What does Digital Transformation mean for your business and what you should do?

Introduction: Digital Transformation is not something nice to have but it is a must-have and the sooner the better. Digital Transformation is all about reinventing your business for a digital world. It also means that your business is not dependent on any physical aspects e.g. physical store vs digital store, In-store buying Vs online ordering and shipping from the warehouse direct. It does not mean getting rid of the physical assets e.g. the store but how do you transform the physical to digital so that you have data on physical and maybe that you can monetize. 

Ever since the introduction of the Internet to the business world in the early 90s, our world is becoming more digital ( i.e. overly relying on computing infrastructure and digital applications to operate) and today our world is fast changing digitally. This has significant ramifications and implications for businesses of all shapes and sizes.

"Today, it does not matter what industry you are in, you are a digital business"- Satya Nadella, CEO of Microsoft.

Take Dominos Pizza, for instance, they make pizzas but they are a digital company. From ordering online to delivery or pick up, the customer journey is all digital. If you are sitting on the fence with half-hearted attempts at digital transformation then that is not going to cut it long term. The writing is on the wall and it is up to you to seize the moment or let it pass. If you seize it you may help grow your business and flourish, and if not then you perish. It's all about the data in today's world. It is not just an imperative but a necessity for survival.  

Data Is the new currency: Having a digital version of your business can help you in many ways. Besides making your business survive black swan events like the pandemic or 9/11, it is easy to scale and you can expand your footprint nationally or globally. Second, you can standardized, control and improve your processes for a consistent customer experience across all channels. Third, and more importantly, your business is not confined to business hours operations like 9 am to 5 pm, but it is operating 24X7, 365 days a year.

But the biggest bang for the buck with a digital transformation is the data and the actionable insights that you will get about your business which will allow you to propel your business in the right direction based on facts rather than just intuition. Data is indeed the new electricity. Just as electricity transformed businesses overnight so does data. Today, modern technology on cloud-based data analysis, mining, analytics and insights is available to all businesses on a subscription basis. This really saves you on time, resources, infrastructure maintenance & support and licensing costs and allows you to run your business on steroids at a fraction of the cost if you were to do it all in-house.  

So the question is “How do you start on this journey?”

A journey of a thousand miles begins with the first step. That is true but for any journey and you need to have a roadmap or a series of steps or milestones to get to your destination. It is also important to know where you are at currently. In order to make efficient use of your time during the digital transformation journey, you need to have a plan or a strategy to reach the destination. As the first step to digital transformation, it has to be part of an overall strategy of how you are going to evolve and change in an increasingly digital world. You need to figure out what your strategy is in response to. Is it for survival or for growth? Each business will have different challenges based on their industry and market. But all digital transformation will have the following steps. Steps 1 and 2 will help you formulate your strategy and the rest will help in execution.

1. Create the right strategy:

• Get a 360 deg view of your business i.e. both internally (micro-level) and externally (Macro Level). “Internally” lets you focus on your current products and services. Among other things, you need to have a laser focus on your products and services. Which ones make sense to keep and which ones need to be divested. For example, late GE CEO Jack Welch kept only those businesses with GE where they were either number 1 or 2 and divested of all others. In the aftermath of the 2008-2009 financial collapse, GM did the same thing with their product lines. They either got rid of some of the brands or merged them with others. “Externally” means what is happening broadly in the marketplace or the industry that you are part of e.g are the consumer preferences changing and how they like to interact with the company and consume its products. It also means how resilient your business is to external events e.g. 9/11 or the pandemic. In both these cases, a digitally transformed business would have been least affected. 9/11 severely impacted the operations of Cantor Fitzgerald, a finance company that had its main office in World trade tower. And the pandemic has affected the operations of restaurants, theme parks and places where people like to go in numbers.
• Put the focus on the customer. Once you have gained an understanding of the internal and external environment, it is time to turn your focus on the customers. Customers today are looking at simple, convenient and frictionless ways of consuming products and services so you need to customize your product and services and how they are delivered or consumed based on this reality. It is about creating a customer digital experience around your products and services.

1. Analyze your business Processes: Review your current business processes and identify critical ones. Among the critical ones identify which ones need to be supported internally by in-house applications and which ones can use third-party applications. If you are a market leader/creator with unique strengths then you may want to develop applications internally and make it your competitive advantage e.g. this is the route that Apple, Amazon and Tesla have taken. Tesla is an auto company but they are into their own data centres(cloud), IoT, Research, Microprocessors, AI and the vehicle fuel which is the battery. They are totally vertically integrated. This allows them to scale and be in control of the customers and their experience.
2. Identify the gap: Next Identify which ones are currently supported digitally and which ones are not. If the processes cannot be digitized and are manual and person dependent then look to technologies like Robotics Process Automation (RPA) and AI to automate them.
3. Train your Workforce for the digital reality: You will need to assess the impact of these technologies on your workforce and accordingly you will need to change job profiles and provide training to your workforce so that they are comfortable with the new way of working.
4. Communicating and Managing the change: If Digital transformation is a huge change for your organization then you need to have proper change management policies and practices in place. For this being transparent and always communicating about your plans to the organization will go a long way in making this whole process go smoothly.
5. Culture: Last but not least create a culture of innovation, continuous improvement and entrepreneurial mindset.

These are some of the basic steps and not an exhaustive list. If you are looking for consulting services on Digital Transformation and Automation then connect with me on Linked In and I will be able to guide you further.