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Digital Transformation: Choose Your Battles

Posted in Digital transformation, and Strategy

There are a lot of myths out there regarding digital transformation. Earlier, digitalization was seen mostly focused on customer experience and being primarily about technology or B2C business. While it is true that B2B is going through digital transformation process more slowly, digitalization has actually proven to have a real impact on how business between businesses is taking shape. We have also seen a rise of new shared economy, C2C, where consumers have assumed the role of traditional business and are offering services directly to other consumers. Traditional companies will need to change their strategy and learn away from the traditional zero-sum game mindset towards new business models of partnerships, cooperation and networks with those formerly known as rivals. Fundamentals of business will need to be updated – the way we see our customers, competitors, how to operate in data intensive environment which challenges us to constantly innovate and rethink our value propositions.

“Fundamentals of business will need to be updated – the way we see our customers, competitors, how to operate in data intensive environment which challenges us to constantly innovate and rethink our value propositions.”

Customer understanding is one of the top elements of digital transformation. In a digital, hyper connected environment customers are no more just the endpoint of a value chain but key influencers in a dynamic network in which value is created reciprocally. Social media for example provides a platform where to build online user communities, where information is shared and brands are being constantly reconstructed in a complex business to consumer to consumer to business interaction. What started as a goal to build brand awareness and being better able to support existing customers as well as attracting new ones, has rapidly turned into a whole new direction. Every single time we visit the web, we leave a digital footprint. The details of our clicks combined with analytics tools and algorithms enables the system to figure out what to suggest to us when we open our web browser the next time. This is one area that is sure to grow and grow especially more sophisticated – digital marketing will become a lot more discrete.

For customer touchpoints, having a website is just not enough anymore, regardless of how informative and well-structured it is. Today, customers expect you to be available in more ways than one. You want to be where your customers are; Twitter, Snapchat, Periscope, Instagram, Facebook, LinkedIn sharing interesting and value adding content or being available for your customers in case they have a question or problem they need attention to. Customers are also becoming more and more active and have an expectation of participation. One way of fulfilling this expectation is to let consumers or interest groups to test beta versions or minimum marketable product ideas well in advance before their intended product release.

Self-service is also fast becoming a new standard in a digital world. Modern digital tools are helping customers save time in forms of mobile apps or convenient cloud based solutions to utilize for full benefit both personally and professionally. Taking traditional ERP –systems as an example, customers worldwide are demanding that even these traditional software heavy-weights should be available purely as a service, paid by the user by actual usage. Big ones are already on it, smaller ones following suit. This trend works both ways – Gartner researchers predict that by 2020 cloud is the new standard for any software development. By 2019 30 % of the world’s biggest software vendors will be operating on cloud only – model which will force companies all around finally as cloud users.

Organizational processes are also transforming. There are huge benefits in digitalization regarding efficiency, productivity and employee leverage which may have more indirect, yet real impact both on customer experience and top line growth. Employee self-service systems, automation of travel expenses claims, different do it yourself -platforms are just some examples how internal processes may be digitized. For software development companies things such as devops and test automation are becoming more and more familiar, in all of this, the purpose is the same. Automate as much as possible of the routine work to free up time to be used in more knowledge intensive, innovative and creative tasks.

“Automate as much as possible of the routine work to free up time to be used in more knowledge intensive, innovative and creative tasks.”

Mobility is another area that has entered daily working life rapidly. There are many good examples of companies which have long ago deserted assigned desks and are encouraging people to work from wherever they are. With today’s technology such as mobile devices, collaboration tools and videoconferencing, geographical location has long gone lost its meaning. People from all across the world are collaborating and working together even if they have never met in person. Once limited one-way vertical communication channel is being replaced with broad spectrum of vertical and horizontal communication channels, which opens up a whole new route to innovations and discovering the next possible opportunity to create customer value.

Data being much more available is increasing better informed decisions both in customer as well as internal processes. Transactional systems form the foundation from which executives are getting better view into their products and services, regions or customers, allowing them to make decisions based on real data instead of assumptions and educated guesses. On top of that, there is vast amounts of unstructured data, big data being generated from various platforms and trillions of connected sensors just waiting to be analyzed. The challenge of course, is to turn the continuously everywhere generated data into valuable information or rather, insights about where to steer focus next.

Digitalization is also transforming how global companies operate. Today’s integrated information platforms allow companies to gain global synergies while still maintaining their local responsiveness. Digital globalization means that companies are becoming more centralized and decentralized at the same time. Increasing usage of shared services and centralization offers a broader view of the business as also data becomes centralized. For local executives it means getting used to a new kind of situation where there are maybe fewer mandates from the top, but more guidelines to follow when tailoring business to their local needs.

Although digitalization may take different forms in different companies, and progress at varying pace regarding different elements of digital transformation, there are a many more common transformational aspects with those companies considered as digital leaders than there are differences. The key for any successful digital transformation relies in managing the transformation, rather than focusing on the technology. There is no one, standard or right way to start your journey on #digital – every company will need to choose their own battles – this does, however, underline the need for clear strategic direction for any company’s digital transformation pursuits.

 Image: Unsplash / Alex Wong

This blog post was originally published in LinkedIn September 21, 2016.