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What does digital transformation truly stand for and why it is important in the current scenario

In just a few months, the COVID-19 crisis has brought about years of change in the way companies in all sectors and regions do business.

“96% of leaders report COVID-19 will accelerate their digital transformation by an average of 5.3 years” IBM

Digital Transformation has been interpreted and labelled differently by businesses in the industry. It can be seen as anything from a process needed to transform your business from manual to automated, to a channel – a mobile app that would label the business digital. What is missed in the buzz is what Digital Transformation truly stands for.

To successfully answer the ‘What’ it stands for, we need to first clearly understand the ‘Why‘.

Why do organizations need to transform? And what do they intend to achieve with this transformation?

According to Peter Senge, one-third of the top 500 companies will disappear within 15 years, and the average lifetime for the largest enterprises is approximately 40 years. In the long run, he says, the only sustainable source of competitive advantage is your organisation’s ability to learn faster than its competition.

So, what does this have to do with ‘Digital Transformation’?

Most organizations believe that the single factor which will ensure their competitive edge for the future is to be more “Digitally” ready than their competitors. While this thought has driven many, in various directions, we strongly believe that to truly future-proof your business, you as an organization need to re-examine and re-define how you engage both, internally with your employees & ecosystems and externally with your clients & markets. The intent here is to maximize the value created for your customers through higher engagement and alignment internally.

The natural outcome of this alignment would be seen in two key aspects:

a) The ability to innovate rapidly, and

b) The ability to create new customer experiences

In other words, the ability to quickly understand and recognise a need in the market, and more importantly, to be able to fluidly align internally to maximize the value using the shortest and most effective way to create a differentiating experience for customers.

To achieve this, any organization needs to consider 3 aspects –

1) Developing an organization model that cuts through the traditional functional hierarchy and building a seamless operating cross-functional team that creates value for their customers

2) Ability to leverage technology to increase automation, which would, in turn, create standardised repeatable processes that build in the needed process agility

3) Ability to learn, unlearn and re-learn as an organization and be able to quickly “realize” that learning into value for the customer and hence the business.

This is the reality of Digital Transformation for any business. If you are wondering why let’s break down a classic example that makes the most sense.

Remember those times when hailing a cab meant standing on the street with your hand out and waving, hoping and praying that a cabbie would stop and agree to drop you at your destination?

The inception of cab aggregators turned the tables on such scenarios for good. Now cabs could be hailed from the convenience of your own home and right to your doorstep. With more and more innovation came more and more streamlining to the entire process of cab aggregation. This resulted in businesses such as Uber revolutionising the daily transportation industry. This model has disrupted not only customer experience as we see it but also how the cab industry works – the largest cab company does not own a single car. The largest hospitality player does not own a single property – Airbnb. These companies are harbingers of what digital can do to an entire industry within a short period.

While the industry has moved beyond questioning the relevance of Digital Transformation and the role it played in the making of such business models, the challenge continues to remain on how to do it within the context of an existing organization and what to consider while building one ground up. Organizations everywhere are going through some form or the other of Digital Transformation as they strive to better themselves and gain an edge. Unfortunately, failed programs tend to outnumber successes, and real gains remain distressingly low.

Why?

Because most companies have failed to grasp a basic truth.

Let’s take the cab aggregator business for example again. Continuous improvement requires a commitment toward learning. Being Innovative ensures that business ecosystems disrupt the industry. While this could have been the objective for cab aggregators, to begin with, it needs the organization to be continually Adaptive and Responsive to the market, continuously Learning and Improving, to stay relevant in the game. Now, while Digital Transformation may only sound like a posher way of describing urbanization, it does indeed stand for the ability to be able to create an internal eco-system that is capable of innovating, rapidly adapting, and responding to the market, ensuring continued relevance through differentiating customer experience and new business models. It is the best form of disruption that helps you discover the true potential of your business by forcing you to shuffle the deck and find yourself a better hand.

“77% of CIOs name Digital Transformation as their biggest budget priority of 2021” - Constellation Research

Greyamp Consulting specializes in building strategies and game plans to bring about effective digital transformation. While we believe technology plays a major role, our main focus lies in working with leaders to help appreciate process changes from an organizational or business point of view to a more technology and customer experience-centric approach. Watch this space for more on our advisory services panning from strategy to organizational design and process.

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