What Is Digital Transformation?
Digital transformation is the process of rethinking the use of a company’s technology, platforms and processes to create new business models and new forms of revenue. This approach was developed in recent decades with the advance of technology.
Digital transformation is driven by changes in customer expectations, and at no time has this been more apparent than in 2020, when the COVID-19 pandemic took hold of the world. Businesses needed to adapt to the changing circumstances, and many did so with great effort: Retailers such as Walmart, Target etc. switched to curbside delivery, with apps and automated messages letting people know when to pick up their products — a completely digital means of what would once have been someone knocking on a customer’s door.
Digital transformation is about the combination of business and technology in order to make customers’ lives easier. Whether that’s using apps, software, new devices etc., that depends on the services or products offered by the business, but adapting to new ways of doing things has already become crucial in the current market.
Digital Strategy: A Necessary Approach
Digital transformation relies entirely on having a plan, a vision which the business intends to see through in order to help achieve the goal of becoming fully digital. This is what is termed a digital strategy. It exists to ensure that the company’s digital assets are used to their fullest potential, in line with the business goals.
A business might obtain digital assets, but without a plan of how to use them they won’t be much help. Below are outlined the steps which you need to take in order to create a successful digital strategy.
Research: You need to know your assets, your competitors and your customer base. Taking a look at what digital assets your competitors and how effective they are will give you an idea as to how well they might fit into your framework. Be aware though, that your business model won’t be identical to theirs, so there might be differences. This is a rule of thumb, a rough idea — not an absolute.
Knowing your customers also gives you an idea of what platforms and resources might be the most useful, as target demographics play a huge role in determining what resources will be used the most.
Analyze: When analyzing your research, keep in mind Porter’s Five Forces. They are, in short, Competition, Buyer Power, Supplier Power, Threat of New Entry, and Threat of Substitution. All of these can affect your prices, profits, and therefore the amount it is feasible to spend on your digital strategy. There’s no use in spending so much that you won’t see that money back for decades: practicality is key here.
Lay Out Your Vision: Taking into account the results of your analysis, decide on a course for your business to take. Having a unified approach across your business is the best way to ensure a seamless transition, so make sure everyone is on board.
Lay Out an Interface Strategy: In a lot of cases, the center-piece of your digital strategy will be a website, however there are plenty of cases in which businesses get along just fine using apps or software as their main interface. You should take your overall vision, and apply it to the properties of the platform you are using in order to kick-start the process.
Don’t forget about your secondary tools either: SEO, keywords and such are great ways to ensure your platform receives the most attention it can. Visibility is the key to digital success.
Discovery-Driven Planning: Dealing With Uncertainty
We live in an age of unprecedented growth in digitization, driven by the unforeseen events of the pandemic that shook the world in 2020. Due to these events, businesses have been forced to lay out digital strategies in a situation where the usefulness and usability of platforms in these new ways are unknown, not an ideal situation for any business!
Unlike in conventional approaches to business planning where success is defined as how closely the outcome matches your projections regardless of changing circumstances, discovery-driven planning takes a more flexible approach in order to factor in new data as it becomes available. This adds a new step to the process.
Re-Analysis: Don’t be fooled into thinking that once your strategy is going it can be left alone! The digital world is an ever-changing one where new adjustments are made every second, and things that were once effective can become a net negative in time. Keep re-analyzing your customers and competition, checking the usage data of your platforms and resources. These will all help greatly with refining and altering your digital strategy when necessary.
In a discovery-driven digital strategy, resources can be allocated based on the performance data of your digital assets, allowing you to either increase or decrease your focus on them as you see the results. It’s a wait and see approach, where you don’t put all your eggs in one basket in the beginning. You measure your success by benchmarks, not by overall increase in profits. In this approach, failures are lessons you can learn from.
In the new era of digitization, it’s crucial to have a strategy by which to focus your digital transformation, however an inflexible approach is likely to cause problems with adapting to the use of technology. You should let the results speak, and change your approach when necessary in order to achieve the greatest possible use of these assets.