What are the 4 main areas of digital transformation?
The events of the COVID-19 pandemic saw companies accelerating their digital development out of necessity‚ not choice. While it may have been unexpected‚ this digital transformation also helped to futureproof businesses against the changing needs of customers.
Whatever the industry‚ a strong digital transformation strategy can help us to stay ahead of the competition‚ as well as become more resilient to threats.
In this blog‚ we’ll explore the following:
- What a digital transformation strategy entails
- The four key pillars of a strong digital transformation strategy
- The potential roadblocks and how to mitigate them.
What is a digital transformation strategy?
When we think about a digital transformation strategy‚ it’s best to ask ourselves: what are the four pillars of digital transformation? This will help us to create a phased roadmap for each stage of the strategy‚ including changes to processes‚ business models‚ domains and overall working culture.
A strong digital transformation strategy will involve all stakeholders‚ starting with the problem rather than the solution. With a problem-solving approach‚ we can build technology that adds value to a business.
At hedgehog lab‚ we offer consultancy‚ as well as building‚ testing and deploying platforms. Each of these processes underpins the four pillars of digital transformation.
Digital process transformation
Digital process transformation should always be the first step in any wider strategy. If we want to effect positive change‚ first we need to agree upon the best way to do it!
Normally‚ digital process transformation is reactive. You might find that your company has to evolve in response to a wider change in the market‚ or a legislative change. For example‚ in the first 12 months since the introduction of GDPR‚ more than €56 million in fines were issued.
Many of these issues could have been avoided had these companies had a more robust digital process transformation strategy. For example‚ consent boxes and changes to Google Analytics should have been top priority.
The key steps to successful digital process transformation
The outcomes of these process changes should be new technologies‚ automated manual tasks and cost savings. For the best outcomes‚ we should:
- Agree on the goals of these process changes – are we adapting to organisational structure amendments or simply incorporating new tech? What does good look like?
- Determine how best to measure success – we should always be collecting data to measure the effectiveness of change‚ including metrics such as time‚ cost and errors.
- Acknowledge everybody’s opinion – all stakeholders have a right to share their feedback. This will avoid conflict‚ and organisations can ‘weight’ feedback based on value to the business.
- Create a roadmap for success – a workflow path outlining tasks for both teams and tools will help to set expectations and timelines.
- Monitor progress – once the process is live‚ we should continuously monitor and measure any changes.
Of course‚ there will be roadblocks to process transformation. Two significant obstacles are personnel and costs. In both cases‚ we need to assess the business value – for example‚ if a member of the marketing team disagrees with sales‚ whose opinion will affect bottom lines? Likewise‚ can we justify all changes cost-wise‚ or just those that will provide returns?
Business model digital transformation
The pandemic is perhaps the most recent example of business model digital transformation‚ with many brick-and-mortar stores going online. But this isn’t anything new – we have seen brands evolve from Lovefilm to Netflix‚ or the digitisation of taxi companies.
One of the best methods of business model digital transformation comes from McKinsey & Company. It involves five phases:
- Defining the problems in the business’ current state and any potential opportunities‚ for example‚ with a SWOT analysis.
- Designing a solution with a vision for the future‚ noting which parts of the organisation and which roles will change.
- Putting the solution into practice‚ for example‚ changing to a hybrid or remote working model.
- Making changes to departments or roles as per the vision‚ for example‚ offering HR teams digital timesheet software.
- Measuring results to see how this impacts business value.
We have more access to digital tools than ever before to enable this transformation. Data analytics‚ for example‚ offer enhanced visibility to help us truly measure our success.
Again‚ we may face roadblocks‚ such as threats identified in our SWOT analysis. We need to come up with contingency plans to mitigate these – such as universal videoconferencing software for remote teams.
Domain transformation
You may have heard of domain transformation in a marketing context‚ such as the Ansoff Matrix. This identifies opportunities such as new product development or new market development.
Domain transformation is similar‚ and sees companies transitioning from one industry into another. One of the most notable examples is Amazon‚ which expanded from e-commerce into data and web services.
Unlike business model transformation‚ which is about optimising your current business for the digital world‚ domain transformation lets you explore new avenues. Naturally‚ tech plays a huge part in this‚ so we need to analyse whether or not we have the funds and capabilities to do this.
Both of these could present roadblocks‚ so it may help to categorise domain transformation. Main focal areas include customers‚ competition‚ data‚ innovation and value. If we can run cost benefit analyses‚ for example‚ demonstrating how this will thwart our competition‚ we may have a stronger business case.
Digital transformation culture change
There is a reason we’ve left this one until last – it’s the most challenging! Getting executive buy-in for digital transformation culture change is no mean feat. Some stakeholders may feel their jobs are threatened‚ for example‚ while others may struggle to learn new technologies.
The key here is to make sure everybody feels acknowledged and valued. Have regular feedback sessions to allay any concerns and arrange accessible training to help them embrace digital. We’ve seen examples of cultural change in real life at Experian. They implemented tools such as the Ascend platform and did so by starting with those most reactive to change. The buy-in from these ‘evangelists’ would then influence others to accept the new culture.
Today‚ employees have streamlined their workflows using an agile approach‚ and Experian has a learning-first culture.
Summary
Digital transformation is no longer a nice-to-have‚ but a necessity in any forward-thinking workplace. As we have seen‚ it involves far more than the technology itself – including people and processes. Whether it is new product development or a wider cultural change‚ it’s important for organisations to use a people-first approach that extols the benefits of digital.
The team at hedgehog lab is here to help you take your company into the future. Find out more about digitally transforming your business with data analytics‚ UX design and service design.
