Before considering Digital Transformation and how you may apply it to your business, you may want to want to gain an understanding of business strategy first. This article will provide you with information on some simple tools to get you started.
What is Digital Transformation?
The following article will aim to give you an understanding of Digital Transformation and how it can be applied to your business today.
ProfileTree are currently undergoing a Digital Transformation where we have partnered with Ulster University to develop a Digital Transformation Model to manage and control each stage of our two year project. This model is known as the EAS3EL model which will be shared with you within this article.
The Definition of Digital Transformation
Digital Transformation is known as the process by which businesses adopt technologies to drive fundamental change and deliver value to their customers. The application of the term Digital Transformation varies with what you aim to achieve. However, ultimately, it is how businesses can develop current processes or create new ones to grow and gain a competitive advantage.
Types of Digital Transformation Technologies
Digital technologies are significant in bringing disruption to how firms and markets operate and are therefore described as a key opportunity to gain a strategic advantage in a competitive context. Below lists some technologies which could be adopted, many of which listed as todays current tech trends;
- Artificial intelligence (AI)
- Digital Assistants
- Virtual Reality (VR)
- Internet of Things (IoT)
- 3D printing
- Robotic Process Automation
- Big Data
- Data Analytics
- Augmented Reality
- Cyber Security
Why is Digital Transformation Important?
Technology is advancing fast and it is up to businesses to decide if they want to grow with it or be left behind. Successfully implementing Digital Transformation and adopting the correct digital technologies can drive fundamental change and offer long-term growth opportunities for businesses.
Three Successful Digital Transformation Examples in Business
McDonalds: McDonalds wanted to find a way to improve customer experience and in doing so decided to introduce the self-service kiosks. Through successfully implementing new technology, McDonalds were able to improve the speed by which customers received their food while also reducing the time spent waiting in line to receive a order.
Netflix: Netflix transformation from Blockbuster is evidence of a business who were able to see what their customers valued, allowing them to innovate in a way to meet these demands. Identifying a shift in consumer needs allowed Netflix to implement a digital platform that would completely change the way people watch TV.
Dominoes: Dominoes are a business who successfully used Digital Transformation to remain in business during a time of survival. Dominoes were the first business to introduce an online tracker, allowing customers to track their pizza and know exactly when it would arrive. Customer experience was later improved when the Dominoes app was introduced, making customer orders quick and easy.
Digital Transformation: A guide applying an effective digital strategy
Digital Strategy & Digital Transformation Strategy
For many businesses, they understand what digital transformation is but have a lack of understanding of how to implement it. This is where the importance of using a digital strategy or digital transformation strategy model/methodology comes into play.
As digital transformation is very broad and can look to integrate people, processes and technology it is important that you have a strategy in place that covers each of these areas while aligning your focus.
What is Digital Transformation Strategy?
Like any normal business strategy, a digital transformation strategy is a plan of action. It will look at using digital technology solutions to improve a particular aspect of your business. As this will determine the long-term direction of your business a step by step guide to digital transformation planning and strategy is required.
Without a digital strategy, businesses are not going to achieve their desired results. Having the correct strategy in place will ensure your transformation can be measured correctly and makes an impact toward the success of your business. It will offer alignment toward meeting objectives and making decisions.
Digital Transformation Strategy Models
Some examples of digital strategy models which have been used by businesses have been listed below.
The SOSTAC Methodology by PR Smith is originally developed as a digital marketing tool, however due to its flexible nature it can be applied to a Digital Transformation project as well. The tool follows as simple structure and if implemented correctly, it will provide you with an effective planning and management system to follow for the duration of your project.
McKinsey Six Step Model
The McKinsey six step model has been used by many businesses due to McKinseys reputation in transformation. The model itself was originally to deal with the disruption in the auto mobile sector and proved highly effective as it covers all aspects of Digital Transformation, including culture change.
ProfileTree have been working closely with Ulster University as part of a mKTP programme funded by InnovateUK, with the aim of digitally developing and transforming our business. As part of this digital transformation, a new strategic model has been developed, known as the EAS3EL Model.
The following Digital Transformation will offer you an effective step by step guide to transforming your business.
The EAS3EL Model – Explained
This model is known as the EAS3EL conceptual model and was developed by Dr John Bustard of Ulster University to assist Profile Tree’s Digital Transformation Project as part of the mKTP Programme funded by Innovate UK. For more information on the model and further context on its proposed use as an aid to Digital Transformation, please visit: https://pure.ulster.ac.uk/en/publications/the-art-of-digital-transformation-a-conceptual-paper-advocating-b
The EAS3EL Model has derived from other digital transformation models but aims to offer you a more holistic view. The model follows five different stages as seen below which any business can easily follow while going through their Digital Transformation journey.
Step 1: External Analysis
This is the external scanning into the wider macro environment. A key tool to apply while looking external to the business is the ‘PESTEL Analysis’. Looking at the Political, Economic, Social, Technological, Environmental and Legal factors which have the potential to influence the industry you operate in is key to positioning yourself appropriately for the future. Understanding which factors which offer opportunities in which you can exploit, or those which oppose as a threat to your business is an important way to make informed future business decisions.
Step 2: Internal Analysis
The next step of the transformation will ask you to look at the internal part of the business. This starts by defining your ‘why’ and understanding what is the reason for the transformation and what you aim to achieve. Another tool which could be implemented here is a ‘SWOT Analysis’.
This tool allows you to look at the strengths and weaknesses of the business, as well as any opportunities or threats. This is key as you will want to look at which strengths could be leveraged e.g. what strengths could you focus on to add value to your business and for your customers. On the other hand, understanding and knowing your weaknesses will allow you to seek out ways to minimise these through the digital transformation being applied.
Step 3: Strategy
As you can see from the model above strategy has been split into three different stages. These stages are;
Strategy Adoption: This step looks at how you are going to get buy in and involvement in the project. It will also look at what type of culture needs to be adopted to make sure the transformation is a success, and what value discipline (explained below) will take the strategic focus.
Strategy Development: This step looks at the goals or objectives you want to achieve. You will also want to look at how you will develop your culture in line with your strategy. Other considerations such as an audit survey could also be implemented during this stage.
Strategy Implementation: The final step will look at the implementation of your plan. You will want to set Key Performance Indicators (KPI’s) to measure your success and ensure that you are on track to achieving your objectives. It will also help to create a road map to implementation with key action items and dates to keep you on track with progression.
Value Disciplines Explained
The value disciplines are developed around the theory that one business can not try to aim to be everything for their customers, otherwise they will become stuck in the middle and this is not sustainable and may harm long-term growth.
Therefore, they should choose one value discipline and aim to deliver this to their market. This will support businesses in aligning their strategy to help them gain a competitive advantage.
Now looking at the three value disciplines, the first one we can consider is;
Product leadership: Firms pursuing product leadership strive to produce a continuous stream of innovative products and services and permanently look for new solutions to their customers’ problems.
Example: Apple is an organisation which focuses on product leadership, where they will constantly come up with innovative solutions to improve products such as the iPhone and keep ahead of competitors by introducing their newly developed products to the market each year)
Customer intimacy: Firms pursuing a strategy of customer intimacy shape and adapt products and services to fit customers’ needs, prioritising the lifetime value of the customer relationship over initial costs.
Example: Amazon is an organisation who focus on customer intimacy, and they do this through offering quality products while aiming to achieve customer loyalty through incentives such as amazon prime which ensures the customers will come back and buy more.
Operational excellence: This describes firms that are industry leaders in terms of price and convenience, because they minimise internal cost, such as by eliminating unnecessary production steps or optimising business processes.
Example: Businesses such as McDonalds, who focus on operational excellence will have highly efficient workflows and processes in place which will allow them to offer high quality to their customers at a competitive price, delivered with little difficulty or convenience
Step 4: Evaluation & Control Measures
Like any strategy plan it is important that you measure your success, otherwise how do we know if what we have aimed to achieve has actually been achieved? We also want to view Digital Transformation as a journey towards the success of a business and not one off project. Changing the way people work should remain consistent within the business forever, therefore control measures will need to be in place.
Step 5: Learning and Feedback
This step involves looking at what went well and what didn’t? What can you learn from or what may you do differently next time round? This could be done by group feedback sessions or another audit survey. This stage also gives a good opportunity to receive a final update on the new systems and processes to make any last adjustments.
What can the EAS3EL Model Achieve?
1. Improved customer experience – the rise in customer demand means many customers expect to be able to communicate with businesses in different ways. Whether it be through mobile apps, livechat or personalised emails, whatever means of communication you choose can have an effect on customers’ perceptions and whether they will come back again. On the other hand, many customers want an easy way to do things and don’t want to spend a lot of time on purchasing a product or service. Therefore, Digital Transformation could be the solution to speeding manual processes while continuing to deliver excellent value.
2. Increased staff productivity and business efficiency – adopting the correct technology solutions could see business productivity improve massively. Transformation offers businesses the opportunity to become operationally excellent through their processes and systems. This has been seen by many businesses adopting automations to speed their internal processes.
3. Supports a culture of innovation – investing time into Digital Transformation shows people your desire to improve. Developing your business from a digital perspective will allow you to keep ahead of competitors through different ways such as differentiation and improved customer value. Digital Transformation also offers an opportunity to promote innovation which can encourage the collaboration and involvement of staff into the long-term development of the business.
3 Main Components to Digital Transformation
Some tips on communication, collaboration and involvement have been listed below.
Digital Transformation: How to communicate effectively
Why communication is important
One of the most challenging parts to implementing a Digital Transformation is getting people on board with the change process. This could be due to people not understanding the benefit the change can have on them and the business, or they have developed cultural habits over time. This is why it is very important that there is consistent communication at all stages of the transformation.
Resistance to change is common in business, where it may be difficult to have people take part in the new ways of doing things. Therefore, understanding who your stakeholders are and which level of importance or influence they can have over your transformation is imperative. One brilliant tool to be able to identify who your key stakeholders are is known as ‘stakeholder mapping’.
Stakeholder Mapping: What is it?
What is Stakeholder Mapping? First of all a stakeholder is any individual or group that has the power to influence any decisions you make while conducting a Digital Transformation. Conducting stakeholder mapping will assess the potential impact these individuals or groups can have on your Digital Transformation project by placing them on the matrix below.
Placing the individuals involved in your project on the matrix below will allow you to identify which people can influence the success of your project upon their role or relationship. Whether they are monitored, kept informed, kept satisfied or managed closely will ultimately decide which level of communication you need to deliver to them throughout the project.
Keep Satisfied: You may have to work harder to get these people on board with your plan. Having high power but low interest will mean they will not want to be bombarded with information, however it is important that they are aware of any changes being made.
Manage Closely: These people will have a lot of power and interest in what you are doing. This means they must be managed closely, keeping them updated with each step of the project. This could be an individual like the CEO of the business, or a group of funders to the project, both of which have the power to cancel any future project plans.
Monitor: These people have low power and low interest in your project meaning less time can be spent communicating with these people, however it is important to monitor what information they need to know and when. The internal and external environment can change the plans to your project and affect the power or interest of your stakeholders so being aware that you may need to shift communication at different times is important too.
Keep informed: These individuals will have high interest and low power. Communication will need to be controlled to ensure your actions are understood. Therefore, having the correct channels of communication from the outset of the project, looking at regular update meetings or emails to highlight progress and future plans for these particular people.
The importance of collaboration in Digital Transformation
Collaboration is a key area to transformation success. Top level management or business owners are going to have a better idea of the direction the business needs to go. Therefore, encouraging these individuals to share their vision in line with the digital transformation strategy will help move the transformation in the right direction.
How can I get people involved in a Digital Transformation?
There are different ways you can get your staff involved in the Digital Transformation and change process and it’s important you consider different ways of doing this. Heavy involvement from staff will improve productivity and satisfaction in the workplace, where staff will feel connected to the future development of the business.
Three areas you could consider to get staff involved are:
1. Listen to them – when starting a Digital Transformation project you will want to understand current ‘challenges’ or ‘problems’ you aim to solve. This can be done through communicating with staff and encouraging input to creating an action plan from this on eliminating any of their current frustrations.
2. Conducting an audit survey – a Digital Transformation audit survey is a good opportunity to collect staff insight and awareness. This will be a chance for you to measure their attitudes towards Digital Transformation and seek out areas that you could use to your advantage during the change process i.e. what could be put in place to ensure everyone adapts to the Digital Transformation.
3. Involve them in the investigating or testing process – no one knows your business as well as your own staff. Therefore, involving more experienced members of staff when investigating a new piece of technology will ensure you are choosing one which best matches your business needs. This will also apply with testing the system within the business. You should choose your best teams to analyse any new technology, giving each of them the opportunity to share their feedback and using their input to make critical decisions.
From the outset, research shows that 70% of Digital Transformation projects do not fulfil their ambitions. To become one of the 30% of successful projects it is therefore critical to build a cohesive strategy to focus on the people, processes and then the technology at the heart of Digital Transformation.
Like any business strategy, the people involved in the process and the culture embedded must support the overall transformation. Resistance to change is expected amongst business transformations, therefore communication and the correct leadership involvement is key at all stages of the process. Measuring the change while upskilling staff on new technologies and processes will also determine the success and outcome of your Digital Transformation. If you found this helpful and wanted some more information on making your business more efficient, ProfileTree have recently published an article on the Top 5 Project Management Software Systems Review (Pros, Cons, Features, Pricing).