Look at the manner in which digital transformation has changed the way enterprises do business, there is little doubt about its impending large-scale impact in the days to come. Most businesses have realized that their business's success is linked to the adoption of new technology and platform-based business models that helps them cater to their customer needs in a better manner. And, increasing digitization in all aspects of business has made it imperative for all organizations to constantly innovate and hence renovate the way they provide products and services to their customers. This very nature of digital transformation places a challenge before businesses on how they go about meeting customer expectations and reaching organizational goals and objectives.
What does Digital Transformation really mean?
Digital transformation can mean different things to different organizations. It can range from getting on social media to implementing advanced tools and technologies such as cloud technology, mobile and Internet of Things (IoT). A framework is hence required for firms to transform their businesses by making the best use of new digitization opportunities. Enterprises that are leading the way in digital transformation have the following chief elements in their reinvention framework.
Customer Decision Journey Study
Understanding the customer's requirement and the stage of the buyer's journey - whether they are becoming aware of the brand or they are considering to make a purchase - is becoming the cornerstone of successful businesses. A recent research by McKinsey shows that enterprises that are able to understand and act upon their customers' journey are able to cut down the costs by 15-20 percent. In addition, these organizations are able to improve customer satisfaction by up to 20 percent and the revenues by about 15-20 percent.
Strategy and Innovation
A digital strategy is an inseparable part of a business strategy for most organizations today. However, the best strategies don't come from past analysis and execution, but are in fact based on where the firm believes the value is likely to shift in the next few years. Digital leaders identify where they are, the changing trends and a few possible disruptions in their industry and market, prioritize them and then craft a digitized business model to exploit opportunities.
Today's changing business environment requires that organizations deploy technology and tools like cloud technology and data analytics tools that support high-performance. Legacy systems alone do not work anymore if the company has to become agile and flexible. Hence, digital leaders are taking a two-tiered approach to implement technology and drive personalization for the customers while focusing on robust performance. While on one hand, they focus on designing and developing customer-facing software which is fast and responsive, on the other, they design core systems for greater stability and high-quality data management.
High-speed data analytics form one of the core elements of a strong digital transformation framework. Companies that lead in digital transformation know what data to use, draw critical insights from the data and focus on delivering on their goals based on this data. According to a recent research by McKinsey, organizations that made extensive use of data analytics saw approximately 126 percent improvement in profits over their competitors.
Process automation forms an important part of the digitization framework. A well-automated process helps in reducing redundant processes and inefficiencies while enabling rapid scaling of business at no substantial additional costs. Over time, a significant cost performance can be achieved while helping the firm to become agile and responsive to changing demands, thus gaining competitive edge.
While technology and tools are an important part of digital transformation, it seldom drives transformation alone. In reality, it is the people, both employees and customers that help drive the digital transformation. Everything about the organization, from structures and business processes to the mindsets and behaviours play an important role in implementing digital initiatives for transforming their businesses digitally.
How can digital transformation help new startups?
There is no doubt that digital transformation is sure to disrupt virtually all industries. New companies, having their inherent advantages of being a startup, should adopt digital transformation to their advantage to see long term success and in a few cases, even lead the transformation. Here is how adopting the elements of digital transformation framework can help startups.
Adopting the right organization culture
A company's employees are its most important resources. Organizations with good digital maturity foster a culture of initiative and collaborative experimentation where its people can take decisions amidst uncertainties. Adopting a mindset of trial-and-error where failure is accepted as part of the process can help talents flourish which in return spurs digital progress. Having the right people that fit the organization's culture also matters because the right people fuel business success while the wrong people can in all likelihood pull it down.
Maximizing evolving technology
Being aware of the latest technology is not sufficient in a world where technology is changing at a fast pace. Moreover, not all technologies are right for a business. Hence, it is important to develop an in-depth understanding of evolving technology so that organizations can exploit their advantage to stay ahead of competitors and stay relevant.
Take advantage of data
Data and information are of utmost importance for an organization's growth. It is critical to collect customer data and know how to use it and interpret it. Just so that an organization stays relevant in the market and has a competitive advantage. New businesses must make data the force behind the decisions they take by efficiently collecting, collating and analyzing it. A successful implementation of this process that will help them appeal to their customers will lead to more successful business outcomes.
Keeping the focus on customer experience
Startups have the advantage of being closer to customers. Hence, adopting a business strategy, model and technology with the end-customer in mind can ensure success. By performing an in-depth research into the customer's requirements, defining a 'buyer's journey' and analyzing customer data, startups can understand how their customers make decisions and customize their marketing campaigns as well as product and service offerings.
Optimizing digital channels
A part of being customer-centric and using data for staying ahead of competition involves optimizing various digital channels.Today, most customers are online and are using digital channels including mobile, social media and search engines to research products and services, and make purchase decisions. Hence, staying optimized for these channels through content and optimization techniques help organizations reach out, stay in touch and better understand customers.
Focusing on agility and flexibility
Being adaptable to changing demands plays a huge part in any startup's success. However, startups cannot afford to designate specific tasks and responsibilities to specific employees due to workforce and liquidity constraints. Hence, it is imperative for startups to hire employees who have a flexible and agile approach to work and can impact the business in multiple ways. And automation goes a long way in ensuring employees are able to efficiently multi-task and provide more value by way of innovation.
Digital transformation is no longer a buzzword. Infact, it is as essential as having a business plan or for that matter, a business card. It is a reality today which is already delivering positive results for enterprises that are leading the way. Hence, it is critical for startups to embrace this transformation to stay relevant and grow in the ever-changing digital future and also put themselves on the path to greater success.