are a variety of causes for a change in consumer behaviour, ranging from the introduction of new technologies by competitors to societal changes. A recent example is the societal shift that lockdowns around the globe has caused for the eCommerce industry. As a result, established brick and mortar brands have been forced to invest in their eCommerce arm to maintain profits.
Technological innovation from competitors is a consistent catalyst for transformation, however, it’s important to keep in mind that shifts in consumer behaviour and how you react to them is what matters.
How to set your digital transformation strategy
A common misconception is that digital transformation is the sum of changes in a company’s technologies. In fact, transformation requires a customer-focused, agile approach that is backed by an opportunistic mind set.
Unfortunately, transformation is different for each company, depending your company’s current position and the market you operate in. The following points detail how to affect positive change when approaching digital transformation.
Access your current digital status
To access requirements for change you must first understand the current digital maturity of your business. This involves detailing where your company sits along the technological capabilities scale. Through some detective work on your competitors you can gauge where your businesses problem areas might be.
When researching competitors focus on the outcome of their strategies rather than the path to them. Can they provide unique customer experiences? Are they improving the lifetime value of their customers? By first focusing on the outcome for the customer you instill a results driven mindset.
Understanding and detailing your businesses current digital maturity helps define a starting point from which you can begin to create a roadmap. Does your current infrastructure enable you to offer the customer experience you’re aiming for?
