As published on Dynamic Business.
I know what you’re thinking. ‘Here we go again, it’s another buzzword; digital transformation’. It’s the key topic for conferences, the headlines for articles from learned reviews, the subject of white papers and reports, and even the basis for entire consultancy businesses. The only thing we haven’t seen yet that declares it a complete trend is critics announcing that it’s already been done, and in fact it’s just the old stuff re-packaged as new.
So, is ‘digital business transformation’ really a thing, or is it just a new phrase for something that’s been around for a while?
At the start of the ‘digitalisation journey’ for most traditional businesses, the main focus is on keeping up with the consumers, or trying to ensure that the company has a relevant presence in places that consumers are using. Digital implementation is largely driven by marketing, with IT being dragged along for the ride. In parallel to that, although slightly slower off the blocks, technology in general is slowly embraced across operational aspects of business; stock and inventory management, point-of-sale systems, ever increasing sophistication in financial systems, and the start of customer databases. The biggest challenge with this is that you often have multiple systems across the business with different data sets that aren’t connected to each other. As such, the next logical step is to start linking all of these systems together to create a single customer view and a cohesive understanding of how your customers are engaging with you. All of these steps are simply about adding digital into the current business structure. Evolution of marketing, improving efficiency through IT systems, better business and customer intelligence; these are all incremental changes to improve what is already being done. No matter how effectively you’ve digitised, the business is still vulnerable to changes in business models made possible by technological advances.
A great and recent example of this in action exists in the Taxi industry. In recognition of their need to digitise, Taxi’s Combined created new websites, launched apps, and started sending emails. However, Uber was able to come in with a new, technology driven approach to taxying and take a solid chunk of their business. This is the real concept of digital business transformation; evolving the business model with technology to create new products, services and ways of interacting. However, it is extremely challenging to try and develop new digitally focused ideas unless the business has gone through the hard yards of digitally enabling it’s traditional business and relationships with consumers. We have seen numerous businesses decide to leap into “start-up” territory, only to face significant challenges as the digital assets required to leverage the strength of the existing business were not in the state that they could be exploited for new opportunities.
One of the key challenges with digital business transformation is that it needs to involve a wide range of stakeholders across the organisation. Digitising the marketing activity could rely on a passionate digital expert driving change (although they typically require a fellow conspirator in the IT team), but digital business transformation done properly needs the involvement of all levels and sections of the business. Starting at board level, they need to appreciate not only why it is required, but also have some appreciation of the complexity and risk involved. They also need to develop the skillset to be able to properly evaluate different approaches to market and provide strategic input. This is, obviously, no easy task.
At a managing executive level, upskilling of digital understanding is required for all personnel. The full executive team need to explore the impact digital is having on a range of different industries and business models in order to assess whether these provide a threat or opportunity in their industry.
Teams responsible for implementation need to be creating systems, content, and engaging customers in a way that provides connection points and insights for new business ideas to be explored. This includes easily accessible data structures, consumer centric content planning, and considered privacy permissions that ensure the business can leverage its existing assets for new opportunities.
So, yes, ’digital business transformation’ is a thing. It’s a stage of evolution that allows businesses, at worst, to stave off threats to their category from outsiders. At best, it allows businesses to develop and expand their model through new products and revenue streams.