How can digital transformation help your business?

12-04-21

Henry Allen | W2Solution

Ecommerce

Digital transformation, it’s become a catch-all term for various types of business change, but what does it mean? How can digital transformation help businesses and how can you benefit from it?

In this piece you’ll learn why digital transformation is important, the factors that drive the need for change, and how to effectively plan your digital transformation strategy.

What is digital transformation?

Digital transformation is the most recent in a line of technology-based movements that affect the way you do business. It affects how businesses relate to customers and conduct processes.

Digital transformation refers to a shift in an organisations culture, strategy and operations in an attempt to correlate with the ever-evolving business environment and consumer behaviour. This is possible through the integration of new technologies, processes and company culture.

As Kurzweil's Law of Accelerating Returns stated over 20 years ago, technology scales exponentially. Although once only relevant to specific industries digital transformation is now becoming universally accepted as a reality for all businesses. New markets and opportunities seem to appear overnight. The catalyst for these shifts is technology, and the access businesses and consumers now have to it.

Companies adapting to change must innovate and invest in strategies to benefit from the impact of technological advancements. One heavily impacted industry is retail. The retail landscape has been flipped on its head by the emergence and growth of eCommerce which, of course, has recently been accelerated by lockdowns around the globe.

ECommerce is now treated as an industry in its own right but it is in fact the result of digital transformation. The case of transformation from retail into eCommerce most commonly takes place when an established brick and mortar store realises the growth potential that new streams of income, partnerships and exposure to customers can provide their business. However, any brand from brick and mortar to those with an eCommerce focus can also go through a digital transformation. One example is eCommerce brands that adjust their strategy from a sales-focused approach to a customer service focus.

Primary causes of digital transformation

The eCommerce industry has seen an influx of new market joiners that can build their business around the modern landscape and leverage their position. What then influences the decision to evolve and how can large corporations maintain contemporary and competitive?

Retail professionals are rapidly accepting that digital transformation is becoming a question of when not if. The realisation that something needs to change can come from anywhere, it may come as a result of a recent downturn in profits or perhaps even reading this piece you may be thinking “should we be doing more?”. The following are the two biggest influencing factors for digital transformation that you should be aware of.

1. Market competition or changes to an existing competitors’ strategy

The emergence of a disruptive new competitor or the introduction of a new technology can eat into your business’s revenue. This loss of market share because of competition often causes management to access the businesses situation and act accordingly. Those who choose to not act will eventually be left behind as seen in the unfortunately familiar case of Blockbuster.

2. A shift in consumer behaviour and demand

There are a variety of causes for a change in consumer behaviour, ranging from the introduction of new technologies by competitors to societal changes. A recent example is the societal shift that lockdowns around the globe has caused for the eCommerce industry. As a result, established brick and mortar brands have been forced to invest in their eCommerce arm to maintain profits.

Technological innovation from competitors is a consistent catalyst for transformation, however, it’s important to keep in mind that shifts in consumer behaviour and how you react to them is what matters.

How to set your digital transformation strategy

A common misconception is that digital transformation is the sum of changes in a company’s technologies. In fact, transformation requires a customer-focused, agile approach that is backed by an opportunistic mind set.

Unfortunately, transformation is different for each company, depending your company’s current position and the market you operate in. The following points detail how to affect positive change when approaching digital transformation.

Access your current digital status

To access requirements for change you must first understand the current digital maturity of your business. This involves detailing where your company sits along the technological capabilities scale. Through some detective work on your competitors you can gauge where your businesses problem areas might be.

When researching competitors focus on the outcome of their strategies rather than the path to them. Can they provide unique customer experiences? Are they improving the lifetime value of their customers? By first focusing on the outcome for the customer you instill a results driven mindset.

Understanding and detailing your businesses current digital maturity helps define a starting point from which you can begin to create a roadmap. Does your current infrastructure enable you to offer the customer experience you’re aiming for?

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Recognise the implications of change and laying out your goals

Empowered with an understanding of your businesses merits and shortcomings you can now list what you wish to achieve, your goals and targets. At this stage in the process it helps to be outcome-focused and not just start adopting new technology and processes for the sake of it. Instead layout your problem areas and make calculated decisions about methods for solving them.

The goal of transformation should be to streamline your teams, processes and operations resulting in the ability to provide your customers with an exceptional service that will differentiate you from your competitors. With your goals solidified you can consider what needs to change to achieve these goals.

At this stage you can now predict and forecast the implications of transformation. Is disrupting all areas of your business the most effective use of time and resources or might some changes be more easily achieved and have a greater impact? Answering these questions will help you understand where you should focus your efforts if you have limitations in budget and time?

Often the realisation that there is a need for transformation will directly affect the change required. However, it can be beneficial at this stage to take a step back and access what other opportunities you have. You may find that investing in a single resource is an inefficient use of budget and instead consolidating your tech stack may have a similar cost but benefit additional business areas.

The key is in leadership

During the implementation of your carefully sculpted transformation plan it’s vital for change to be instated through leadership. This is especially true for larger corporations where communication can easily become convoluted.

Transformation changes more than just technology, it affects processes and company culture. For implementation to run smoothly the backing of authority is required to put changes into practice. Therefore, working closely with the C-suite to ensure the entire company is onboard with the strategy enabling you to deliver a smooth adoption to change.

Backup vision with logical justification

As mentioned, significant changes to business require buy-in from all levels and teams. Leadership needs to lay out in practical terms how transformation will affect and benefit individuals and their rolls, along with why it’s important.

You can go a step further by encouraging a culture of experimentation throughout the company. Of course, this doesn’t mean following up on every single idea but instead empowering employees to come up with, share and take calculated risk to spark innovation throughout the company. This approach allows the specialists to do what they do best and has the added benefit of reducing the chance of any resistance to change from employees.

Transformation never ends

Technology is ever evolving; new market entries will continue to disrupt and competitors will continue to improve. This being the case its beneficial for investments in technology to have room for expansion. You don’t want to invest hard earnt capital on innovative tech to realise in a year you will have to migrate to a new system. Look for technology that that has no upper limit and can grow with as your business does.

Lastly, being aware that transformation is an ongoing process will ensure that your brand remains contemporary. With consumer behaviour constantly shifting we recommend implementing a system for gathering feedback from your customers. What would they like to see from your company?

Conclusion

In the new digital age transformation has become a requirement rather than a nicety. Awareness of the implications this has for both small businesses and enterprises is vital. Businesses need to understand what areas requires attention and how to implement change when the time comes. This is the key to remaining competitive in the current technology driven and customer centric landscape.

If you wish to outpace competitors a willingness to innovate and experiment is necessary. The result of effective digital transformation is better serviced customers, greater organisational efficiency and a culture of excellence. Businesses that fully embrace digital transformation will be agile and able to face what’s to come.