5 Key Perspectives of Digital Transformation
In today's world, the evolution of technology has opened up new avenues and expectations for businesses in all sectors. To improve performance, efficiency, innovation, and customer satisfaction, companies must take advantage of the potential of digital tools and platforms such as cloud computing, artificial intelligence, data analytics, blockchain, and cybersecurity. The process of using these digital technologies to adapt existing business processes, culture, and customer experiences to meet changing business and market demands is known as digital transformation. It's not just about adopting new tools or platforms but about re-evaluating how an organisation operates, delivers value, and competes in the digital era.?
Digital transformation goes beyond digitisation or digitalisation, which is converting analogue data to a digital format and adopting digital technologies in various contexts. Digital transformation is integrating technology into an organisation to create value and competitiveness. Unlike digitisation and digitalisation, which focus mainly on technology use or absorption, digital transformation extends the scope to creating value and improving organisational competitiveness. Digitisation and digitalisation are the operationalisation mechanisms of digital transformation. It is important to understand digital transformation from different perspectives, including technology, business strategy, value creation, employee engagement, and change management, as it is an ever-evolving process that requires continual research.
Digital transformation is a multifaceted concept that has been defined in various ways. One approach involves organisations fundamentally changing their ways of working by redefining their capabilities, processes, and relationships based on technology-driven methods. Essentially, this means that companies must recognise the potential of digital technologies and use them to transform their operations, whether that involves rethinking how they produce goods or services or improving their customer interactions. Another definition considers digital transformation a strategy that uses digital resources to create added value for the organisation. In this sense, it is a means of leveraging the power of digital technologies to improve business outcomes, such as revenue growth or cost savings.
Yet another perspective on digital transformation is that it involves transforming products and processes. This view emphasises the importance of using digital technologies to create new products or services or to improve existing ones. It also highlights the need for companies to re-engineer their processes to take advantage of the new capabilities offered by digital technologies.
Digital transformation should be viewed as a process of change that occurs at two levels. The first level involves implementing new technology into the organisation's operations. This requires companies to invest in new hardware, software, and other digital tools and train their employees to use them. The second level involves adapting to the change's behavioural and cultural implications. Companies must be prepared to rethink their organisational structures, workflows, and culture to accommodate the new ways of working that digital transformation requires.
Digital transformation presents a significant opportunity to enhance innovation and performance for both the company and individuals, industries, and society. However, it is essential to recognise that digital transformation is a constantly evolving process and requires continual research to keep up with the changing needs of customers and technology advancements. To achieve this, it is essential to consider the five critical perspectives of digital transformation: technology, business strategy, value creation, employee engagement, and change management. By taking a comprehensive approach that addresses these perspectives, companies can maximise the benefits of digital transformation and stay ahead of the competition.?
1-???Technology perspective
Businesses face disruptive technology daily. Failure to adapt to new technology and processes can have a negative impact on the organisation. Quick response to new technology can lead to increased profitability. However, effective technology management is crucial to ensure success and support from employees and customers. An organisation's approach to technology decisions can reflect its future technological goals. Some organisations view technology as a tool to fulfil business needs, while others see it as a platform for technological advancement and market leadership. Technology is critical in digital transformation, enabling innovation and securing an organisation's future. Therefore, an organisation should be driven by ambition to become more technology-driven when making technology decisions. It is essential to consider change management and broader perspectives when introducing new technology and ensure people accept and support it. This involves integrating competencies into the company alongside recent technological or strategic changes as part of change management.
An organisation's digital transformation process and future innovations rely heavily on technology. However, solely focusing on technology can be limiting. Organisations must determine whether adopting a more strategic cross-functional approach to technology innovation will strengthen their overall hold. Many companies need more management and leadership skills to reap the benefits of new digital technologies. While adapting to emerging digital technologies is crucial, it's important not to overemphasise this area at the expense of other critical factors in the digital transformation process.
2-???Business Strategy
The success of a digital transformation strategy is dependent on its aims and objectives, which focus on transforming businesses. Therefore, digital business strategy should be approached differently from traditional IT strategies, requiring a cross-functional approach. Firms must move beyond conventional Information Technology strategies and develop business strategies to address the complexity of technology use, value creation, structural changes, and financial structure. Success in the digital transformation journey can be achieved by embracing digital technology and building business cases through cross-functional understanding.?
The viewpoints presented regarding business strategy for digital transformation share the commonality of requiring a broader cross-functional approach beyond a singular technological perspective. The shift towards digital business only occurs when the strategy encompasses the entire business model and should not be viewed solely as a technology or marketing project. As a result, digital transformation entails various digital innovations that significantly change frameworks, methodologies, principles, and attitudes that may challenge, substitute, or supplement current practices.
An agile and flexible business strategy is essential for successful digital transformation. This strategy should constantly evolve to keep up with changes in the industry. Strategic pillars should be in place to differentiate from competitors and gain a competitive advantage. When digital innovations lead to new business models, they can significantly impact the organisation's overall context. Collaboration between support functions such as marketing, buying, and logistics is crucial to develop a digital transformation strategy that leverages core technology to create value across the entire business. Technology is a critical component of digital transformation and should enhance customer experience, ultimately affecting the organisation's competitiveness, profitability, and survival. Creating value for customers is crucial to the success of a business, and new technology opens up opportunities for increased interaction and better customer service.
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3-???Value Creation
Digital transformation can bring many benefits, such as creating new products and services, improved access to information, more choices, and better customer experiences, potentially leading to better prices. However, organisations must also be mindful of the downsides, such as the risk of overwhelming customers with too much information. Finding the right balance can be challenging, especially when businesses want to showcase their communications. Many organisations need more expertise to use digital strategies to enhance the customer experience, making it difficult to achieve successful digital transformation. This complex process requires careful management of new technologies, customer behaviour, and customer information. To succeed, it is crucial to understand the importance of business strategy and embrace digital transformation as a transformative process. Digital transformation is changing people's lives, requiring customers to learn new skills to adapt to the digital era and take advantage of new touchpoints. Ultimately, creating value for the customer should be a top priority for any organisation, and it should be a critical strategic pillar alongside technology to drive successful digital transformation.
4-???Employee Engagement
Employee engagement is a crucial topic for businesses undergoing digital transformation, emphasising the necessity of effective change management. Organisations supporting employees during change lead to better performance and overall success. Companies must combine culture, learning, leadership, and clear strategic objectives to mature beyond mere digitalisation. With strong leadership and a clear vision, organisations can fully transform digitally. While technology has historically been the primary focus of digital change, the absence of knowledge management and leadership has led to many organisations failing due to the inability to change mindsets and build cultures that encourage change. Executing successful strategies requires skilled individuals equipped with the right skills, culture, and change management. The perspectives highlighted above stress the significance of employees' role in the overall digital transformation process. Change can be challenging for humans and companies, mainly when employees need to support the digital transformation strategy.
5-???Change Management
The process of digital transformation can pose several challenges for organisations and leaders. Often, the focus is solely on technology-driven strategies that produce positive results, leading to a misconception among employees that technology is the transformation itself. Unfortunately, this mindset can result in change failure due to overreaching, poor communication, and lousy plan execution.
To overcome these barriers, it is essential to address employees' objections, concerns, and fears while making change management a strategic pillar. By doing so, organisations can ensure more innovative, faster, and cheaper implementation of change, which can help combat resistance to the company's overall strategic direction.
To ensure the success of digital transformation, the involvement and support of the entire organisation are critical. Employee engagement through change management should be part of the overall strategy. Employees should be informed about the benefits of the transformation to the company and how it will affect them individually. Providing training and support to employees to adapt to new technologies can also help ease the transition. In summary, a well-planned and executed change management strategy can significantly contribute to the success of digital transformation efforts.
To successfully undergo digital transformation, a business must have a comprehensive strategy focusing on three main areas: Technology, Customer, and Employees. Essentially, digital transformation is a strategy that aims to enhance business processes and models and provide customers with easy access to products and services. It is important to note that this is not achieved through a single factor but rather by understanding, transforming, and executing the organisation's and its people's needs to create value for the end consumer. All three areas - technology, customer, and employees - are equally important and require critical strategic initiatives. A holistic approach that involves people, processes, culture, and technology is needed for digital transformation to be successful. This is not a one-time project but an ongoing journey requiring continuous evaluation and adjustment. Above all, it is a mindset that embraces change and innovation.
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Sadiq Alesia is the Co-founder and Managing Director at Ashford & Alesseea. You can follow him on Twitter @SadiqAlesia or contact him at [email protected] .?
Visit https://ashfordalesseea.com/blog to view and partake in other interesting topics.
Student at King's College London
1 年The very essence of digital transformation is rooted in constant improvement and innovation. Adopting new technologies, processes, and mindsets is imperative to create value for customers, employees, and stakeholders. This journey is not a one-time event but a continuous undertaking that must be pursued relentlessly.
Senior Strategy and Research Manager
1 年Companies must be open to new ideas, collaboration, and flexibility to keep up with the changing times and embrace digital transformation. This requires making adjustments to the organisational structure, roles of employees, and necessary skills for implementing digital initiatives.
Building a start-up fintech | Programme Director | Operations Director | SaaS | Blockchain | Building smarter digital workflows for capital risk management
1 年Sadiq Alesia A great article, which echoes much of what I have said in posts and comments. You rightly point to employee engagement and change management as critical to success. Too often the People elements are given insufficient attention. There's pressure too disband the team and move on once the tech has been delivered, and employees aren't sufficiently engaged early enough in the transformation. How can the C-Suite be persuaded to provide sufficient time and funding for the People elements of transformation? What has worked for you?