Digital transformation is a broad term that refers to the integration of digital technology into all aspects of a company. It’s a cultural change that requires organizations to continually challenge the status quo, experiment often, and get comfortable with failure.
Digital technologies have the ability to automate and optimize logistics networks – customizing and speeding up delivery. They can also help businesses meet rapidly changing customer demands for more personalized services and fulfillment.
Tier 1: Process Transformation
Digital transformation is the process of using technology to transform business processes. This can include a wide range of tools and techniques that are used to improve customer service, increase agility, and reduce costs.
To achieve a successful transformation, it is important to know what the desired outcomes are and tailor your strategy accordingly. For example, if you are looking to increase employee engagement, your strategy will need to be geared towards creating a workplace environment that employees enjoy and are excited about.
Likewise, if you are trying to enhance productivity in your company, then your approach needs to be focused on providing employees with the right tools to do their job well and increase efficiency. This can be achieved through better performance management systems, improved employee communication, and other measures that improve employee satisfaction.
When implementing a digital transformation project, it is essential to make sure that everyone involved is committed to the change. This includes the employees, customers, and the leadership team. This will help ensure that the change is a success and helps to ensure that all aspects of the business remain stable during the process.
The first tier of digital transformation is focused on improving business processes and creating new ways of working for agility and experimentation. This is crucial because it can create a competitive advantage for the company and can help to transform how the business operates.
It can also create a more sustainable and profitable company by using data to understand the needs of customers. This information can then be used to create more personalized, agile content.
For instance, it can be used to understand which customer segments are most likely to buy from you and create more relevant communications with them. This can be accomplished by analyzing structured and unstructured data such as social media metrics.
By making your organization more efficient, you can ensure that all of the employees in your organization are able to get their work done in a timely manner. This can help to improve employee satisfaction, which will lead to more retention and happier workers.
Tier 2: Business Model Transformation
Business model transformation is the next step beyond process transformation and is about reimagining how your company engages with its environment, provides value to its customers and partners and ultimately generates revenues. It is a holistic approach to your organization that combines new technologies with changes in the way you operate.
The first step is to define the goals of your transformation and to enroll an executive champion who can help ensure that the project moves forward with the right incentives, funding and communication strategies in place. It is also important to develop metrics and a clear idea of what success looks like.
For example, Peloton creates exercise equipment that connects to the web and uses data gathered from these machines to match consumers with the appropriate trainers. Similarly, GE tracks the product-sensor data from its jet engines and uses AI to offer real-time guidance to pilots to optimize fuel efficiencies.
Companies in this tier must be on the lookout for opportunities that leverage their existing production ecosystems to deliver new data-driven services to consumers. This tier is especially relevant to firms that produce products with digital platforms such as exercise equipment, food delivery and ride sharing applications.
As you might expect, implementing the most innovative technologies in this tier has its own unique challenges and risks. These include but are not limited to: determining which technologies are most likely to deliver the expected return on investment (ROI); determining how the best way to implement them will affect customer experiences and, most importantly, whether they will be effective and scalable across your organization. Finally, identifying potential barriers to implementation and creating solutions to overcome them.
Tier 3: Full Category Transformation
The tier 3 of digital transformation is the logical step up from Tier 2 with the goal being to better serve the needs of students, faculty and staff in a digitally enhanced environment. A well-conceived plan to achieve this goal requires a multi-pronged approach, including: (i) an understanding of current service delivery and program quality measures; (ii) an evaluation of current service model components to determine which are most appropriate to change; and (iii) a review of the best practices in the industry. The resulting roadmap should also include a clear and concise vision statement to guide the rest of the organization. The key to success is in identifying and prioritizing service improvement opportunities that will yield a return on investment in both time and resources.
Developing a comprehensive plan to implement these improvements is no easy feat, and the ensuing challenges will require strategic guidance from an experienced Cella consultant. Fortunately, there are several tools and techniques that will help to navigate these challenges and deliver a scalable digital transformation worthy of the school’s name.
Tier 4: Business Model Transformation
In recent years, digital technologies have fueled disruption in many industries. They’ve also made it possible for smart businesses to challenge established economic models.
To survive and thrive in today’s hyper-connected economy, companies must be able to adapt quickly to supply chain disruptions, time-to-market pressures, and rapidly changing customer expectations. To do so, they need to embrace a business model that leverages technology’s ability to collect, generate, and transmit information.
That means transforming their organization, processes, and systems to use new digital technologies and platforms. To do this, firms must develop a vision that articulates how they’ll use computer-based digital technologies to achieve their strategic objectives.
A firm’s business model is a blueprint for how it will conduct its operations in order to generate the highest levels of returns on investment (ROI). It must be based on an organizational structure that allows for rapid adaptation to change and enables cross-functional teams to work together efficiently.
For example, beauty company Avon International used a direct-selling model for 130 years. But when the coronavirus outbreak shut down its supply chain and forced the company to rethink its sales process, IT experts helped it shift to a mobile-based sales model that allowed reps to take orders directly from customers over WhatsApp, text messages or emails.
Another example of how technology can disrupt traditional businesses is GE’s use of product-sensor data from jet engines to offer real-time guidance to pilots on how to optimize fuel efficiency. In return, GE receives a portion of the cost savings that it generates from these fuel efficiencies as “outcome-based” revenues.
The same is true of Peloton’s exercise equipment, which generates user-interaction data that it uses to match individual users with a community of fitness professionals. AI algorithms in Peloton’s digital platform match those users with trainers, again generating new revenues from data-driven services.
All these examples illustrate how digital technologies can create new strategic advantages for companies that approach transformation with a vision. But only if they are accompanied by clear, well-articulated goals that clarify the purpose of digital transformation and an approach to achieving those goals.
