In recent years, the terms “digital transformation” and “going digital” have been cropping up with increasing frequency. There is no doubt that the digital age has arrived, complete with all the opportunities (and chaos) that normally accompany every advance in technology. Although every company (with few exceptions) is already a digital company to some degree, making the transformation to a true digital enterprise is a concept for which no universal definition has been accepted by everyone. To some, it represents a change in customer expectations, while to others it might herald better supply chains, more efficient operations, new products to market or opportunity to expand into new territories. One thing, however, has become obvious: Without a strategic approach to the transformation, the move can fail to deliver the comprehensive results desired. Having a digital strategy means including five important core components.

  1. The digital capabilities are built around the customer. Companies that have successfully completed a digital transformation made customer engagement the pivot around which all other activities revolved. They have carefully analyzed all the data available to them to identify customer personas and target markets, and they have then tailored their digital strategies to deliver solutions that meet their customers’ needs. They use demographics to identify what specific groups want most and then given it to them. They may need to address the needs of different groups in different ways. For example, millennials are more likely to demand mobile apps than seniors; denying mobile apps to the first group can lower the customer adoption rate, but the same result can be seen if the second group is forced to use mobile apps to interact with the company.
  2. All processes are optimized and automated to the greatest extent possible. Automating and integrating business processes across channels, product lines and operations can make it easier to devote more time to essential tasks rather than spending it on routine or unproductive tasks. It can also help improve your company’s profitability, which can provide a variety of benefits for your customers. However, customers are less likely to adopt automated processes that they consider of little value to them. For example, customers might be more enthusiastic about reading the specifications of a product than finding a list of all stores within 100 miles of their home that carry the product.
  3. Successful digital enterprises leverage data to find actionable insights. In the age of “big data,” it is easy to compile statistics and demographics. However, unless the analysis provides information that you can act upon, it is little more than various tables of numbers. A company might detect a trend, for example, that indicates that sales are declining among females aged 50 to 60. You can react to that data by increasing your marketing efforts targeted to that group, but unless you know why the sales are dropping, you are reduced to guessing what strategies might help. On the other hand, if you notice a dramatic increase in credit card purchases and discount coupon redemption among that group, you might surmise that the issue to address is pricing, rather than shorter lines at the cash register or faster-loading apps.
  4. Executives support innovation and accept the risks that can accompany it. They promote a culture of innovation that understands that failing is not necessarily the worst thing that can happen. Every failure is treated as a learning experience that can provide valuable lessons for future initiatives. At the same time, risks are controlled to acceptable levels. What those levels might be depends on the business. Some operations can afford to have 90 percent of their initiatives fail dismally if the remaining 10 percent are overwhelming successes. Other businesses may need to be more cautious and walk a fine line between stifling innovation and mitigating risks.
  5. Businesses that have successfully transitioned to digital enterprises have demonstrated an unyielding commitment to keeping their customers’ data secure. Over the last five years, there have been many well-publicized incidences in which hackers stole customers’ personal data. These breaches have made many customers reluctant to provide their personal data or credit card information digitally. The expansion of the Internet of Things is increasing the threat surface substantially, with everything from cars to home appliances connected to the Internet and a potential target for hackers. Successful digital enterprises take the threat of hackers or breaches very seriously, and they take whatever steps are necessary to ensure that their customers can trust them with their data.

Eventually, all businesses are going to have to come to terms with the idea of a digital transformation. The move, although necessary, will not be without challenges. However, taking a strategic approach to digital transformation can make the transition go more smoothly and provide better results.

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