What is a digital transformation strategy?
This is an important question for any organization that wants to survive and thrive in the digital age.
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However, it is only the first among several important questions.
Business professionals interested in learning more about digital transformation should also be asking themselves:
- Why does a digital transformation strategy matter?
- How do you create a digital transformation strategy?
- How is digital transformation executed and managed?
In this article, we will explore the answers to several of these questions, starting with one of the most basic questions of all…
What Is a Digital Transformation Strategy?
Digital transformation is the process of leveraging new technology to make specific improvements to an organization.
In most cases, this term refers to transformative efforts aimed at modernizing a business and helping it stay relevant and competitive in the digital age.
Digital transformation initiatives can focus on tackling specific areas, such as:
- Digital adoption. Digital adoption means fully integrating software into a digital context, such as an enterprise work environment, and using it for its intended purpose and to its fullest extent. Today, many organizations lack a digital adoption function, which hinders digital transformation, employee learning, and organizational change.
- IT modernization. A company that doesn’t have modern tools or infrastructure will have difficulty keeping up in the modern world. IT modernization can mean adopting new products for the digital workplace, transitioning to a cloud computing environment, training employees, and more.
- Cybersecurity. Cybersecurity is a critical for the contemporary enterprise. After all, data breaches can be very damaging to an organization, its profits, and its reputation. Since cybersecurity is such a complex, fast-paced field, many organizations contract with cybersecurity firms and digital transformation agencies to help them expand their efforts.
- Developing new products or services. One of the top reasons why organizations pursue digital transformation efforts is in order to pursue growth opportunities, according to a report by Prophet. New products and services can help a business gain a competitive edge, dominate, or even disrupt its marketplace.
- The customer experience. The customer experience has become a competitive differentiator in today’s business world. A single bad experience, after all, can drive a customer to a different brand, which is why customer care is so important. However, to deliver digital customer experiences that meet expectations, many organizations must transform operations, business processes, mindsets, and more.
A digital strategy will naturally focus on how to improve areas such as those just listed, as effectively and efficiently as possible.
Since digital transformations require extensive organizational changes, digital transformation strategies are closely linked to organizational change management strategies.
According to Deloitte, a good digital transformation strategy should start by articulating a north star – a clear focus that will guide the digital transformation.
This north star, says Deloitte, serves a number of purposes:
- Clarity. Clarity is “perhaps the most important purpose” of the strategic north star, since it helps define a clear vision and purpose behind the digital transformation effort.
- Mobilization. Another reason to develop a strategic aim is to mobilize support. That mobilization is critical, since a lack of support can easily derail a project.
- Alignment. When businesses are not aligned, then conflict can also cause digital transformation plans to come to a halt. A well-defined strategic purpose can prevent, or at least minimize, misalignment and its negative effects.
- Branding. Organizations with a clear, strong vision of the future will earn more trust from customers who are concerned about the uncertainties of tomorrow’s digital economy.
Articulating this strategic north star is a fundamental point – the first point – along the digital transformation journey.
How Do You Create a Digital Transformation Strategy?
Deloitte’s digital transformation framework begins with the development of a strategic north star, as we saw above.
That north star should be a “pithy and compelling statement” that outlines:
- Long-term vision. This is the final destination, which is important to have so that customers and stakeholders know where the digital transformation journey is headed.
- Short- and medium-term vision. Along the route, however, it is important to have “mile markers,” or short- and medium-term objectives. These should be clear, achievable, and measurable.
- What it means for customers. In many cases, digital transformations are built around customers’ needs and changing expectations. Even if that is not the main focus, it is critical to keep an eye on customer needs – which is why this should be defined clearly in the north star.
Clearly articulating this strategic aim is a linchpin for any digital transformation strategy – yet it is only the first step in the digital transformation process.
Deloitte’s complete digital transformation framework consists of five stages:
- Business model
- Operating model
- People, process, and technology
These stages are also linked to three other key components of the digital transformation process:
- Agile mindset
- Digital adoption
- Customer success
Deloitte goes on to say that strategy drives digital transformation, not technology.
That strategy, the firm claims, should focus on specific aims, such as agility and digital maturity.