Today’s era is characterized by rapid technological advances and constant shifts in customer preferences. In the context of such changes, organizations can either face the challenges of outdated practices, increased levels of vulnerability, and limited market reach, or they can adapt to reality and try to maintain competitiveness, increase efficiency and seize new opportunities to their advantage through transformation. Digital transformation is a popular term in this context. However, it is not a magical quick, and easy process. One must be well-prepared for this step and understand the context of the underlying changes. So, how do we get digital transformation right?
What is digital transformation?
The most common definition of digital transformation is the integration of modern digital technologies into business processes in order to fundamentally alter an organisation’s decision-making, communication, operations, production, and logistics. It is crucial to understand that simply implementing new technologies will not necessarily improve everything. Such a comprehension does not adequately reflect the complexity of the entire transformation process. Afterall, it is more about involving a holistic change in business processes, models and interactions, including a shift in corporate culture, rather than just implementing digital tools. Thinking of digital transformation as a trend that only involves investment in technology would therefore be a big mistake. And indeed, this is exactly where a significant number of companies are failing – not approaching digital transformation with a deeper understanding.
The key here is to understand what we are aiming to improve and the reason for it. Digital transformation should not be applied across the board based on current trends alone, but must be based on specific needs, clearly defined goals, and challenges that require solutions. Reasons for significant changes always need to be communicated further across the organisation. Each organisation has its own unique framework within which digital transformation can provide new opportunities and help resolve specific issues. In this respect, it is important to see it as a strategic process that needs to be carefully thought through, planned, and managed with its own specificity in mind. Change initiation should therefore be based on a vision that is shared within the organisation.
It is not exceptional for entities to approach the implementation of new technologies without understanding their individual needs or the potential for further use of already established technology. This often results in a waste of resources and a major disappointment in terms of expected results. Such mistakes are one of the reasons why digital transformation is rated as successful in only 20 percent of cases, and the ratio is even lower in traditional industries, such as oil and gas, automotive and pharmaceuticals. In addition to the excessive focus on technology and technological trends, other factors contributing to the lower success rate of digital transformation across sectors include insufficient communication flows and a lack of information about the entire transformation project as well as a general reluctance to embrace major change. That can lead to a very low level of engagement and support from the key stakeholders.
The key to success?
Taking the opposite approach to the one described above is logically the cornerstone of a successful digital transformation. This requires a well-defined strategy and a clear vision that represent the desired direction of the transformation effort. However, understanding one’s own needs is only one element among many in the context of digital transformation. Another crucial aspect contributing to the success is leadership support together with a thorough understanding of customer needs and preferences. Not to mention that the transformation strategy should be regularly reviewed to ensure that the right steps are being taken at the right time.
Involving senior management in transformation initiatives can provide the necessary support and resources for changes in corporate culture and attitudes towards innovation, while a customer-oriented approach ensures that transformation objectives are based on real requirements and lead to a production that truly meets market demand. In this case, data is a valuable asset that guides informed decision-making. Using data analytics to gain insight into customer behaviour, operational efficiency, and market trends helps to guide the entire transformation process.
An agile organisational culture is closely linked to the ability to understand customer needs and adapt to changing market conditions. In fact, agility can be the key to overcoming the challenges and uncertainties of digital transformation, as it encourages flexibility, continuous improvement, and innovation based on a willingness to learn from failure, close collaboration between teams and departments, and shared responsibility and autonomy.
As can be seen, there are many other changes to be made along the way, and success in completing the digital transformation depends on a commitment to adapt to and meet the ever-changing demands of today’s dynamic world. By understanding its nature and considering all key aspects such as customer needs, corporate strategy, and existing corporate culture, fundamental mistakes can be avoided and one can advance towards prosperity.