The pursuit of digital transformation affords leading companies the opportunity to disrupt established industries. Amazon is a great example, beginning in e-commerce and now entering the retail grocery business with a fully digital checkout process, allowing them to create the checkout-free grocery store. Moves such as this have led companies of all sizes to increase their focus on digital transformation.
Technology is changing the way business is done, as we know it, and your organization must evolve to address the changing business environment. We can define digital transformation as the acceleration of business activities, processes, competencies, and models to fully leverage opportunities presented by digital technologies and how they impact strategy and prioritization.
Companies are investing a great deal of money and resources into digital transformation; however, to succeed, they’ll also need a strategic approach; It is a marathon and not a sprint. To ensure that your digital strategy is on-point, you need to get a pulse on the changing market and adjust your approach accordingly.
There are four essential factors required for organizations to be innovative in shaping their digital transformation strategy and to create a thoughtful approach that drives change throughout their entire organization.
1. Innovation requires focus beyond competition or industry
Fear is the motivation behind transformation; Fear that a competitor will beat you to the punch, or that a new company with disruptive behavior will leave you behind.
Statistics show that this fear is justified. According to Credit Suisse analysis, the impact of digital technologies has resulted in the average lifespan of S&P 500 companies declining from 60 years in the 1950s to approximately 20 years today, apparently signifying that disruption rather than longevity is the new standard.
Since disruption can come from any direction, companies can’t afford to depend on analyzing their competitors’ behaviors and actions. They need to look at sources of change beyond their own industry that will unavoidably infuse their own. General Electric (GE) was able to look beyond its competitors by analyzing the innovations in the Technology industry, ultimately launching the 'Predix Platform' allowing industrial machines to be monitored and optimized digitally. As a result, GE has been able to land the targeted business of large companies, like their alliance with Pitney Bowes, before competitors.[G1]
2. Customer Insight
The success of the digital strategy is contingent upon understanding the target audience. Organizations must seek insight from their core audience before solidifying their digital strategy.
For instance, a $12 billion Telecom company, Saudi Telecom Company (STC), had determined a change in their business in 2016 and discovered there was a shift in their core target audience to millennial customers who demanded more digital products. Instead of designing a new digital strategy, they interviewed and studied the millennial customers’ behaviors and pinpoints before they devised their a revised strategy which allowed them to successfully launch a new brand, Jawwy.
A thorough understanding of your customers' motivations and goals is a critical starting point for any digital transformation initiative. At ThriveVance, insight is not an afterthought; it is a fundamental foundation of how we help clients formulate their digital strategy.
3. Executive Influence
Companies test digital initiatives by launching innovation centers that do the digital thinking for them. In 2015, Scotiabank began their 'Digital Factor,' a tech accelerator unit with a single philosophy to help identify areas for process improvement: "Reinventing how banking serves people, starting with Scotiabank's customers." This team examines the customer experience and aims to offer solutions to the customers’ most pressing pain points.[G2]
Executive support is a crucial factor in implementing a digital transformation. An article in Harvard Business Review titled, To Lead a Digital Transformation, notes that it is the CEO who has the power to provide this kind of digital direction across the entire enterprise.” An executive direction is essential for a systematic digital transformation to implement successfully. To illustrate this point, consider Ford Motors under the direction of its CEO, Alan Mulally. When Mulally took over as CEO in 2006, Ford had lost 25% of its market share since 1990.
He created a business plan, shared it with his executive team via weekly meeting, which was duplicated at every level of the organization all the way down to front-line employees. Managers then collected employee insight and shared it back with the executive team. Mulally set the high-level outline while considering feedback from the entire organization.
Your digital strategy could fail implementation without executive support, but it may also have significant organizational gaps without input from the internal sponsors. Finding the right balance to a successful digital transformation is essential.