There has been a global movement towards digital transformation for over 20 years. The COVID-19 pandemic is estimated to have accelerated digital transformation across all industries and regions by 3-4 years.
It is widely accepted that companies need to continue to transform to stay competitive. Digital transformation is about reimagining business for the digital age. It is about more than adopting new technologies, it’s about transforming your entire business to reap the benefits of customer satisfaction, loyal and productive employees, and a resilient organization.
Transformation is both external and internal. External transformation is about how you think about, and engage with, customers. Internally companies need to improve business operations and strategy to survive the growing threat of disruption.
Digital transformation can improve customer satisfaction
“The true business of every company is to make and keep customers.”
Customer satisfaction is the most obvious reason why your company needs to stay ahead with digital advancements. Without customers, you don’t have a business. With digital disruption taking place across all industries, you are at risk of losing customers if you don’t meet their expectations.
The digital world creates a wealth of customer data, new channels to reach customers, and better ways to support customers. Your transformation can help you both retain customers and find new sources of value for your customers.
Create customer-centric products
The banking industry is a powerful example of the risks and rewards that come from customer-centric transformation. Over the past 10+ years, mobile banking with great user experience has become the norm. Fintech companies continue to find new ways to improve traditional financial products and services through better customer experience and customer-friendly solutions.
The opportunity to create customer-centric products using data insights and new technology is vast. This can be seen in the rise of global fintech investment, which amounted to $105 billion in 2020 and shows no signs of slowing down.
Your digital transformation can help you access customer data and use technology to create innovative products.
Customer connection is critical
Customer retention has always been good business. A study by Bain & Company and the Harvard Business School showed a 5% increase in customer retention increased profits by 25% – 95%.
In today’s digital world retention requires excellent customer service and all-around experience.
Customers expect new levels of service. Personalization, instant responses, online self-service, and multiple channels of connection are just a few of the standards customers now expect. These are only possible when embracing a digital approach.
On top of customer service is customer experience. This is the entire journey a potential customer moves through from discovery, research, purchase, and follow-up.
There is no customer service team large enough that can keep up with this level of personalization and response. Instead, companies need to keep up with customer preferences and expectations through digital innovation. This has become essential for acquiring new customers and retaining existing clients.
Digital transformation creates loyal and productive employees
While digital transformation is essential for external value-driven development with products and services, internal value creation is also critical. Digital transformation builds organizational capability which is able to deliver value. Two of the primary drivers for internal value creation are employee motivation and company culture.
Motivation from meaningful work
Digital transformation should make your company a better place for your employees to work.
Increased digitization allows for the reduction of repetitive and mundane work. This creates the opportunity for increased productivity as fewer people are needed for routine work. It also increases employee engagement as they have space to focus on creative and strategic work.
With realities like tech skills shortages and new trends for remote and hybrid work, creating a company where work is efficient and people want to work is a competitive advantage.
Culture is critical to success
One of the biggest risks to transformation is culture. Culture has also been shown to create greater innovation than relying on technology alone.
There is an upward spiral dynamic between a successful digital transformation and culture. A strong digital culture should be cultivated to ensure the success of your digital transformation. Your transformation will also improve your culture.
Here are a few ways a digital transformation can create a digital culture. With improved data and transparency employees are empowered to make decisions and deliver. This can speed up the overall delivery time and create opportunities for collaboration. More than that, a fast feedback cycle creates clear parameters to take risks and provides opportunities to learn. From here innovative solutions can be found. Innovation is essential for your business to stay relevant.
Digital transformation creates resilience
Transformation is a comprehensive change of all aspects of a business. While there are clear benefits to both customers and employees the ultimate reason for transformation is survival.
Extensive change is called for in periods of failure and disruption. Businesses created before the internet need to transform to both compete and survive in the digital economy.
The ultimate goal of a digital transformation is to create a resilient organization that can thrive in this world of volatility, uncertainty, complexity, and ambiguity (VUCA).
An Agile organization structure
True transformation requires a change to core business structure. Large companies established before the digital age organized in functions to be efficient. Now, these structures make organizations slow and complex. Organizations need to respond to change with speed to survive.
While functional skills are still required, they should be integrated into cross-functional teams. Cross-functional teams have been shown to speed up decision-making through transparent information sharing, improved decision-making, and collaboration. They can also increase innovation and deliver new products of value.
Creating a scaled Agile organization that responds at speed with clear organizational governance and decision-making authority is crucial for success.
An Agile organization allows you to recognize and act on the new sources of value created in the digital world. This will create a resilient organization and counter the threat of disruptive startups.
Digital transformation for the future
We’ve been living in this digital world since the start of the internet in 1980. Even with the experience of the past 40 years, it’s impossible to predict what new changes are coming our way.
There is no end state for digital transformation, it is a way of operating in the world. It’s not only about changing your tools and infrastructure. It is about the way you satisfy your customers, employees and run your organization.
Digital transformation requires a transformative vision. This is a combination of technology, strategic thinking, and innovative business outcomes to align your organization.
Digital tools need to be exploited to make data-driven decisions, outperform your competitors and identify trends, business drivers and improve customer experience.
Whole-scale organization change is needed. From organization structure to hiring and training digital talent. This will likely mean creating entirely new career paths with new skill sets.
You do not have to do this alone. Find people who deeply understand the digital world to help you upgrade your business strategy.
To learn more about how companies have succeeded in their digital transformation, speak to one of our consultants.