What does a business need to do to change from analog to digital?
“Every business is a software business.” Google that statement and you’ll get 200 million results, one of which will link to a book from 2001 talking about the software maturity and what was considered agile at the time. Companies that haven’t made the digital transformation have been behind the technology curve for more than a decade.
Current changes in technology makes it more crucial than ever for companies to develop a digital strategy, In fact, by 2017, over 50% of IT spending will be on the dominant new technologies like mobile, cloud, and big data. These technologies are changing how companies do business and create new sources of revenue.
The Four Changes Needed to Achieve Digital Transformation
Frank Gens, IDC’s chief analyst, has said that “Mainstream companies in every industry are realizing they’ll be disrupted if they don’t get moving now.” Tackling the transformation is tough; only 15% of respondents from companies at the early stages say their organizations have a clear and coherent digital strategy. While the number with a digital strategy increases to 81% among more mature organizations, which means close to 20%, still lack a clear strategy even in the midst of transformation.
Digital transformation requires rethinking every element of how your company does business, from how it creates new products to how it interacts with customers. The World Economic Forum identifies four key themes you need to address for your company to become a digital enterprise:
- digital business models
- digital operating models
- digital talent and skills
- digital traction metrics
Digital Business Models
Transforming into a digital business requires fundamentally rethinking how your products are developed, since slow product development cycles no longer work in the digital era. Instead, time has shown the success of innovative products that reach the market quickly and focus on the user experience. Creating products like that may require completely rethinking how your products are developed, as ADP did when it established its Innovation Lab. Some companies may want to model development cycles on those used by early stage businesses or to create a corporate venture company.
For some companies, digital business means turning their data into a product through the use of analytics, since data monetization allows companies to sell the insights hidden in their collected data.
Digital business models create products more easily, but they also let your customers connect more easily with your business. Another example of digital transformation comes from Bank of America, whose Teller Assist service lets customers speak to tellers while they’re at an ATM.
Digital Operating Models
To be effective, you should use digital technology to empower employees to make decisions faster and to communicate and collaborate with colleagues within and beyond departmental boundaries. Collaboration with external partners should also be streamlined through digital technology; search for opportunities to implement technologies, such as sensor-based Internet of Things devices, that can increase operational efficiency.
Digital Talent and Skills
It takes a new kind of talent to implement a digital strategy; the skills needed aren’t just technical, and they also require political savvy to push back against internal resistance. Even the White House needed to step up its hiring after the failure of Healthcare.gov’s initial rollout.
Company leadership must be digitally savvy, with an understanding of both technology and business issues, and employees at all levels must be provided the training necessary to be comfortable adopting digital tools. Keep in mind that corporate culture may need to be transformed to attract and retain a diverse community of employees.
When necessary, consider using on-demand workers to provide skills the internal workforce lacks; robotics and artificial intelligence may be able to automate some current job functions.
Digital Traction Metrics
The key performance indicators (KPIs) of a digital business are not only financial metrics, but they are also digital metrics of user engagement. You should collect metrics in real-time and feed them into analytics that drive corporate decision-making.
Tackling the Four Changes
The push toward digital transformation has to come from the top, and it isn’t easy. Besides implementing new technology and new processes, digital transformation must overcome structural impediments such as resistance to change. While hiring a Chief Digital Officer indicates an interest in achieving digital transformation, successfully implementing a digital strategy requires participation and commitment from all levels.
- Implementing a digital business model also requires a tolerance for disruption, and in fact, the World Economic Forum recommends disrupting yourself. At the same time, it’s important not to let the disruption interfere with core business functions; instead, focus disruption around the edges, and target aspects of the industry where customers and trends are already accepting the types of changes you’ll implement.
- To implement a digital operational model, first select one of the five digital operational models they identify. These models differ in how they are organized, how they work and how their success is measured; choosing an appropriate model will help structure your efforts and let you know how well you are succeeding.
- Building a digitally savvy workforce requires understanding how to make your workforce appealing to employees, including millennials. Your surveys can let you know what your employees are thinking, but you may find more honest opinions on social media sites.
- Identify digital traction metrics meaningful to your business, and remember that collecting and analyzing them may require implementing new technology. Making the metrics meaningful requires a commitment from management to incorporate these metrics into decision-making.
The process of digital transformation can be complicated, but the benefits far outweigh any initial challenges. The key is to think through these four changes and develop a strategy that will change your business from an analog dinosaur to a digital leader.