What is digital transformation and why it matters

In 2011, Capgemini and MIT defined digital transformation as the use of technology to improve the performance or reach of a business. The term immediately went viral as organizations began to claim it as an essential part of their strategic vision in the decade since it lost its novelty. Today, it’s widely understood that most organizations can go digital or dwindle. But just because a phrase is overused doesn’t mean the concept has been properly adopted. As a result, digital transformation remains a significant challenge for many organizations. 

To understand the current state of digital, let’s look at common challenges organizations face during their digital transformation and beyond. Plus, strategies that help them transform. 

What is digital transformation? 

The goal of digital transformation is to use technology to empower your organization—not to become a technology company. While this may sound like semantics, there’s a significant difference. Digital transformation has become such a buzzword that the original definition needs to be corrected. It aims to leverage technology, process, and resources to become more customer-centric. It’s not about replacing an old product or page with something new. Instead, it’s about completely rethinking your organization to align with how to serve your customers best. A digital transformation is meant to be just that—a transformation. 

Take the well-known fashion brand Burberry for example. Their product team showed impressive foresight and transformational aptitude by leveraging their data of customer style preferences into an app that now features custom-tailored digital experiences and clothing recommendations. By looking back at their customers’ desire for personalization, they could create a digital version of what would typically occur in a physical location. The result? A 200% increase in interactions with personalized content.

Common digital transformation challenges

While transforming digitally is the goal for all organizations, it's easier said than done. Here are some of the challenges facing non digitally native organizations. 

Falling short of getting genuine buy-in

For a digital transformation to be successful, there must be complete buy-in from all relevant stakeholders and team members. Digital transformation can’t be done halfway. It’s either a priority or a waste of time. The effort needs proper financial resourcing, specific KPIs, and clear assignments of ownership and responsibility. If digital transformation isn’t a primary focus for the managers responsible for results, actual change will not occur. 

Lack of digitally fluent leadership and teams

For organizations that haven’t yet incorporated technology into their workflow, it’s essential to have an experienced, digitally proficient expert leading the effort. If there are no digital experts on the team, it could be time to hire a CTO, build out a transformation team, or seek out a consultant. Filling digital skill gaps isn’t always easy. Creating a defined talent roadmap that clarifies where team capabilities are lacking for digital innovation is valuable.

Low adoption by teams

It’s easy for leadership to get so excited about technology adoption that they forget about the learning curve for their team. However, especially in organizations that have been late to adopt digital innovation, there will undoubtedly be team members who are less than excited about learning new tools and processes. That’s why leadership needs to involve affected team members at the earliest stages of digital transformation and communicate the personal benefits said changes will provide them. CX

Digital transformation strategies

Now that the world has seen more than a decade of digital transformations, there are plenty of examples of organizations that adapted well. But, across the board, there are some common themes seen in their strategies. 

Prioritize customer experience

Customer centricity is the wave of the future. Across all industries, special consideration for end-to-end user experience is a core facet of digital strategies in the future. While user and customer experience has been covered extensively online, the prioritization of employee needs is equally important. Ultimately, organizations are made up of people. If those people love being a part of their team, the product, customers, and bottom line are better served. 

Invest in digital maturity

According to Forrester, an organization's digital maturity can be quantified based on five core factors: strategy, culture, talent, organization, and technology. Organizations that score well in these dimensions are more likely to experience significantly higher revenue growth than their less-advanced counterparts. A simple understanding of digital maturity’s definition and financial value can go a long way in securing stakeholder investment.

Emphasize agility

The ability to innovate is a consistent characteristic of industry leaders. But innovation doesn’t just refer to product updates. The ability to adopt and implement new business models is a hallmark of agile organizations. In addition, proactively exploring new services and potential revenue streams separates excellent organizations from the average. 

Data-backed decisions

Successful digital transformations can happen when decision-making is informed and consistent. One of the most valuable attributes an organization can have is an airtight system for testing, data analysis, and insight. Digitally savvy leaders invest in skills, tools, and techniques that optimize their team’s ability to gather feedback and quickly create strategies based on quantitative and qualitative learning.  

The snowball effect of digital transformation is speeding up and growing. By observing the failures and successes of digital transformation over the last decade, organizations have a headstart in successfully innovating old processes and technologies.