Understanding Digital Transformation

The change will be permanent and why digital transformation is not a set of tools.

So, what has changed? On the one hand, technology has enabled industries to find more efficient ways to operate, by either eliminating or replacing intermediaries in the value chain, while on the other hand, consumers have regained their power and have been moved now to the center of the experience; they are now the ones who choose what to read, listen and who they pay attention to. 

Thanks to this new context it has never been easier to launch new value propositions for clients and consumers and generate more with less, leveraging disruptive innovations.

So, what is digital transformation?

This brings us to the concept of digital transformation and understanding that more than a game of technology it is a game of management. The whole purpose of DT is increasing operation productivity and gaining more cashflow and company value; however cashflow shouldn’t be the only thing that matters for XXI century companies.

The dilemma is whether companies need to abandon the old model in order to make space for the new one. Organizations are prepared for linear changes, not exponential changes and the ones that fail to match the speed of transformation with the speed of change, will inevitably collapse. 

The digital transformation journey

Before embarking on a DT journey, companies must first understand their value chain from different angles. Understanding not only who they are but where they are at. 

This is where tools such as the Porter analysis, Business Model Canvas, Value Proposition and the Consumer Journey come in to allow a deeper internal and external knowledge, but they must all include a key factor: put the client at the center of the analysis. 

The Customer Journey in essence, is an indispensable tool that enables companies to gauge clients needs and how they are being met with the company’s current value proposition. Fragmenting the client experience, allows to solve each fraction with an specific value proposition and also provides an overview of how other companies, brands and players are extracting value from different sections within that journey. 

In the images above and below, it is possible to see how a "consumer pain" in terms of health follows a journey that can be solved and intervened in a myriad of ways. This is why this tool becomes crucial for determining needs and creating solutions in a holistic, in-depth manner.

With clients and consumers now being at the center of the experience and hyper connected to technology, not only their sovereignty and decision power has expanded, but the environment has shifted from a push to a pull approach. This is why the information architecture and service/product solutions must always be in service of clients needs in a coordinated and consistent way.  

"If a business model changes, the customer journey and the organization will consequently change."

A game of management

There are several methodologies and models for implementing digital transformation in an organization that adapt to their culture and objectives. Each one of them requires a diverse set of timings, investments and involvement levels. There isn’t a one size fits all solution but a previous analysis of the company status, vision, goals and what resources it is willing to allocate.

The picture below shows some of the most common DT models segmented by cost/ approximation and evolution phase.

The paths towards digital transformation vary. For instance, the rigid structures of companies can support the Business as Usual part of the business (BAU), focused on certainty, automatization and repetition, while the flexible structures can enable the management of uncertainty, thus provoking disruptive innovation, reducing time to market and launching high impact, more agile projects.

The right management in a digital transformation journey is the combination of both of them, through a hybrid model.

The value proposition and business model is what defines the structure of the organization for a DT journey in terms of roles, responsibilities, hierarchy, etc. Therefore, understanding the four following pillars is pivotal:

Capacities: what are my current capacities, what are the new ones that need to be acquired, what is the status of the people and teams in the organization, how can those be developed?

How to organize:  What new structures need to be build, which ones need to be maintained or kept partially, how does the transformed organization look like and how do areas relate with one another?

How to Work: How should work and collaboration function in the digital and non digital aspects? What platforms and set of tools are needed for this new modus operandi? How can we kick off changes and new practices and ensure their sustainability and permanence?

How to Lead: What is the current state of culture and leadership within the organization? What framework can help us develop a digital culture? How must we lead the Digital Transformation? What new capacities must take place and be developed?

The ways of working rule over the how to get organized and the how to get organized rules over the ways of working. As mentioned, digital transformation is meant to be understood as a profound evolution an organization takes to survive and thrive in the digital era. Technological tools are here to enable that jump.

Source/Credit: IMPACT / ISDI Digital Transformation module by Alberto Díaz

“The best marketing doesn’t feel like marketing.” - Tom Fishburne

After a career in brand management and marketing, I've pivoted into topics related to the digital space and how this new era is reshaping and challenging the way we connect, consume and do business. Thanks to pursuing a Masters in Internet Business at ISDI Spain, I've become interested in writing and sharing knowledge about digital marketing, data infused-creativity and positive leadership.