Digital Transformation: How it’s changing the way you do your business
Digital transformation, or the use of digital technologies to effect a change in the way you do business, increases your competencies and changes your activities, models, and processes. This leads to more innovations and fosters creativity, instead of just being tools that you can use to do your job.
Digital transformation might seem like just another buzzword that is more hype than a necessity. Remember when they said that you should get on the cloud, or you should use big data, or else? The “else” here means that your competitors are going to beat you so hard that you would go out of business.
For some, they never did migrate to the cloud or buy up the tools necessary for big data initiatives, but they are still doing fine. Now here comes “digital transformation.” Are you supposed to be scared not to believe the hype?
Maybe you should. Over the years, many brick and mortar businesses have lost out to their online counterparts. A lot of local bookstores have shut their doors because people preferred to go to Amazon. Just recently, Toys ‘R’ USthat they will be closing down their stores, leaving some 31,000 employees jobless.
In 2017, some of the biggest national retailers have showed signs of trouble. It was the year that Rue21, Payless Shoes, and Gymboree started closing stores. All in all, around 7,000 stores ceased to operate for the entire year.
And much of the blame is leveled at online retailers such as Amazon. People nowadays prefer to shop online or through their smartphones. If that does not drive home the point of how digital transformation is very important for businesses, then we do not know what will.
Digital transformation is important in surviving today’s business world, regardless of what industry you are in. One of the biggest realizations that drive digital transformation is that your competitors are not who you think they are. For example, Toyota’s Smail Haddad said that there are new competitors for their company and it is not Hyundai, Kia, or some other automaker. It is in fact, Uber, which some prefer using over buying their own cars. They also look at Google’s autonomous cars as a very real competition.
But what is digital transformation really?
Different organizations and people define digital transformation differently. Success Rocket’s Larry Boyer likens it to a caterpillar metamorphosing into a butterfly: it changes everything on its body.
Digital transformation is the same way. You do not just change your operations, and leave marketing, HR, and accounting the same. You change the entire organization. Boyer defines digital transformation as the change of operations, mindsets, and culture that allows you to connect machines and humans to have tipping points and exponential change.
How do you go through a digital transformation?
Most organizations would be sorely tempted to imagine what their businesses would look like once they become fully transformed. Perhaps an American mom and pop store that sends their products to a customer in India? Or perhaps a local enterprise that is able to supply their products to the world’s biggest companies? While it is great to have that sort of vision to motivate you, you should start at the very beginning.
First, you should determine what would drive that transformation. There are several points for this, but the most common driving point is data. At the moment, the strongest enablers of digital transformation are data hubs and data governance.
Data governance is making sure that you have trustworthy data, so that you can use it confidently for making business decisions. Meanwhile, data hubs are those technologies that gather together all the data you have, transform these data, and make them usable for other systems in your business. Data hubs, in short, gather and then package your data so that these could be used by other systems.
The good news is that digital transformation takes place with the same tools and technologies you have been using for some time now. Andrew White at Gartner explains that the tools you need for the transformation are what you have been investing in over recent years. Digital transformation is only bringing them together.
But the thing is, each business would need to come up with their own digital transformation strategies. You should have your own approach to your market, a good reason why you need to transform, and a transformation strategy that includes the entire company. Plus, of course, you need to pinpoint the people who will execute these strategies.
Take a look at what happened with Nokia. Nokia was one of the first mobile phone companies in the world. For a time, everybody wanted to own a Nokia and waited for the release of their new phones. However, for some reason, Nokia dropped the ball and Apple and Android not only barged in but also wiped the floor with Nokia.
Nokia tried to get their crown back by partnering with Siemens. No such luck: their partnership was only mildly profitable and Android and iOS products continued to dominate the market.
So what did Nokia do? They sold their mobile device manufacturing business to Microsoft, cut off their partnership with Siemens and concentrated on the business lines that they have remaining and working from there. Although registering a net loss for 2017, Nokia had gross revenues of $8.13 billion, slightly lower than gross revenues of $8.46 billion a year before, but close to doubling the $4.87 billion revenues registered five years before. The net loss is because of an R&D investment of around 5 billion euros. Plus, they’ve recently moved back into the mobile phone business once again.
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In this age where even the biggest companies are dislodged from lists, such as the FTSE 500, in just two short weeks, the worst description you could ever hear about your business is that you have failed to evolve. Holding on to what you are comfortable with could easily mean that you might be closing down tomorrow. Around 27% of senior executive think that digital transformation is necessary to survive, and they are not wrong.
The thing is, you might already have the technology you need to undergo a digital transformation today. All you need is to have a clear vision of why you need to transform, what your goal is, and who will be in charge of the strategy.
Photo courtesy of Bryan Mathers (Flickr).