Digital Transformation: The Universal Lessons Behind Customized Deployments

8/22/2018
By Phil Rainsberger

Digital transformation has many requirements, but here are two of the biggest: strong leadership to drive change, plus a clear vision for what parts of the company must be transformed. 

Whether it's in the way individuals work and collaborate, or the way business processes are executed within and across organizational boundaries, or in the way a company understands and serves customers, innovative and customer-centric digital business provides a wealth of opportunity. 

A recent MIT Sloan School of Business report goes well beyond the anecdotal and helps codify the standards and practices that characterize the best and most successful strategies for companies initiating their own digital transformations or reacting to forces compelling them to (finally!) act. 

The study's key finding is simple but also a bit counterintuitive in a space where options are myriad: focus is important. Among the 50 enterprises studied, every single one is taking a step-by-step approach—none is transforming all areas at once. But the study finds the best-managed organizations are constantly identifying new ways to redefine the way they work in the new digital era.

They're doing so not only by changing how their functions work, but also redefining how functions interact and even evolving the boundaries and activities of the company.

The report says three building blocks of this transformation are digital modifications to the business, the creation of new digital businesses, and digital globalization. 

 

Digitally Modified Businesses

One media executive said: “We’ve realized that if we don’t transform the way we do business, we’re going to die. It’s not about changing the way we do technology but changing the way we do business.” The company is finding ways to augment physical with digital offerings and to use digital to share content across organizational silos.

A grocery company is staying true to its traditional business but using digital to transform a new growth business. As one executive reported, “After two years, our e-commerce platform is bringing us 20% of our new clients and our traditional clients are consuming 13% more on average.”

Other businesses are building digital or service wrappers around traditional products. A national post office is creating a free digital mailbox attached to each physical mail address that companies can use as a substitute for a person’s physical mailbox. A business credit company is developing a digital business for some credit products that requires less involvement than their traditional high-touch offerings.

 

New Digital Businesses

The Sloan study also shows companies are also introducing digital products that complement traditional products. For example, a sports apparel manufacturer started selling GPS and other digital devices that can track and report on a customer’s workout. Other companies are changing business models by reshaping their boundaries through digital. A mortgage company is moving from being a link in the value chain to being a global assembler of investment products. An airport authority is aiming to become the owner of a traveler’s end-to-end process by providing an integrated multichannel experience, including information on airplane traffic and reservations, duty-free shopping promotions and other benefits.

 

Digital Globalization

Companies are increasingly transforming from multinational to truly global operations. Digital technology coupled with integrated information is allowing businesses to gain global synergies while remaining locally responsive. The report shows these companies benefit from global shared services for finance, HR and even core capabilities like manufacturing and design. Global shared services promote efficiency and reduce risk. They even promote global flexibility. One manufacturer can shift production around the globe with only a few days’ notice in response to interruptions or excess demand.

Those examples are only the tip of the iceberg; all of us can (or should be able to) name numerous examples where our interactions with customers – or our own interactions as customers – have been transformed.  With markets as tight as they've ever been and with customers empowered to be as demanding and disloyal as they please, there has never been more impetus behind the need to embrace digital transformation.

Is it intimidating to do so? Of course. Need you go it alone? Not a bit. We're here to help. Let's talk.