Complete guide to digital transformation for business leaders
Unpacking the loaded term digital transformation
“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.”
What is digital transformation?
If you believe that digital transformation is all about taking everything into the online realm, you are wrong. Though a major chunk of what actually happens with digitally transformed systems is opening newer vistas in the digital domain, in its essence digital transformation implies integration of digital technology in your business, fundamentally changing the way you operate & deliver to your customers.
And it doesn’t stop there.
Digital transformation of legacy systems, more often than not, is accompanied by changes in the organizational culture where companies & brands become more & more digitally rebellious (aka, always challenging the status quo), open to bold & experimental ideas, & comfortable with failures.
For most businesses (especially the established, legacy systems) this means walking away from long-standing processes, “traditions”, and “this-is-how-it-has-been-done-always”s. If you are a business owner/enterprise leader/ entrepreneur, your definition of digital transformation begins from the “why” of your organization.
Why does your business exist?
Improving customer experience, reducing friction, increasing profitability, enhancing efficiency of systems, what have you. There are millions of articles & blogs on digital transformation that go on and on about data analytics, technologies (AI/ML/AR/VR), software, & so on. But remember these are just the enablers of digital transformation.
Not digital transformation.
At the core of digital transformation are customer centricity, leadership, & culture.
Which means you might have all the cool technologies at your disposal, but without the right leadership & culture, these mean nothing. And this means going back to the question – the “why” of your business.
And also what digital means to your company?
The word digital means different things to different people.
And different organizations.
For some it means going paperless. For others it means integrating AI/ML in their processes. For many it could mean making your services available through an app. Or building agile teams.
The implications are myriad.
As a leader, before diving headfirst into the digital transformation bandwagon, it’s critical for you to be very clear about these two questions.
- Why does your organization exist?
- What going “digital” means to your organization?
How can design add value to your business?
“Design adds value faster than it adds costs”
We are all well aware of examples of bad designs.
(USB plugging – 3rd time’s a charm or endless call waiting options on bank toll free numbers).
We are also well aware of iconic designs that have stood the test of time
(Swiss army knife, Helvetica font, Anything Apple).
All of these are constant reminders of the fact that powerful design is always at the core of both disruptive and sustainable business practices, be it a digital service/product or a physical entity. Trying to successfully run a business in a world where design-cum-technology giants such as Apple & Amazon are driving customer experience (& expectations) off the charts inadvertently implies for you to build much stronger design capabilities.
Recent studies conducted by McKinsey showed that design-led companies outperform their competitors by 2x. These companies were able to grow their revenues & total returns to their shareholders exponentially through the power of design. And this is not true just for products & services purely in the digital domain. This is true for retail, healthcare, banking, & similar industries where physical (or phygital = physical+digital) elements form the core deliverables.
The potential for design-driven growth is colossal and this is good news for business owners & leaders. Why? Because there are more opportunities than ever for you to serve your customers better. How? By implementing design & technology best practices to collect customer feedback in real time, understanding customer demographics, being more data-informed & not just data-driven, and so on & so forth.
Immense repositories of user data & advances in AI have opened vistas to powerful customer insights & also unleashed the era of innovative techniques such as computational design. These elements together make it possible for businesses to access & communicate with their customers faster & better. Such quantum leaps in technology have placed the user at the heart of business decisions in a way designers & design leaders have always yearned for.
The big question at this moment is – How do you get maximum ROI from design?
Breaking down the complex answer into 4 major categories, the value of design can be seen as
More than just a feeling – It’s all about analytical design leadership – The way you drive & measure revenues & costs, the same way you must measure & drive design performance.
More than just a department – It’s 100% cross-functional – No one person or department is responsible for customer experience, user-centricity is not a siloed function.
More than just a phase – Its continuous iterations & improvements – De-risk ventures & initiatives by continuously listening to your users, understanding their pain points, & iterating with actual users.
More than a product/service – Its the entire user experience – There should be absolutely no internal walls between physical, digital, & service design.
So how can your organization take the first step towards great design?
Select an important upcoming product/service and implement all 4 steps. And commit to using these 4 steps for all processes going forward in reimagining your organization as a digitally transformed, design-led company.
The rapid surge of startups, pulsating market (& user) trends, and trailblazing technological innovations are making most business leaders & entrepreneurs rethink traditional business models & values. It’s 2022. And legacy businesses are losing the race to lean & agile business models.
Business design is the answer to the question – “How do we know if this business model is the right fit for us?”
It provides the right set of tools & methods to test drive a business model. It also brings out the difference between a business model that is a textbook marketing stunt, aka short-lived glory, and a long-standing sustainable business model.
So how does this thing really work out? And more importantly, why is it called “business design”?
Business design is when you take design principles and practices (such as HCD approach) and use them to create innovative business models. This can help you take your value proposition to an actual business model. It’s also about value creation by thinking in terms of how different systems are connected to each other (manufacturing-inventory-logistics etc)
At the heart of this are the essentials of design thinking approach
Understanding markets, using cross-industry best practices to articulate assumptions
Develop a business model prototype
Test, learn, & iterate
Why is it critical for your business to follow this ideology?
It provides business leaders & entrepreneurs with the capacity to think of creative ways of building business models.
It’s a systematic approach you can easily implement at a small scale, test, learn your lesson, iterate, & expand it to company-wide operations
Establish economical viability of business models with minimum resources within
How can you, as a business owner, develop an appetite for innovation?
“Innovation is anything, but business as usual”
Behind every successful business innovation or transformation is a swift, improved, & modified articulation of the company’s vision, objectives, & initiatives. Stewing in stale vision & perception of the company’s role in this rapidly changing world will do you no good. It might look cynical (questioning your own ideals & beliefs again and again), but it’s for your own good.
Complete overhaul of a company’s identity, values, & vision is not an exercise in futility or skepticism (or even pessimism). It’s ok to change, if the change means you serving your customers better. In this era of agile, lean, & modernized systems, being steadfast to archaic vision and ideals is not a healthy business practice.
For starters, it limits your openness to new technology. And secondly, it doesn’t invite the spirit of experimentation, bold, & out-of-box thinking – elements that are perennial to design thinking approach & business design.
During the 1980s, Haier was all about building a strong brand identity, as a primary seller of refrigerators. In the 1990s, they jumped on the diversification bandwagon with a number of mergers & restructurings, transforming from a refrigerator brand to an end-to-end home appliances company. From there, it spread its wings further to international markets, with strong focus on localized research, manufacturing, & marketing.
Everything Haier did was innovative & bold, treading into unknown waters, gaining steady success, & then moving on to something big. Capturing a huge chunk of the American & European market was not the original agenda of a once Chinese refrigerator brand. But it opened itself to more challenges, & thus victories, by constantly renewing its approach to different segments, markets, demographics, & technology.
The second way to increase your appetite for technology is to fall (obsessively!) in love with your customers. A global study by Accenture revealed that even today, less than half of American companies leverage customer insights to improve their customer experience.
On the flipside, companies that ARE doing this (aka, design-led companies with high customer-centricity) are realizing higher rates of growth & success, scale, efficiency, customer loyalty, revenues, ROI, and so forth.
As a business leader, your leadership must be sensitive to changing customer needs & market trends. Start looking at the world with a holistic view. A breakthrough innovation in the fintech domain today can change how edtechs or FMCG companies are behaving. Technology has broken down the walls separating traditional industries & business models, making the digital landscape more comprehensive.
Find out where your customers are.
And what are they talking about?
Not just about your brand.
But everything under the sun.
Find them on social media, understand their user journeys, what it takes to make an audience your loyal customer.
What does it takes to retain them?
What does it take to make them ambassadors of your brand?
The answers to these questions are hidden in how consumers talk about brands, products and services they use with their social groups.
For this, and many more customer-centric approaches, social media is a gold mine.
Another great way to identify this is Amazon’s (or any popular merchant site’s) review section. This is where users get really honest & candid about their expectations from a product. A close monitoring of these could get you valuable insights on customer pain points, opening vistas to better customer experience.
Be it leveraging customer data from various sources, diversification of products, going rogue at international markets, data-informed revamp of your vision & reach – the bottom line is that these are possible when you are more open to technology. Advanced AI, ML, Deep learning, several 100s of martech tools, cloud computing – these & many more trailblazing technology & tools are at your disposal.
All you need to do is start using them.
And using them right.
Starting small and gradually extrapolating these protocols to company-wide, large scale operations is far more effective (& sustainable) than drastically altering paradigms overnight. The commitment to these tenets have to be intense. And the need to redefine the organizational hierarchy, culture, & leadership styles is non-negotiable.
Companies that show aggressive dedication to these 4 priorities amplify their chances of transforming into creative organizations that invariably design great products and services.
Why business design is the most important skill of the future?
“Design is a formal response to a strategic question.”
The last two decades have unleashed the era of agile startups. The ways of doing business has changed overnight. Design thinking, which was once an isolated superpower within the design community, has now (fortunately!) permeated into every imaginable business process possible. However today the discussion is not about design thinking in business, but business design as a whole.
Mastering agile ways of working: Take your company to the next level
“It’s no longer the big beating the small, but the fast beating the slow.”
To succeed in 2022, you need to adopt a flat, flexible, & cross-functional organizational structure, instead of being incredibly convoluted with layers & layers of hierarchies.
Because the latter will fall as easily as a house of cards.
You want your company to be swift, ready to change as per changes in the ecosystem, & extremely agile in adapting to the twists & turns of the market.
An agile working environment is where you have the ability to transform how your organization operates without changing your core business. You build accounting software for small businesses? Great. Now how do you reimagine the network of all the coders, developers, marketing folks, senior leadership, etc in a way that makes the organization flat, adaptable to change, while still building accounting software for small businesses?
Tough question, isn’t it?
Here are some golden rules to help you turn agile
Quick responses to strategic opportunities – These could be in the form of new technology at your disposal, or discovering a completely new & untouched geography (or demography), changes in government policies,etc.
Keep the review cycles brief – Set a limited time & number of permissible iterations & improvements. Follow this strictly without wasting much time.
Focus on change management – Declare a new vision, empower the people who are responsible to drive this change, encourage self-organizing teams.
Integrate the voice of the customer – The customer should be a part of the product development process, including users & their views instead of marching ahead with assumptions.
Focus on risk management & anticipation – The past one year has shown how companies that had robust preparedness for uncertainties grew exponentially high during the pandemic period.
Interdisciplinary product teams – Designing a unique customer experience is not the job of a single person or a single team, cross-functional utilization of expertise in augmenting CX is the way to go.
Elimination of organizational silos – Design, marketing, sales, manufacturing, whatever segments exist within your organization, none of them should be isolated from each other.
Leveraging technology – This goes without saying that technology is the biggest enabler of every practice, process, & protocol your organization needs to survive & thrive. Don’t be averse to it, embrace it and watch your company grow beyond bounds.
TL;DR? We got it covered here…
- Digital transformation is so much more than just ‘going Cloud’ or making an app. True transformation is accompanied by improvements in organizational culture & digital maturity.
- Digital transformation is not an isolated function – it’s cross-functional, data-informed, & a continuous iterative process.
- Business design is a key defining component determining the success of organizations in the present & future. Design thinking is NOT just for designers or design agencies/studios.
- Develop an appetite for innovation. You don’t have to be from the tech background in order to understand its significance in business expansion & customer experience delivery.
- What the pandemic has accelerated & reinforced is that swift, flexible, & agile models beat long-standing, unchanging, & fixed incumbents
- Elimination of organizational silos, effective change management, & blending user’s voices into your product strategy are some of the key ways to emerge victorious in a digitally dominating ecosystem.