Monday, February 6, 2023

What are the four main levels of digital transformation?

Starting your digital transformation journey can be challenging with so much information out there. After all, the process involves rethinking the operational structure of an organization.

To avoid a failed strategy, it’s better to tackle digital transformation systematically, focusing on four critical levels of your business. Understanding how digital transformation impacts business processes from day-to-day operations to company culture is crucial to achieving meaningful growth.

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Digital transformation is the process of improving a company using new technologies. It involves asking how digital tools can boost productivity, make business processes more efficient and improve the customer experience. Digital transformation initiatives vary depending on the company’s needs, but many experts focus on four key levels.

These include:

  • Culture
  • Business process
  • Business models
  • Business domains

True digital transformations require a holistic approach. Neglecting key levels creates an organizational weak point and prevents the process from moving forward.

Process Transformation

Digital technologies provide organizations with an opportunity for radical change. Digital transformation is about optimizing day-to-day business operations to achieve lasting growth.

How a company uses technology depends on its goals. Are they planning to enhance current processes? Upgrade existing software? Or adapt their operations to a new organizational structure?

It’s important to measure the success of process transformation by establishing baseline metrics. Keep track of cost, time, and the number of errors to demonstrate your strategy’s effectiveness to stakeholders.

Speaking of stakeholders, it’s crucial to involve them at each stage to ensure you’re meeting their demands. Map out an ideal process transformation scenario to present to key decision-makers and monitor the process gradually.

Business Model Transformation

Many companies adapt to new business models through digital transformation. Netflix moved from a video rental service to a digital streaming giant, taking advantage of improvements in digital tech. Many more companies transition to an online model to expand their reach and offer new products.

Renovating a current business model is complex, and many risk-averse companies avoid the challenge. But, daring industry leaders continue to demonstrate the value of a complete business model overhaul. Digital transformation focuses on how technology can guide this change.

Domain Transformation

Domain transformation is one of the most neglected levels and one of the most potentially transformative. Technological progress can break down barriers within an industry, allowing companies to enter new terrain.

Businesses are overly cautious when entering unfamiliar territory. The key to a successful domain transformation is to transfer the existing strengths of your current business model to a new field. 

Cultural/Organizational Transformation

At the heart of all successful digital transformation efforts are people. Employees, customers, and management determine the success of the process. Digital initiatives must align with the values of the company.

It’s not just about introducing new tech and hoping people accept it with open arms. The focus is on communication. Change management involves consistently communicating the goals and benefits of the transformation process to employees. Everyone needs to be on board. Otherwise, transformation negatively affects the existing culture.

If employees aren’t prepared for change, adoption slows down, productivity decreases, and stakeholders waste time and money. People are the key to achieving a positive ROI on software investments. An improved digital culture encourages collaboration and delegation and inspires a more proactive workforce. In turn, this enhances the customer experience. 

Digital Transformation Comes Down to Talent in 4 Key Levels

Digital Transformation Comes Down to Talent in 4 Key Levels

Even the most comprehensive digital transformation strategies start to sink without the right talent at the helm. Success relies on collaboration between talent in technology, data, process, and organizational change capability. Every leader in each of these levels should value the traits of change management to ensure a streamlined process.

Many companies watch their strategies fall apart despite conceiving a solid plan because they lack experts in key business levels. Insufficiency in one area ripples throughout an organization, weakening the entire process. Many experts suggest that talent is the most important factor in any digital transformation strategy.

  1. Technology

Digital technologies present massive transformational power to an organization. Several companies have been at the forefront of widespread change after spearheading digital innovations. The end objective of digital transformation is to make a company adaptable and ready to utilize technology to its full capacity.

Don’t underestimate the challenge of integrating new digital assets into the workplace. It’s not enough to throw new technology into a work environment and expect it to stick. Most digital transformation strategies require integrating new technology with existing technology rather than a complete overhaul. Also, replacing ingrained legacy software is expensive and complicated.

This is why talent is so valuable. A company requires strong individuals to oversee complicated processes, with the knowledge and skills to get the most out of new technology. Leaders understand that digitalizing a business involves more than just technology. They focus on contributing to a holistic approach to digital transformation, working closely with all levels of a business.

Most companies expect their IT departments to stay in their lane. Businesses fail to utilize their IT team to demonstrate the full potential of software implementation. Communications and trust should be the foundation of any working relationship, especially concerning digital transformation.

  1. Data

Businesses waste a lot of resources managing data incorrectly because they don’t appoint the right talent to oversee the process. Leveraging data effectively means transforming data collection on the front line. The right talent can transform the data collection process by encouraging their company to analyze new types of data. The result is a better product or service for customers.

  1. Process

As we’ve discussed, a business should approach digital transformation holistically to achieve the best results. An organization breaks up into many smaller levels, so it’s only natural that a company would approach transformation incrementally. This leads to a stalled process, with levels of the company benefiting from transformation while others remain stuck in the past.

Having the talent to manage the digital transformation process ensures a streamlined transformation strategy. Talent can recognize the need for small or large company changes during the process. Change management can also ensure that any transformation efforts improve customer experience.

  1. Organizational Change Capabilities

Companies without a clear direction during digital transformation often focus too much on technology and not enough on the people. Business leaders should embrace the human side of change. This means comprehensive training materials, an effective digital adoption platform, and employee support throughout the process.

Employees worry that introducing new technology into the workplace will make their jobs obsolete. Gartner’s recent business insight shows that ‘46% of employees who’ve used automation say it’s a threat to their job.’

Effective talent reminds employees of the benefits of transformation. After all, digitalization improves the workplace for everyone. A genuine people-person makes all the difference, someone with exceptional communication skills who guarantees meaningful organizational change.

What Are The Three Approaches To Digital Transformation?

What Are The Three Approaches To Digital Transformation?

Now you understand the four key levels that digital transformation targets and the required talent to achieve meaningful growth. But how do you begin a digital transformation strategy? Below, we’ve outlined three possible approaches.

Wait for proof of digital success

The first and arguably the most popular approach to digital transformation involves waiting for proof of success before moving forward. The idea is to experiment with the process, targeting smaller levels before launching a company-wide transformation strategy. Stakeholders sometimes prefer to act on hard data before making further technological investments.

The problem with this slow method is that it leaves the company vulnerable to competition. Undoubtedly, some companies will move faster with their transformation strategy. Incremental change seems less risky at first, but this approach could minimize results in the long run.

Develop an all-inclusive digital strategy

This approach is the opposite of waiting for proof of success. Instead, the company focuses on crafting a complete, long-term strategy before starting. Many companies prefer transforming organizational structure first before digitizing the workplace. Preparing employees through training to accept new digital tools accelerates the adoption process and leads to a positive return on software investments.

Incremental delivery of digital skills

This approach to digital transformation is a mixture of the previous two. A company introduces changes slowly, observing progress and making changes to the strategy as required. It’s a more flexible approach that involves experimentation to ensure the business achieves the best results. Companies taking this approach understand the unpredictable nature of their industry and create a strategy that shifts to meet changing demands.

The Four Essential Pillars of Digital Transformation

The Four Essential Pillars of Digital Transformation

We’ve explored how digital transformation changes four key levels of a business and the different approaches to a successful strategy. 

Now, let’s take a look at four essential elements of an end-to-end digital transformation process. These four pillars guide your adoption efforts to achieve wide-scale change across the organization.

Start small, learn fast, and scale quickly

It’s clear that small changes alone are not enough to create lasting change, but introducing digital technologies incrementally allows for a faster, more effective process. The only way to scale your digital transformation is through small changes in behavior, processes, and culture.

Scaling upwards is easier when digital transformation leaders provide a comprehensive technology roadmap, communicating the upcoming changes to all levels of the business. Transparency is at the heart of all successful digital transformation efforts.

Empower digital innovation and workflow automation

A company’s digital transformation goals often outweigh the resources to meet its digital needs. Replacing entire legacy systems with modern digital alternatives is an expensive process. IT teams often bear the brunt of this problem. 

The solution is to empower more employees to actively adopt simpler digital tools and seek value through digitized processes. Ensure employees remain at the center of your transformation efforts by focusing on optimizing labor-intensive tasks. These combined steps nurture pro-digital attitudes throughout an organization because people see the benefits firsthand. 

Deliver at digital speed and scale

Rapid external change in the digital age requires an equally fast transformation strategy from companies. Standing idly by while competitors take advantage of digital innovations will leave your company in the dirt.

The key to a faster transformation is the implementation of digital adoption platforms to increase the rate of adoption by reluctant employees. Training employees on new software remains one of the biggest obstacles to digital transformation success. Digital adoption platforms help train users at their own pace, reducing hiccups in the overall scaling of digital transformation. 

Connect the digital supply chain 

Combining new digital solutions with existing software strengthens the link between people and systems. Adoption is less abrupt and merges seamlessly with current operations. Employees feel supported and find it easier to harness the power of digital technology gradually. 

How Do The Four Main levels Of Digital Transformation Intersect With Digital Adoption? 

Digital adoption is an integral component of the digital transformation process. Adoption focuses on improving attitudes to new digital assets, leading to faster integration and increased productivity. 

The four main levels of digital transformation interconnect through people. Leaders, employees, and users all determine the effectiveness of a digital transformation process. Getting the most out of digital technology means employing the right talent, delegating responsibilities, and supporting employee training throughout the process. 

It’s No Secret That Organizations Feel The Pressure To Go Digital. 

It's No Secret That Organizations Feel The Pressure To Go Digital. 

According to Gartner’s recent 2022 survey, ‘digital technology initiatives have been identified as the top strategic business priority over the next two years.’ As digital technology continues to transform our lives in unprecedented ways, companies of all sizes race to adapt to customer needs. 

Moving from traditional, manual systems to digital software is a complicated journey. Companies can’t simply transform their operations overnight. Just like technology, modern business is constantly evolving. Digital transformation is a continuous process. 

Overly cautious businesses should remember that the benefits far outweigh the potential risks. Digital transformation is about more than just technology. It’s about what technology can provide. Digital technology can revolutionize all business levels, leading to a better user experience.

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Digital Adoption Team
Digital Adoption Team
A wonderful team of Digital Adoption, Digital Transformation & Change Management Experts.