As with any new buzzword, common misconceptions and substandard approaches are fast becoming the norm where digital transformation is concerned.
So, what is digital transformation?
I like the below definition used by the Guardian:
“Transformation is a whole scale change to the foundational components of a business: from its operating model to its infrastructure. What it sells, to whom and how it goes to market. A transformation programme touches every function of a business; from purchasing, finance, human resource, through to operations and technology, sales and marketing.”
In effect, it’s a term which will eventually die out and solely be referred to as a “business strategy”.
Where are businesses going wrong?
From experience, here are a few of the most common failings I’ve seen from businesses trying to approach “Digital Transformation” and how you can avoid making the same mistakes.
1. Thinking digital transformation simply means developing a website where you can sell online
The problem: As you’ll see from the definition above, digital transformation should have a much wider remit throughout the whole business. Simply applying your offline strategy to online is a sure-fire way to fail. See HMV, for example.
The reason why many businesses take this approach is because digital transformation tends to be driven from within the digital or marketing department and in reality, even when the directives come from the top the website is the first and easiest thing they can “digitalise”.
Recommended Approach: Before you start any digital transformation you need to fully understand the market in which you’ll be operating online. Who and what are your competitors (hint: they are unlikely to be the same as your offline competitors and may be indirect).
Also, you need to spend time understanding who your customers are through research, they may have very different behaviours and expectations online, and a different demographic might actually be more valuable to your online business.
Finally, you need to gain a sound understanding of digital technology, your current capabilities and what else is being developed within the industry. This will allow you to set a digital transformation strategy which takes advantage of where new developments are happening and be prepared for how this could potentially affect the rest of your business.
2. Digital transformation projects take too long and are not agile enough
The Problem: the majority of businesses considering digital transformation are typically bricks and mortar (digital-first businesses tend to be constantly iterating and changing as a natural progression).
I’ve seen digital transformation projects ranging from 3-5 years and these usually over-run. The issue with this is that in a very fast paced market, your business could lose market share to the new digital rivals (again, see HMV).
Recommended Approach: One potential way of approaching this, if you already have an ecommerce offering is to test out new ideas, business propositions and disruptive operating styles through A/B split testing on your website (our client Wilko is taking this approach as part of their 5 year digital transformation). The benefit of this is it’s mitigated, low-risk and most importantly a quick way to test out new strategies. You’re not going away spending months or years developing a new proposition that you “think” will work but you’ve never tested. This approach allows you to try out your concepts in real-time and to gather feedback and valuable insights on how the market receives these changes.
Within your strategic digital transformation plan, build in quick change periods (sprints) and review feedback at each stage. If something isn’t working, fail fast and don’t be afraid to stop those ideas which aren’t working so well.
Additionally, don’t ignore the importance of change management. While you’re changing processes, you’re also likely to also be changing people’s remit, job specs or responsibilities. As humans, we’re reluctant to accept change. If you want your transformation to be successful, you need to have a plan in place to bring your staff along with you on this continuous journey.
3. Not understanding the role offline still needs to play in digital transformation
The Problem: Businesses get so caught up in digital transformation strategy that they forget to review the role and integration of their offline offering.
Recommended Approach: If you’re multi-channel, tracking and attribution will be your best friend. Understand the role and value that offline vs. online plays in your customer journey. For example, while many people may purchase a new car online, it’s likely that a major part of the customer journey for the majority of buyers will include a physical interaction at some stage, which will be crucial in converting that online sale. Are we looking at a future of 24 hour car showrooms with digital self-checkouts?
Things to remember
Don’t let market forces be the driving force behind your digital transformation as there are enough horror stories of dying brands and businesses who have failed to take heed of this advice.
Be proactive, plan and take a holistic approach to your business and its place within in the market and you’ll have the right ingredients to deliver a winning business strategy.