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Digital Transformation: Six Foundational Principles
Richard Ersek Senior Program Manager, Digital & Analytics | March 1, 2021
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Sometimes, I’ll be in a restaurant where there are so many choices on the menu that look good that I’ll tell the waiter, “I want everything.” Digital transformation sometimes looks this way too, with seemingly everything thrown into the definition of that phrase. What does it actually look like to create digital businesses when we’ve been working in a digital world for so many years?

Digital technology has brought us new ways of solving problems, working with data, and communicating. While this digital transformation began with the replacement of infrastructure and technology, the most significant changes in recent years are through business processes that have been redesigned into digitally-enabled solutions. Entirely new sales channels and digital businesses have been formed based on digital technology. Nowhere has this been more visible, or the impact greater, than in the retail space where traditional shopping has been encroached by digital competitors. With technology constantly evolving, businesses are keenly aware of the urgency to implement, optimize, and even transform their digital strategies.

SIX FOUNDATIONAL DIGITAL TRANSFORMATION PRINCIPLES

How exactly do you determine what’s essential and what’s hype? Do you need to convert development processes or re-architect applications and digital technology? Think about this as a journey— one that may have many turns, and one in which you’ll want to be able to adjust the course as quickly as possible.

  1. DEFINING STRATEGY

    Strong strategy work begins with a foundation of industry knowledge and digital technology. Assess your competitive environment, including what your peers are doing today and what trends are likely to take hold in your sector. Also, consider the emerging trends in your customers’ lifestyles and any other situational factors in your business and industry.

    Strong strategy work begins with a foundation of industry knowledge and digital technology.

    Mapping these factors in graphical form, along with any visualizations of hard data that you have available, can help you to define and communicate the business challenge. Next, define the goals of your digital transformation strategy, so it’s aligned with your enterprise-level mission statement and goals, and then move onto building your go-to-market plan for digital channels. Be creative when it comes to thinking about what opportunities are available through digital that could enable deeper engagement with your customers.

    Another part of digital transformation strategy involves thinking about your business’s strengths and weaknesses and how both aspects fit into a larger interconnected marketplace. What other services, digital strategies and businesses are complementary to these objectives and that can be designed into a digital ecosystem? Or, perhaps there is an existing digital ecosystem that your business aligns to.

  2. CUSTOMERS FIRST

    Remember, it’s not where you want to go, but where your customers want to go. As you transition from strategy into the specific programs and tactics that will help realize that strategy, take a good hard look at customer experience first. Tools like primary research, customer journey mapping, and personas are powerful ways that one can utilize to create a clear picture of how your customers understand their business relationship with you and the goals they’re trying to accomplish.

    Remember, it’s not where you want to go, but where your customers want to go.

    Your digital strategy may start from a mobile user perspective exclusively, or it may take more of a multi-channel approach– considering the approaches like the web, phone, and in-store experiences. Some of our clients in traditionally brick-and-mortar businesses have created new sales channels based on digital purchasing ecosystems that are integrated with the in-store experience. Many others are looking to create new capabilities along these lines as well.

  3. TEAM EFFORT

    The success of digital solutions depends on everyone working toward the same goal. Reinventing how you do business can put a lot of demands on an organization, whether it’s committing the time and resources, or integrating changes into existing processes. At the people level, change can be naturally stressful but also has the potential to inspire and reinvigorate individuals in an organization.

    From the start of the strategy formation, try to include key stakeholders across business functions that can offer a broad perspective as you go about planning for change. Seek out leaders with a ‘can-do’ perspective who will form a core team of advocates and that who can also help in resolving problems that emerge in the course of implementation.

    Develop a comprehensive vision, along with a communication plan that employs a variety of tools including visual diagrams, timelines, goals, and metrics that can aid in getting your message across to an audience possessing varying perspectives and learning styles.

    Collaborate with your core team to review the existing processes that are impacted and those that can be refreshed or enhanced with new digitally-enabled concepts or digital solutions. Reach out to the parts of your organization that are included and impacted in these changes. Don’t rush this part either— take the time to communicate with the leaders and individuals who are essential to successful execution.

    Take the time to communicate with the leaders and individuals who are essential to successful execution.

    Make a strong case for your vision in a way that builds them into the story. Can they clearly see the importance of this vision as it relates to their own understanding of the overarching business goals, and do they see their part in it? Do they understand priorities in the same way that you do?

  4. BE NIMBLE

    Whenever you tackle something ambitious— whether developing a new product, service, or internal capability, it is not always clear what the end state should be like, and there’s not always time for lengthy planning. Agile practices lend themselves well to digital transformation, because they are designed to build applications using small, self-managed teams, a customer-centered approach, and an iterative process that integrates customer and team feedback.

    Agile isn’t a mandatory component of your digital transformation strategy, nor does it guarantee success, but, when implemented in an organic way that fits with the business, it’s a great tool for developing a steady flow of incremental business value. Ask yourself if the motivation for shifting to Agile is coming from your teams themselves, or if it is a top-down mandate. Positive long-term results from Agile practices are more likely when the team is invested in bringing about those results without coercion. Customer experience techniques and continuous integration/continuous deployment are a great fit with the iterative and feedback-driven cadences of Agile development.

    If you decide that Agile development just isn’t right for you at this time, you can still incorporate agility into your processes by embracing customer and team feedback. You can use milestones for reflection and course corrections, and for setting expectations with stakeholders about allowing room for learning.

  5. THE FUTURE IN MIND

    Having a flexible, scalable, and measurable services architecture is an essential foundation of mobile and web applications. If you are creating a new backend or replacing an older web-based application, first try breaking down the solution into focused services that integrate together and connect them to APIs that expose those services to devices.

    Developers can utilize tools such as API gateways, reverse-proxy servers, and NoSQL caches to provide a more responsive, decoupled service platform with improved scale compared to the older transactional databases and tightly-coupled web interfaces. If you have many deeply embedded applications that are part of critical workflows, you might start out by building a microservices layer in front of the legacy services, rather than replacing them all at once.

    You’ll find that there’s another benefit in breaking down a complex solution into services: this architectural model fits well with small teams using Agile development practices. Each team may own a handful of services and are empowered to develop and release functionality on their own schedules, isolated from interdependencies by versioned APIs. Coordinating all of this will be a product owner, who is focused on delivering business value through technology, using tools such as product roadmaps.

  6. METRICS MATTER

    As revenue increases through digital channels, greater pressure mounts on IT provide to support through the continual release of incremental service improvements— keeping those solutions running smoothly and collecting the massive amounts of data gathered as customers interact with your services.

    The aim is so that you can analyze and adjust your Agile development strategy in real time. DevOps, which links development and operations disciplines together, supported by a new generation of tools including logging and analytics, helps smooth out the speed bumps on the way from development to release.

    Treat data collected from digital engagement and the digital channels as a valuable, yet perishable resource that decreases in value over time. You might think of it as part of your circulatory system that flows through business processes to feed your customer experience process and that keeps your strategy relevant. In your continuous deployment processes, take advantage of data through A-B testing to immediately validate assumptions and adjust strategy in real time.

WHAT’S RIGHT FOR ME?

Many of these technologies and methods have come to the forefront because the most successful players have leveraged them strategically. While you might benefit from adopting the same practices, this isn’t necessarily a sure thing. The best digital transformation strategy for you will involve building a portfolio of capabilities that are uniquely suited to your business needs. The pace at which you start on this journey may vary and you might be able to transform incrementally, but competitive pressures might mean that rapid change is needed to survive.