Digital transformation has become an integral business strategy for nearly every legacy corporation in existence. The current disruption from swift moving tech-startups is unprecedented, and larger companies are being forced to transform their asset types in order to remain relevant to end users, not to mention stay competitive within their market. We now live in a digital-first world where technology must transcend every level of an organization, creating an attractive value proposition for consumers and forming an interconnected workforce. But how do organizations and their business leaders know where they stand during all of this change? And more importantly, how do they identify progress as it relates to the end goal?
Every organization that embarks on a digital transformation falls somewhere on the readiness scale. And identifying readiness for digital transformation is one of the most important steps in the entire process; once overlooked it’s difficult to backtrack to this stage. But before an organization can determine what stage of readiness they are in, they must first understand their preparedness for the challenges ahead.
The following four levels of organizational preparedness, as identified by Eller Executive Education at The University Of Arizona, can help identify a starting point for digital transformation. Or better, it can pinpoint what resources will be required, and where they need to be allocated.
- Ecosystem Lifetime Value
- Business Model Change
- Customer Experience
- Operational Effectiveness
Ecosystem Lifetime Value
Starting from the top, ecosystem lifetime value is a realistic model for the most sophisticated level of preparedness, representing a complete and thorough transformation throughout the organization and consumer environment. At this stage, an organization has successfully merged the physical and digital world in which they operate, adding value to the entire business and even more importantly, their end users. Very few companies reach this stage prior to embarking on their transformation and most will never get here. For many, their level of preparedness doesn’t need to be this advanced to allow for success in the digital realm. However, past transformation examples prove that a customer-first approach across all facets of a business is the main catalyst for upward growth on this scale.
Business Model Change
The level representing business model change refers to a company-wide ability to approach all processes from a digital perspective. With the current amount of disruption from smaller firms, this level of transformation is vital for large companies lagging behind their competition with regard to innovation. It’s also a key concern for many C-level executives who constantly need to remain aware of external market threats.
Take Thyssen-Krupp for example, led by CEO Patrick Bass. As quoted in I-CIO, (an IT informative resource from Fujitsu) Bass recognized that the elevator business could fairly easily be disrupted by smaller start-ups if their IoT (internet of things) data-fed models were to be exploited.
“We either had to respond by preparing to react [as new threats emerged] or by being on the front end of this. And we decided that we wanted to drive it and be willing to take the risk of that journey.”
Thyssen-Krupp is a prime example why a complete digital transformation calls for a business model change; all processes need to take on a digital form, across every level of the company. And when done securely, it’s an effective method for protecting the business model from outside threats.
Transformation Of The Customer Experience
Maintaining relevancy with end users through every available digital touchpoint is a concrete driver for digital transformation. However, it represents a company that might be lagging in terms of technology adoption. As many of today’s more successful companies have proven, it’s better to be slightly ahead of consumers rather than behind them, especially with relation to how they interact with the digital touch points of the products/services they use.
The customer experience level of preparedness symbolizes a need to catch up with modern practices. An organization often finds themselves here when they’re out-of-touch with digital behaviors and expectations. Often, this deficiency in the overall customer experience calls for a more thorough understanding of how, where, when, and why end users are interacting with the company — a full audit.
Data and research is key to designing a new solution at this stage; a job suited for UX designers. A boost in technology budgets can make a significant impact on growth and development, but only if it supports the customer journey identified through research. There’s no room for assumption in a digital transformation. And an error in judgement or poor understanding of the customer will prove to be too costly to repeat.
At the customer experience level of preparedness, organizations don’t have the large budgets and infrastructure needed for large-scale marketing programs. Instead, they focus their energy on strategic digital teams, with the goal of understanding the end user through and through, before designing a solution that satisfies their wants, needs, and behavior.
The Level Of Operational Effectiveness
The first level of preparedness, or the most basic indicator to embark on the digital transformation process, lies in the operational effectiveness of a company. Far stretched from the aspirational goals of enhancing ecosystem lifecycle value, operational effectiveness focuses on streamlining processes, designing more efficient workflows, and creating an effective relationship with digital technology to get more done, in less time, with less error. What we are really referring to here, is efficient automation.
Take PostNord for example, the postal service provider in Sweden. Facing a business-model disruption for years, the company was forced to enter the hyper-connected world of IoT to focus on innovating its operational efficiencies. The company’s Senior Manager for IoT, Helen Holst, summarized their actions by stating, “Start with what you know,” she advises. “Try to find business cases that generate savings. These will help you fund the next steps of your digital transformation.”
Whether performed by people, systems, or a combination of the two, digital transformation can improve the efficiency and effectiveness of the processes involved with all business-related operations. Of course, this effectiveness is only valuable if it resonates with employees and end users in a satisfying manner. It’s another call to integrate UX teams into the mix.
Although operational effectiveness is an introductory stage into the realm of digital transformation, it’s integral to building a strong foundation for change within any organization, and can resurface further down the line to create strategic advantages. Operational improvements often account for the largest gains within many companies; it’s a factor that can be completely controlled. And that can’t be said for the rest of the transformation process. From reduced downtimes, increased productivity, better utilization of tools, and greater flexibility to internal events, organizational effectiveness opens the door to vast improvements that impact the bottom line and user experience.
Upon analyzing all four levels of preparedness, the path forward in beginning a digital transformation is paved differently with unique challenges for every organization. And it’s important to understand that each level of readiness calls for a long-term strategy. One that can unify internal teams across every department while supporting the transition to a customer first, technology-driven company. And ultimately, this will drive real change for the business. But even this one shared goal doesn’t guarantee that a feasible plan can be created, yet alone implemented. Digital transformation is still a relatively new concept; nobody has “finished” a digital transformation. Even the most advanced companies see it as an ongoing process. In reality, a complete shift to thrive in the digital world is the new normal, starting with the alignment of talent and cross-functional teams.
Our speciality is identifying the very talent that makes these projects successful, and The Carrera Agency is here to help you in your own digital journey, wherever it may be along the readiness scale.