Digital transformation – it’s the digital marketing buzzword of 2020 and 2021 and hailed as the future for companies across industries, nations, and sizes. But what if I were to tell you that you don’t always need digital transformation and that, in fact, it could prove to be a liability to your organization rather than an asset?
I know what you’re thinking – this is madness. Every organization needs to adapt and evolve in order to remain competitive, especially in today’s business environment… and you’d be right.
Businesses do need to adapt and evolve to their market and circumstances to increase efficiency and remain competitive. However, there is a difference between digitally transforming with a purpose and without one.
This is why you shouldn’t start from how to achieve it – you start from having to prove you need digital transformation in the first place.
Digital transformation without purpose
There are hundreds of examples of companies that understand the need to digitally transform. They’re eager to remain competitive and rush out to spend their budgets on new tools and technology, hoping for results that never come.
When executives ask why, they hear sheepish answers that point to more technology, different solutions, or better tools. The excuses that are generated can even state that the data is wrong, or that the executives should just be patient with the results.
Except – the results never come.
What went wrong?
Above is a typical example of an organization that attempted to digitally transform without a specific purpose in mind. Sure, there were promises of ‘quality customer experiences’, ‘greater insights’, and ‘more productivity – but these are just statements. They are not specific objectives or goals that fulfill a real purpose.
We see it time and time again. Leadership tends to pour more money into digital initiatives and hopes for the best, believing if enough resources are dedicated to the task it will be done well. This continues until the spending reaches critical mass, and everyone realizes that the efforts only left them with bills, misused technology, and a lot of questions.
Unfortunately, you can’t put out a fire by pouring money onto it. This is why, despite the hype, the track record for companies going digitizing is not impressive. The bitter truth is that a shocking 84% of efforts to digitize fail and, according to a Snap Logic research report, 69% of companies need to reevaluate their strategies to digitise.
Digital transformation is not cheap, and so it is critical that companies get it right and for the right reasons. To do that, organizations need to specify a purpose for their transformation. Only by identifying a specific purpose with achievable objectives can organizations see if their digital transformation is working or if it needs refinement.
Digitally transforming with purpose
Consider this – there are thousands of different tools on the marketplace and new technology is coming out every day. Each of those tools and technologies represents a path for your business to take. Like with any journey, some of those paths take you closer to your goal, while others pull you away from your destination.
Digitally transforming with purpose is finding that destination where you would like to end up. The challenge, of course, is identifying which destination is beneficial to your business.
Identifying your purpose for transformation
The best way to find the purpose for transformation is to set specific objectives and goals for your organization. You can then use the reason for these to match up with your purpose. The catch is, they need to be specific.
Every company wants to ‘increase profits’, ‘boost productivity and ‘enhance their customer experience’, but these aren’t specific objectives, they’re wishes. To turn these wishes into objectives, you need metrics and benchmarks to know when you have achieved these objectives.
For example, the wish “I want to increase profits” can be turned into an objective by rephrasing it with specifics such as “I want to increase sales by 30%” or “I want to increase profits by cutting down on resources waste by 50%”.
Once you have a purpose in mind, you need to know where to implement the transformation within your organization. This will help you identify the right tool and digital assets you will need. When it comes to digital transformation, there are generally four primary areas where digital tools can assist, depending on your focus and identified objective.
4 Areas to digitally transform
Transformation objectives are typically derived from business objectives and aim at their delivery improvement. These business objectives commonly fall into the below four areas.
The financial category is concerned with the cash flow of your business. It involves the number of sales and the costs for achieving them. Some of the general objectives where digital transformation can assist within the financial category include:
- Maximising repeat business
- Expanding new business opportunities
- Optimising return on investment
Digital transformation can also impact how you service your customers and their general experience with your brand. For customer-centric businesses, this is essential to their success. Business objectives that fall under this category include:
- Creating a superior value proposition
- Maximising customer value
- Increasing customer satisfaction or loyalty
The internal processes of a business are core to its daily operation. Optimizing the processes of a business enables it to generate more value with less effort, leading to increased efficiencies and greater savings. Some of the processes that can be enhanced through digital transformation include:
- Achieving sales superiority
- Increasing the value generated from marketing
- Streamlining customer management
The most direct effect of digital transformation is its ability to introduce a new function or capability within your organization or product. We label any business objectives that concern themselves with adding functionality as ‘enablers’. Here are a few examples of objectives focused on enablement:
- Adding features to core products
- Adopting new channels for marketing or sales
- Promoting a culture of data and performance
- Boosting human capital and human resource value
Are you ready for digital transformation?
Identifying which direction you want to take your digital development is a big and important step towards a successful digital transformation. However, it’s not the only consideration and must work in tandem with other aspects before fully committing to any particular digital transformation.
We believe you need Digital Transformation but only if your WHY is clear!
Credits: Maciej Napierala, Senior Marketing Consultant at Engagement Factory