As concepts like cloud technology, real-time analytics, and the internet of things (IoT) continue to transform the business landscape, companies with high levels of digital maturity stand the best chance of succeeding. For businesses that rely on manual methods, this means that embracing digital solutions is no longer a choice — it's a necessity. However, with 70% of digital transformations failing to meet their objectives, digitizing your business is no easy feat.
If you're serious about driving real results, this guide covers five best practices for launching a successful digital transformation — from prioritizing strong leadership to reimagining your company's culture.
Tech.co's Guide to Successful Digital Transformation:
What Is Digital Transformation?
Digital transformation is the process of integrating digital technologies into all areas of a business, to create fundamental and sustainable change.
While the end goals of digital transformations vary for each business, according to a survey conducted by Tech.co, the biggest incentives include enhancing operational efficiency, gaining data driven insights, improving customer experience, and becoming more agile as an organization (see below).
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A common feature of digital transformation includes ditching manual practices for modern software solutions. By doing so, businesses are able to streamline countless processes including accounting, customer relationship management (CRM), internal and external communication, project management, and payroll — but the process doesn't end with implementing smarter solutions.
The success of digital transformations hinges on the adaptivity of employees and their ability to develop new skills. And in some cases where digital skills are lacking, onboarding new talent with technical expertise is necessary to assist with the transition.
These technological and skill-based changes won't be sustainable unless a company is able to wholeheartedly embrace a digital culture. This often requires a complete overhaul of a company's organizational structure, including the development of new processes, attitudes, and values.
But don't worry; this doesn't have to be as scary as it sounds. By following the five key factors below and adopting a more holistic approach to business transformation, you'll be able to maximize your chances of succeeding.
1. Company leadership
While every part of a business needs to band together to digitize effectively, behind every successful digital transformation is a strong leader. This sentiment is summed up perfectly by George Westerman, a workplace culture researcher at MIT, who explains “digital transformation is less of a digital problem than it is a leadership problem.” But which leadership characteristics are the most important when carrying out a digital transformation, and why?
According to the results of a McKinsey poll, the digital literacy of a leader — from a CEO to a project lead— is the main factor that will determine a project's success. And while this digital expertise can be learned, it's often necessary to onboard industry experts that already have the relevant skills under their belt.
In addition to digital know-how, a leader's ability to commit to a transformation is also a vital factor behind a project's success, alongside their aptness to remain adaptive in the face of change.
2. Smart tools
Manual methods may have been serving your business up until now, but trading them in for digital tools is one of the best ways to increase your business's operational efficiency. However, if you choose the wrong software, or don't use the solutions effectively, it will take much longer to see results. So, before throwing your business's former practices out the window, you should carefully consider which tools will be able to meet your demands.
First, you should consider which business processes need to be streamlined. For instance, if your business manages remote or hybrid teams, communication tools like Slack and Chanty are excellent ways to improve your company's coordination and organization. Alternatively, if you publish content, content management systems (CMS) make light work out of managing media and distributing it across multiple channels.
If your business relies on phone lines to make sales or to provide support, switching to voice-over-internet protocol (VoIP) technology should be a major component of your digital transformation. Compared to legacy landline phones, VoIP technology can be hosted on any digital device and provides businesses with heaps more features — from call analytics to advanced call management.
Aside from unlocking a wide range of functionalities, cloud-hosted VoIP solutions also often work out better value than traditional phones, because they rely on existing broadband rather than landlines. Telephony prices aren't always transparent, however, so to receive custom quotes you can use our free comparison tool.
3. Data-driven insights
Streamlining core processes with clever technologies will move your business forward by leaps and bounds. However, if you want to maximize your business's chances of success, we recommend using these tools as part of a wider data-driven approach.
By harnessing intelligent, data-driven insights, businesses are able to gain a much clearer understanding of their market and the needs of their customer base. Then, by using these insights to action important changes, companies have the power to dramatically improve the experience of their customers or clients.
Unsurprisingly, this approach can prove to be extremely profitable. According to a report from Workforce, advanced reporting doesn't just save a company money, it's also capable of substantially increasing profit margins. This is because data-driven insights eliminate the need for often costly guesswork by allowing businesses to make decisions based on informed predictions.
You don't need to fork out to use this approach either. There are loads of free services available to track customer behavior including Google Analytics, Open Web Analytics, and Smartlook.
4. Digital upskilling
Adopting intelligent technologies is a great way to bring your business into the 21st century, but if your workers aren't digitally competent, the success of your project will be limited. This is why tackling digital skill shortages is crucial when transforming your business.
Fortunately, this can be achieved in multiple ways. First, by redefining the roles and responsibilities within your company. This will make it easier for your company to meet your business's emerging needs. Training workers on how to use relevant hardware and software or educating them about your company's wider digital strategies is the best way to ensure their digital competence. Next, if your company is still lacking technical know-how, onboarding staffers with the specialisms you require is another way to increase your chances of success.
The results of digital upskilling speak volumes. Research from the World Economic Forum reveals that 66% of employers deploying training have seen a return on their investment within the first year. What's more, 93% of CEOs that introduce upskilling programs have witnessed increased productivity, improved staff retention, and greater resiliency within the workforce, according to PwC.
5. Building a digital-first culture
Implementing a series of tech-first measures won't stick if your culture is still stuck in the past. Therefore, in order for a digital transformation to be successful, it needs to permeate through to your company's culture.
While this may sound daunting, there are a number of smaller steps you can take to build a digital-first culture. By training your staff to adopt new behaviors and mindsets, you're able to introduce new ways of thinking from the ground up. In fact, research from McKinsey reveals that nearly 30% of companies with successful digital transformations have opted for this approach.
In addition to training and development, establishing a culture of transparency, innovation and experimentation are crucial ways to realign your company's values to suit your needs. And these don't all need to be implemented from the top down. By giving employees a role in enforcing change, your company stands a much better chance of moving forwards as a unit.
1. Process transformation
As the name suggests, a process transformation is about rethinking and restructuring a business's internal processes. These processes could relate to any function of the business, from internal communication to administration. A number of different technologies can aid process transformation, but popular strategies include the use of automation, machine learning, and data analytics.
While the ultimate goal of process transformations tends to be cost reduction, they can also be implemented to reduce cycle time, upgrade product quality and improve the overall customer experience.
2. Business model transformation
Business model transformations aim to reshape a business's core goals, and operational structure to align with its new digital vision. By throwing out the rule book and disregarding traditional business models, this type of transformation opens up new opportunities to create added value.
While the nature of this process will depend on a business's industry and specialism, they're generally geared towards embracing innovation and exploring new ways of doing business. Because this strategy changes a business from the ground up, it's one of the riskier types of transformations. However, when executed well, it can deliver extremely high payoffs.
3. Domain transformation
Oftentimes, businesses are capable of broadening their current offerings to unlock new streams of revenue. When a business does so — and expands into another market domain successfully — this is called a domain transformation.
Since this doesn't require businesses to rethink their entire format, domain transformations are one of the safest ways to open up new opportunities for growth. What's more, with the help of emerging technologies, it's now easier than ever to compete in new markets.
4. Cultural transformation
Every digital transformation should aim to address the company's culture. However, cultural transformations place these issues at the center of its strategy by restructuring a company's organizational culture around its renewed digital focus.
From placing a greater emphasis on learning and development, reimagining workplace hierarchies, or testing out new forms of collaboration, there are a number of different ways to carry out cultural transformations. However, as a general rule of thumb, the methods deployed are grassroots in nature and aim for smaller incremental changes over larger developments.
Examples of Successful Digital Transformations
Digital transformation can come in many shapes and sizes. To bring the practice to life, we discuss some real-world examples below.
Capital One
One of the biggest digital transformations in finance was carried out by Capital One. Back in 2016, the bank first embarked on its digital journey by rolling out a mobile wallet that used contactless technology.
In addition to this industry-first, Capital One also engaged in a series of digital practices including predictive and risk analysis. The company conducted over 80,000 big-data experiments a year, which resulted in 87% improvements in customer retention.
Walmart
With Walmart already dominating the grocery industry in the US, you might not expect growth to be its top priority. However, the company has rolled out a number of tech-savvy initiatives in recent years to remain competitive in the digital age. From offering customers mobile apps and finessing its ecommerce capabilities (collecting 40 petabytes worth of customer data daily while doing so) to utilizing cloud technology, Walmart is intent on staying one step ahead of the curve.
Its digital transformation efforts are paying off too, with the company generating $47.8 billion in online revenue in 2021 alone.
How to Make Your Digital Transformation a Success
If you choose one takeaway from this guide, it's that using the right technology is only part of the challenge. Aside from harnessing smart solutions like CRM software and VoIP systems, business owners need to address digital skill gaps and welcome a culture of change in order to create a meaningful digital transformation. By doing this, while also prioritizing strong leadership and launching data-driven strategies, companies will have a much better chance of competing in the digital economy.