Successful digital transformation is about far more than technology. Here’s how to create a digital transformation strategy for your business.
The last few years have brought dramatic, rapid change, and many companies are struggling to keep up. A May 2021 McKinsey study noted that 9 in 10 business leaders say their organization will have to adopt a new, digital-first business model by 2023 in order to remain economically viable.
Why the urgency? Because digital transformation, when done right, provides clear, significant benefits. A study conducted by Deloitte found that companies with a higher level of digital maturity significantly outperformed competitors on key financial metrics. These companies were three times more likely to report annual net revenue growth and net profit margins significantly above their industry average. The companies outperformed in other ways, too, reporting significantly higher efficiency, product/service quality, customer satisfaction, and employee engagement than their competitors.
With all those benefits, the race to transform is on. But simply investing in new technology isn’t enough. True digital transformation requires a top-down commitment and a methodical approach to be successful. That’s because digital transformation is about more than technology; it’s about fundamentally rethinking how you can more effectively leverage technology, processes, and people to improve both operational efficiency and customer experience.
Here’s how to develop a holistic digital transformation strategy for your organization.
Start With the End Goal in Mind
Rather than focusing on the implementation of technology, your digital transformation strategy should focus on what you want to achieve through the use of technology, whether it’s streamlining your supply chain, elevating customer service or gaining production efficiencies. Your plan should address your company’s greatest problems or its greatest opportunities, and the outcomes should be stated in terms of concrete goals, such as improving speed to market or boosting innovation.
Examples of successful holistic digital transformation abound. Across all industries, businesses of every size have implemented chatbots — software that simulates human-like conversations with users via chat — to provide immediate support to their customers during times when human agents are unavailable. Chances are, your utility providers have digitized their billing process and have enabled you to sign up for paperless billing. Meanwhile, in the healthcare industry, the widespread adoption of telehealth has made quality care more accessible to the millions of Americans who’d previously struggled to attend in-person visits due to lack of transportation, physical disability, or proximity to care. In all of these cases, the end goal came first, and the technology was the means to an end.
“Both customers and businesses have adapted to new ways of doing business,” says Abbas Merchant, Chief Marketing Officer of Regions Bank. “These new ways will endure into the future and digital will become even more important as a way to engage with our customers.”
According to Boston Consulting Group, companies that track the progress of their digital transformation efforts against clear, quantifiable goals are significantly more likely to succeed. Not only does this create accountability among managers and workers for reaching targets but having clear KPIs can also make it easier for organizations to track and measure progress.
In Episode 12 of Commercial Insights with Regions Bank, Abbas Merchant shares tips for using technology to improve customer experience.
Focus on the Customer
In a time when customer demands are evolving, your digital transformation strategy should focus on improving customer experience. New business processes, created through digital transformation, should eliminate pain points in order to serve the customer better.
"Today more than ever before, customers are looking for what I call the three S’s: simplicity, speed, and stewardship,” says Merchant. “Simplicity and speed are increasingly becoming table stakes for businesses of all sizes.”
Though the transformation is digital, some of the best tools are decidedly traditional: good old-fashioned conversations with clients. For many companies, the process may start via interviews with existing customers and other stakeholders, exploring what they like and dislike about dealing with your company, with questions that are tailored to that end goal.
To supplement those conversations, Merchant suggests that companies turn to digital analytics tools to learn more about their customers’ needs. “Businesses can really learn a lot from that information and use it to personalize the experience they're delivering,” he notes.
Create a Culture of Change
Rethinking how to meet customer needs using digital technology may require you to change how work is done across your entire organization — in some instances, it may actually require a fundamental shift in how your company operates.
When it comes to implementing a successful strategy for digital transformation, engaging your workforce is key. The fact is, change can be scary, and a common fear among workers is that the introduction of new technology will result in the loss of jobs. If the process isn’t handled with care, it can trigger resistance from your workforce.
As part of the change management process, managers should address concerns head-on, reassuring workers that the goal of digital transformation is to eliminate the mundane and routine aspects of their work, freeing them up to focus their energy on tasks that make a more significant contribution.
According to McKinsey, nearly 30 percent of companies that successfully implemented digital transformation included employee training that focused on new behaviors and mindsets in addition to teaching technology know-how. Workers should be encouraged and enabled to upgrade their skills, and managers should position this as an investment in their growth that will ultimately make them more valuable in the marketplace. Re-skilling workers so they can handle new roles can pay huge dividends — according to Deloitte, this move can lead to a double-digit improvement in employee engagement.
Company leaders must explain to employees that digital transformation is critical for the company to grow and prosper, and change must start from the top. In order to truly be effective, executives must walk the talk, using the technology themselves.
As you work with employees, reassure them that change will happen in a way that’s methodical and thoughtfully paced. In a world that changes at a rapid clip, it’s worth reminding yourself of that, too. No matter how fast tech seems to evolve, a strategic, logical approach is key to long-term success, as with any initiative that will so fundamentally affect every aspect of your organization.
Safeguard Your Organization
Since digital transformation creates more connections with the world, it can also increase the likelihood of encountering fraud. When implementing your digital transformation strategy, it’s important to take proactive measures to mitigate risk. Learn more about how to improve cybersecurity for digital transformation.
