Digital transformation may be a trending business buzzword, but it’s also a crucial initiative for companies across industries. In order to stay relevant and keep up with the competition, businesses must find ways to embrace new digital technologies and trends.
But what does digital transformation actually entail? And how can your company do it best?
Table of Contents
Define Your Objectives
One of the first things you’ll want to do is make sure that you’re clear on your objectives for digital transformation. You don’t want to jump into this with a vague idea of what the benefits of the transformation will be—you need to know the specific goals of the initiative so that you can measure your progress toward achieving them.
These goals could include things like increasing revenue, decreasing customer acquisition costs, increasing customer retention, or improving employee satisfaction.
Ideally, your goals should be both measurable and high-impact—the last thing you want is to feel like you’re spinning your wheels with a digital transformation project.
Dakota McDaniels, Chief Product Officer at Pluto states, “Digital transformation starts with a clear understanding of what you want to achieve and why. Do you want to improve customer experience? Increase operational efficiency? Or launch new products and services?
“Once you know your objectives, you can determine the strategies and tactics needed to reach them.”
Assess Your Current Situation
Once you’ve got a firm grasp on what your objectives are, it’s time to assess where your organization currently stands. This means taking stock of a few key areas by asking the following questions:
Your Digital Assets: What are the current digital products and services offered by your organization? What digital capabilities do you have that can be leveraged for new products and services?
Your Technology Stack: What technologies are currently being used to power these digital products and services? What new technologies might be worth exploring for the future?
Your People and Culture: What does your team culture look like? What types of people are currently making up your workforce? What are your employee retention rates like?
Your Data and Information: What data and information currently exists within your organization? What new sources of data might be worth exploring?
“Take a good hard look at your current situation,” says Chris Gadek, Head of Growth at AdQuick. “You need to understand where you are today in order to chart a course for where you want to be tomorrow.”
By answering the questions above, you can map out such a course and develop an action plan for continued success.
Build a Culture of Experimentation
This one is important. If you want your digital transformation initiative to succeed, you need to create a culture of experimentation within your organization.
This means fostering an environment where employees feel empowered enough to try new things, fail, learn from their mistakes, and try again without worrying about losing their job.
To do this, you may want to consider implementing “fail fast” policies that encourage employees to move quickly, take risks, and make mistakes. You also may want to look into ways to improve your company culture, such as with social recognition programs or team-building initiatives.
“I see many leaders get bogged down in planning and never get to execution,” says Neel Shah, Founder of EZ Newswire. “You need to build a culture of experimentation, where it’s OK to try new things and fail. The key is to learn from your mistakes and keep moving forward.”
Implement New Technologies
After you’ve created a culture of experimentation, it’s time to start implementing new technologies that will help drive the digital transformation forward. Ideally, you’ll want to focus on one or two key technologies that will have the biggest impact on your organization.
“Technology is a critical enabler of digital transformation,” says Lindsay Malu Kido, CEO of Empower Pleasure. “But it’s not enough to just adopt the latest and greatest technology. You need to make sure you’re investing in the right technology for your specific needs.”
For example, if you’re looking to decrease customer acquisition costs, you might focus on implementing an AI solution that can automate lead generation.
If you’re looking to increase customer retention, you might focus on implementing a CRM solution that allows your team to more easily keep track of their interactions with customers.
“CRM software has proven to be a powerful tool for driving customer engagement and loyalty. But if you’re a B2B company, you might want to consider investing in a platform like Salesforce or Oracle,” says Ian Heyman, Founder of MDP.
Build an API Foundation
If you want your organization to be truly digital, you’ll need to implement an API foundation. What this actually means, though, varies depending on the industry you’re in. In general, though, an API foundation is a system that allows your various systems to communicate more easily with one another.
“Companies need to build an API foundation to enable digital transformation,” says Maegan Griffin, Founder, CEO and Nurse Practitioner at Skin Pharm. “An API is a set of programming instructions that allows one piece of software to interact with another. By creating APIs, companies can expose their data and functionality to other developers, who can then create new applications and services.”
For example, if you have a CRM system, an accounting system, and an HR system, an API foundation would allow all of these systems to communicate with each other, regardless of where each system is hosted. This is important because it allows each system to benefit from the functionality of the other systems.
If you don’t have an API foundation, you’ll likely have a bunch of stand-alone systems that don’t communicate with each other. This means that you’ll need to manually transfer data from one system to another—which is inefficient, time-consuming, and prone to human error.
“If you use social media, you have access to many APIs. Facebook has an API that allows developers to access its user data and build new applications on top of it,” says Karim Hachem, VP of eCommerce at Maxine of Hollywood.
“Twitter has an API that allows developers to embed tweets into their own websites and apps. And Amazon has an API that allows developers to access its vast e-commerce catalog. By creating APIs, companies can open up their data and functionality to a whole new world of possibilities.”
Establish a Digital Governance Team
Once you’ve implemented new technologies and created an API foundation, you may want to consider establishing a digital governance team.
Brittany Dolin, Co-Founder of Pocketbook Agency says, “Our digital governance team is responsible for developing and enforcing our digital strategy. This includes everything from setting priorities to allocating resources to measuring progress.”
Your team would be responsible for overseeing the implementation of new technologies and making sure that each technology is being used in the best way possible.
For example, if you’re implementing a new AI solution to automate lead generation, the governance team would be responsible for making sure that the solution is being used in a way that’s consistent with your company’s goals. They would also be responsible for making sure that the solution is being used ethically and legally.
Measure Your Progress
You want to make sure that you’re measuring your progress throughout the transformation process. This means taking stock of your goals from the beginning and monitoring how you’re doing as you go—and making adjustments as necessary.
For example, let’s say that one of your goals is to increase customer retention. You could measure your progress toward this goal by keeping track of your customer churn rates over time—and by making adjustments to your product or service as necessary.
Similarly, if you have a goal of increasing your revenue, you could measure your progress by keeping track of how much revenue you’re bringing in each month. You could also look at your customer acquisition costs to see if there are ways to decrease them.
“You need to continuously measure your progress and course-correct along the way,” says George Fraguio, Vice President of Bridge Lending at Vaster Capital. “Otherwise, you’ll never reach your full potential.
“Some of the key metrics you should track include customer engagement, operational efficiency, and revenue growth.”
Don’t Expect ROI Anytime Soon
We’ve talked a lot about the benefits of digital transformation, but let’s be real: there are some drawbacks to this initiative, as well. For one, you’ll likely experience some growing pains as you re-organize your company around new technologies.
“Digital transformation is not a short-term initiative,” says Chris Bridges, CEO of VITAL Card. “The goal is to create a long-term competitive advantage, not to earn a quick return on investment.”
You may find that it takes longer than expected to implement new technologies due to complexities in the procurement process. In addition, you may find that your initial cost estimates are higher than expected—and that it will take more time to achieve a positive return on investment than you initially anticipated.
That being said, the pros of digital transformation outweigh the cons. And if you follow the tips outlined above, you’ll be well on your way to a successful digital transformation.
Conclusion
Digital transformation takes time, and that’s perfectly OK. The key is to start small and focus on making incremental improvements. Over time, those improvements will add up to big changes for your company.
And don’t forget, the journey is just as important as the destination. By focusing on the right things, you’ll not only achieve your objectives, but you’ll also build a stronger, more agile organization along the way.
