Embracing Digital Technologies
Digital transformation refers to the changes associated with the application of digital technology in all aspects of human society. Digital transformation may be thought as the third stage of embracing digital technologies : digital competence → digital usage → digital transformation, with usage and trans formative ability informing digital literacy.
The transformation stage means that digital usages inherently enable new types of innovation and creativity in a particular domain, rather than simply enhance and support the traditional methods.In a narrower sense, “digital transformations ” may refer to the concept of “going paperless”.
Digital transformation affects both individual businesses and whole segments of the society, such as government,mass communications,art,medicine or science.
Digital transformation has become the ultimate challenge in change management because it impacts not only industry structures and strategic positioning but all levels of an organization (every task, activity, process) and its extended supply chain.
Leaders must constantly challenge their organizations to ensure that this technology-enabled change can unlock productivity gains and significant competitive advantage and understand where and how the fundamentals of their current operations could be unsettled by agile new entrants or new business models.
The Key Drivers Of Transformation
There are three key drivers of transformation: changing consumer demand, changing technology and changing competition. These, of course, are an ecosystem and it is always a convergence of factors that brings about changes in a market.
When any of these factors coincide such that a business’ operating model is no longer fit to serve its customers, the business has reached a tipping point. Here’s the thing – evolving businesses don’t reach tipping points! They spot opportunities before they become tipping points. Evolving businesses are continually focused on their customers, changing and adapting with, or leading in their market.
Businesses that spot tipping points when they are too late to be considered opportunities need to transform, and those that don’t, tip over the edge. Consider HMV as a case in point.
Clearly none of this is new. There are well-used models to understand these market phenomena; Porter’s five forces, McKinney 7S and the Boston matrix, for example.
Next let’s define digital. I think of it in the broadest sense as any technology that connects people and machines with each other or with information. Therefore “digital transformation” is a visible wholesale restructure to avoid a tipping point caused by digital technologies and downstream market effects.
The role different organizations play in digital transformation
Some companies – big global consultancies such as PwC, Deloitte and Accenture – manage transformation programmed on behalf of large businesses. To transform a large organization takes a significant amount of time, a huge amount of resources and a cross-functional set of business skills that are typically only found in global consultancies such as these.
Creative agencies, on the other hand, aim to help businesses avoid the need for digital transformation altogether. They specialist in being close to consumers, understanding new technologies and markets, and what’s going to happen next.
They work with their clients to see what’s coming and help them evolve to meet it. They bring new products and services to life in prototypes and trial products and experiences such that businesses can envision the future, so they can be ready for it and lead it.