For businesses and organization to survive and thrive in the long-term, they must change and adapt in order to keep up with the evolving habits of consumers and technological changes in society. This part looks at what digital transformation is and how to successfully execute it within your organization.
“Digital transformation” refers to the changes in the application of technology and flow of operations in order to create experiences that feel seamless, connected, and easy.
Whilst digital transformation covers many industries and intersects with everything from education to medicine, we will focus on digital transformation within a business.
In this section, we will explore examples of successful digital transformations from well-recognized brands to help put into context what digital transformation can mean and how broad digital transformation can actually be. Most importantly, these examples show us that digital transformation isn’t just about developing new software, but rather, radical organizational change that reimagines a company’s portfolio of product and service offerings as well as its internal operations needed to successfully deliver those products and services.
In 1997 Netflix was launched, offering customers monthly subscriptions so that they could rent movies to be posted to them to their door and so that they could avoid late fees that traditional movie rental companies imposed on their customers. Right from the start, Netflix was a disruptive company which has probably led to the organization’s ability to transform and adapt to the digital world.
In 2007, Netflix launched its streaming services. This meant that subscribers no longer needed to order and wait for their DVDs to come in the mail, they could just log in online and watch movies and TV shows whenever they wanted. This would ultimately change the way that consumers would watch content online.
What can we learn from Netflix’s digital transformation? Past success doesn’t dictate future success. Netflix was already disruptive in the industry when they launched in 1997, however, if they had not completely changed their business model in order to keep up with digitalisation and how consumers were changing the way that they consumed video - especially since the launch of YouTube, they would have probably met the same fate at Blockbuster. This particular case shows that digital transformation can be a matter of survival for some businesses.
In 2008, Dominos Pizza was struggling. Stocks had hit an all-time low. The company struggled to maintain a positive brand image. In 2012, all this changed.
What can we learn from this? For Dominos, success in digital transformation rested on the fact that the key Transformation players managed to get top management onboard, and their enthusiasm trickled down through the whole company. This shows that no matter how good your digital strategy is, if you don’t get the whole company, and most importantly management onboard, your strategy probably won’t fly.
IKEA has evolved from catalogue store to e-commerce giant with a great focus on content. One of the key features of IKEA’s business has been its strategy of keeping costs down by getting customers to drive to their stores to shop and pick up furniture themselves. However, the changing living habits of consumers had forced IKEA to change how they work.
For example, with more people living in cities without cars (in particular, Millenials who live in house shares), IKEA has had to expand its e-commerce offerings to cater for these target groups.
On the marketing side of things, IKEA has experimented with innovative and immersive digital techniques including technology such as AR.
In short, IKEA’s Digital transformation has focused on their target audience and using technology to cater to them best.
After a period of expansion, the beloved toy company, LEGO suffered a decline and by 2004 LEGO was near bankruptcy. Facing this bankruptcy, LEGO started restructuring and implemented a Digital Transformation which focused on new revenue sources coming from movies, mobile games, mobile applications, and AR experiences. By finding new sources of revenue, LEGO has managed to transform their brand and keep up with the wants of kids today.
Now that you’ve seen how others have implemented a Digital Transformation change strategy, how can you implement it within your organization?
For a more in-depth look at how to implement Digital Transformation successfully, we recommend watching our Digital Transformation webinar that we co-hosted with expert, Joakim Jansson.
Here are nine things to think about when embarking on a digital transformation journey:
Building support from the top is important for change to be implemented in the long term. It might be easier to build support for companies that are struggling in the current climate than those who are thriving. Companies who are already feeling the effects of the new digital world maybe be craving change and ready for it, however, those who are not yet feeling this, may be more reluctant to actually embrace new change. In order to build C-suite support, Change Managers need to find the pain points that organizations are struggling with and provide actionable solutions. As mentioned above, this transformation can be implemented gradually and doesn’t need to be a dramatic all-at-once change that turns an organization on its head.
Change Managers need to make sure that there is an audit of the status quo and then a plan is made from there. Transformative, however, doesn’t have to mean that everything needs to be done at once. By choosing some elements of digital transformation and implementing things slowly, organizations will be able to adapt more smoothly and adopt new processes easily.
Regardless the size of your organization, and the resources that you have on hand when implementing digital transformation, it is better for change managers to start with making smaller changes and scale up over time. This gives employees a chance to adapt to the change and see it as a good thing, rather than a threat to the status quo.
Hiring the right people is so important, and for digital roles, you need to hire digital natives, i.e. a person brought up during the digital age and has familiar with computers and the Internet from an early age.
The more traditional roles within the organizations shouldn’t be left behind in the digital journey. There should be a plan for how to make roles in finance, sales and marketing digital, for example. This, of course, means that there is a need to invest in training and perhaps the restructuring of roles, however, in the long term, it will mean that organizations will end up with fully-digital teams.
Whilst data has always been important to many branches of organizations, the term “data-driven” is a relatively new term which has become prevalent as data collection and analytical tools have developed. Deciding to take decisions based on data is an important part of the digital transformation, and it up to change managers to lead the way and try to change how organizations make decisions, moving from guessing to using data.
Digital transformation has also seen a shift in how companies operate on a cultural level. The digitalisation of HR roles has been a factor in this change. However, the digital organization that focuses on data and where management roles are not just reserved for those with the most experience, digital transformation forces organizations to become more open and transparent. It is up to change managers to make organizations aware of these types of changes too and to make sure that they are perceived as a good thing - i.e. a great environment for innovation.
Any substantial change within an organization requires investment. In order for change, and for managers to be successful in a digital transformation implementation, change managers should make organizations aware at the start of the process, that digital transformation requires investment and that it should be catered for in the budget.
Whilst digital transformation is one aspect of change management, it should not be seen as the be-all and end-all of the transformation. Organizations still need to improve on an ongoing basis. Implementing lean and agile methodologies into the workplace may help organizations to become more accustomed to change.
In conclusion, there’s no doubt that implementing Digital Transformation is a huge task for change managers and employees alike. It should be implemented over time in stages and it is important to make sure that everyone within the organization is onboard.
This Article is part of a series about Digital Change Management.
Read the next chapter: After Digital Transformation: What’s next for Change Management?