Digital transformation isn’t a new term – it’s been a buzzword for almost a decade. But few other terms in business vocabulary trigger more debates and questions among executives than this one. What does it mean? How do you start? When are you “done?” Who owns it? What payback can you expect? These are just some of the questions executives are eager to find answers to.
The answer requires some context: Digital technology has transformed our lifestyles, our culture and how we interact with brands and businesses in revolutionary ways. It has created spectacular new opportunities for innovation. But it has also accelerated ‘digital Darwinism’ – the disruption of businesses and entire industries as they fail to adapt and ‘catch up’ to consumers and their constantly-evolving needs, expectations and attitudes.
In order to succeed, or even survive, large incumbents with inertia for doing things the way they’ve always done them before need to transform digitally.
At Prophet, we use digital transformation to describe the process by which large companies can deploy digital to reimagine their business and compete effectively in a digital economy. Digital transformation isn’t a single event, a single project or a single move. It’s actually a series of moves and processes that add up to reimagining a business and creating “uncommon growth.”
It’s important to call out that while a digital transformation strategy defines what a business should do, a digital transformation program describes how it should do it using change management principles.
Key Components of a Digital Transformation Strategy
We have identified four phases to jump start your digital transformation strategy journey:
Assess where your business currently stands across key areas (such as customer experience, marketing, product & service development, etc.) and where it needs to be in order to compete effectively (relative to competitors, customer expectations, external disruptive factors, etc.).
Define a digital strategy that outlines the role of digital within the company; the portfolio of initiatives the company needs to prioritize to realize this role; core and enabling capabilities required; new systems and infrastructure required.
Operationalize the digital strategy by developing & piloting priority initiatives, embedding new capabilities, and upgrade systems & infrastructure.
Track and assess the customer impact and business impact of transformation initiatives; iterate strategy based on this feedback loop.
As Altimeter, a Prophet company, has found in its latest State of Digital Transformation report a digital transformation program can have a tremendous impact on a business’ growth trajectory. However, it requires C-Suite sponsorship and cross-functional leadership support in order to realize this impact. Similarly, it requires a well-thought-out change management approach to influence culture, coordinate change and manage complexity throughout the process.
While executives may continue to debate about the nuances of digital transformation, one thing is not debatable: driving change today is no longer a nice-to-do. It’s a matter of survival.
Are you struggling with where to start when it comes to digital transformation? Contact Prophet to learn how we can help your organization.