The most discussed topic in business today is digital transformation, but it begs the question: Why? Before we embark on the journey of digital transformation, let us explore why this may be important.
Companies are in a constant cycle of creating value, monetizing value, and defending value. While the cycle keeps repeating itself, the way a company goes about this cycle changes over time. Let us consider the example of value creation in the movie industry.
Twenty years ago, a movie producer may have relied on instinct, experience, or basic market research to determine the type of movies that resonates with an audience. Today, Netflix uses digital means (i.e. big data) to determine with a degree of accuracy the genre of movie that you prefer, when you prefer to watch these movies and even your attention span for these movies.
Digital has changed the way in which value is created by companies and extends itself to other activities of a company such as value monetization or value communication. This change in the activities of a company is now widely referred to as digital transformation.
Digital transformation fundamentally changes how companies create, monetize, and defend value, giving companies the much-needed competitive edge. And companies that have not figured out how to keep up with digital transformation are slowly being acquired or being liquidated.
Digital transformation may be an important answer to many of the questions that your company is challenged with today, such as:
- How can we differentiate in the market?
- How can we increase our profitability and find new avenues for growth?
- How can we expand our company into new markets?
- How can we reach the new generation of millennials?
Ultimately: How can we be competitive in our industry?
According to Jabil’s 2018 Digital Transformation Survey, only eight percent of respondents considered their company fully digitized. Thirty-one percent stated that they take on digital transformation projects on an ad-hoc basis and another 31 percent shared that they were still working on their plan.
Regardless of your current standing, there is a lot of work to be done on the digital transformation journey. If you have not begun this journey of digital transformation already, there is no time like the present. Below are six important steps for you to consider as you go through this journey.
6 Steps to Take on Your Digital Transformation Journey
1. Determine What “Digital” Means to Your Company
While digital transformation is important, the first step is to understand what digital transformation means to your company. The word “digital” can have different meanings to different companies since digital transformation is the means to solve a problem and each organization, depending on its maturity, industry, competition, value chain, and ecosystems, has unique problems.
Therefore, it’s critical for you to diagnose the challenges that face your company and determine what digital solutions are suitable for your company to achieve its goals. The first step in the process is to do an audit of the challenges facing your company.
2. Establish How Your Company Will Go Digital
Once you have identified the key challenges for your company, you are in a good position to evaluate the various digital transformation alternatives that exist for you. These alternatives could range from front-end transformation such as products and customer experiences to back-end transformation such as cloud and IT infrastructure. Below are some strategies that are being considered by companies looking for digital transformation in the front- and back-end:
- Redesigning products and experiences to have a digital component: 66 percent of respondents from the survey are either evaluating the Internet of Things (IoT) or plan to develop such solutions.
- Building digital ecosystems: Companies no longer operate in silos and rely on larger ecosystems to support digital transformation. Expertise in the cloud, connectivity, and big data are available for you to consider in building such ecosystems.
- Monetizing the data from this IoT ecosystem: Companies use data from their IoT solutions in numerous ways such as developing new features and solution offerings to get to market faster with solutions.
- Transforming operations and factories: 81 percent of organizations intend to transform their factories or other facilities to better leverage cutting-edge innovations including advanced automation, 3D printing, machine learning, and similar advancements.
- Building a strong IT infrastructure: According to the Digital Transformation Survey, the second biggest challenge companies face is around the mismatch of their existing toolsets. Whether internal or outsourced, the infrastructure is the central nervous system of your organization.
While you may choose one, some, or all of these as part of your strategy, it is important to always understand that the above digital solutions are a means to an end and one should not lose sight of the end (which is bringing value to your customers and your shareholders).
3. Make Executive Buy-in a Priority
Once you have your digital strategy and solutions thought out, it is important to socialize this inside the company and obtain executive buy-in. Jabil’s Digital Transformation Survey shows a 62 percent increase in board support for digital transformation from 2016 to 2018. That is impressive progress in just two years.
The survey also demonstrates that 85 percent of respondents report that executives understand the criticality and support transformation efforts. The importance of executive buy-in can’t be overstated. It is one of the most reliable signs of a company’s strategic commitment to digital transformation.
4. Find Partners to Accompany You on the Journey
The biggest challenge companies face with a digital transformation is not having the internal expertise to take on the initiative. This is when partners are critical to your digital transformation. When asked about the roles of partners, digital transformation stakeholders overwhelming agree that their business partners have a role. Respondents of the Digital Transformation Survey share that they expect their partners to support them on the journey by:
- Delivering capabilities to help them transform
- Offering consulting services that will help them integrate digital technology
- Helping them navigate the landscape of digital innovation
- Sharing successful approaches and best practices
5. Prepare Your Workforce for the Transformation
Clearly communicating your plan and vision for the company is just as important as coming up with the strategy. If the value of digital transformation is not communicated well to employees, the company may not obtain intrinsic buy-in from its employees. Provide employees with transparency, a clear structure and plan, and adequate training to prepare them for the digital transformation.
6. Begin Your Digital Transformation
Start executing on your plan.
95 percent of Jabil survey respondents expect the rate of digital transformation to accelerate even further in the coming years. With remarkable levels of investment around these efforts, there’s a tremendous need to execute and execute with speed.
Written by Arvind Ravishunkar, Director of Strategy and Research, Radius Innovation & Development. This post originally appeared on the Jabil Blog.