Business Transformation through Digital Transformation

The power of steam led the first industrial revolution. Then came another wave of industrial growth through introduction of mass production with the help of electrical energy. The third revolution started in the middle of the 20th century and can be credited to modern computers, which could run multiple tasks with ease. Now, the fourth wave of business transformation has arrived leveraging automation and artificial intelligence (AI). Digital transformation essentially implies integrating digital technology across all areas of a business.

A study by MIT reveals, “The 25% of firms that excel both in digital intensity and transformation management capabilities are 26% more profitable, generate 9% more revenue from their physical assets, and achieve 12% higher market valuations than other large firms in their industries.”

Realign and redesign your process and products

Today, businesses must transform to meet the evolving customer needs, to remain competitive and sustainable. A systemic digital transformation will enable companies to capitalize on the changing consumer behaviour and needs.

A survey conducted by PwC of 2000+ respondents in 26 countries says “Industrial leaders are digitising essential functions within their internal vertical operations processes, as well as with their horizontal partners along the value chain. In addition, they are enhancing their product portfolio with digital functionalities and introducing innovative, data-based services” and “Customers will be at the centre of the changes to value chains, products and services. Products, systems and services will be increasingly customised to customer needs using data analytics for better understanding. First movers who are able to establish successful platforms will have a significant advantage over competitors. Ultimately, companies will need to own relationships with the end customers who drive demand or at least integrate with platforms that allow them to access the end customers efficiently.”

Go beyond customer expectations

What value do your customers derive from you? Traditionally companies worked to ensure that they deliver what their customers asked for, but today businesses must predict customer needs and prepare for future demands by understanding customer behaviour and influencing their purchase decisions through Big Data and artificial intelligence.

A great example of a business leveraging technology for transformation is Netflix. According to Harvard Business School Digital Initiative (HBS), the success of Netflix can be attributed to:

·        Advancements in streaming capabilities accelerated in line or better than expected as Netflix transitioned to a primarily streaming service

·        The proliferation of mobile phones and tablets as well as the introduction of smart televisions allowed Netflix to be available to its customers at all times

·        The change in viewing tastes because of the first two greatly enhanced Netflix’s value proposition.

While HBS is right, the role of Cloud, AI-based analytics and Big Data in developing Netflix into what it is today can’t be ruled out.

Go beyond digital channels

Analytics will allow businesses to create personalized experiences for each customer. Mass personalization will be possible through digital transformation and will help in systematic deployment personalization beyond digital channels.

According to Mckinsey, “Some 44 percent of CMOs say that frontline employees will rely on insights from advanced analytics to provide a personalized offering; 40 percent say that personal shoppers will use AI-enabled tools to improve service; and 37 percent say that facial recognition, location recognition, and biometric sensors will become more widely used. At Covergirl’s new flagship store, an AI-powered program, enabled by Google’s conversational Dialogflow platform, directs customers, while augmented-reality glam stations let customers “virtually try” products—by altering the customer’s image as if the product has been applied. Macy’s, Starbucks, and Sephora are using GPS technology and company apps to trigger relevant in-app offers when customers near a store.”

Another interesting example of technology aiding business efficiency and growth is the Autonomous Mobile Robot (AMR) by Fetch Robotics. At the DHL distribution in Netherlands, the AMRs help handle the entire logistics chain of spare parts, from intake of order to delivery to customer, thereby improving efficiency manifold.

Technology-driven digital transformation will help business to:

Increase their competitiveness: Blending analytics with automation businesses can develop their product and services better. Through faster adoption of digital technologies, businesses will also have the ability to provide more products and services at a reduced cost to the customer.

Utilize emerging opportunities: Digital transformation will, “open up new ways for companies to integrate their customers’ needs and preferences into their development processes.”

Smart systems and human collaboration

For a successful digital transformation, organizations must not focus on technology alone, but it should also focus on its people. As per PwC report, “The biggest challenge of leaders isn’t technology - it is the people. While digital technologies are rapidly becoming a commodity, success largely depends on an organisation’s Digital IQ, especially how well its digital leaders communicate the transformation. It’s also dependent upon the digital qualifications of the employees who need to roll out digital processes and services. Radical disruption isn’t always comfortable for the people who make it happen, so change management will also be critical. And with data analytics becoming a core capability for every company, enhancing skills and organisational structures will be critical.”

Closing thoughts

During my work days at AMEX, in late 90’s our leaders took us through a book called “Who Moved My Cheese?”. Thanks to them, I was introduced to the concept of change management. It taught me change is inevitable, which is so true even today. Businesses must quickly adapt to the changing digital landscape or risk lagging behind. We as leaders must ensure that the organizational infrastructure advances, processes evolve, and human resources are trained to excel in the digital age!