Wikipedia defines digital transformation as: “the change associated with the application of digital technology in all aspects of human society.” For the purpose of this article, we will focus on the digital transformation in businesses.
While the focus of many articles hone in on the tech angle, digital transformation is not just about adopting new technologies, but also about changes in how we work, what we do, how we provide value, how it will effect the journey of the customer, and more. There are three major areas of digital transformation, each with three important sub-areas.
Transforming Customer Experience
Customer Understanding: This is not only about promoting your brand more effectively through social media, it is also about creating online communities to build loyalty. Many leading organizations are developing new analytics that help them understand the customer better. Not only has everything gone mobile, but digital interactions are taking over from face-to-face interactions.
A good example of how the customer experience is changing comes from Charter Communications, a large cable/internet provider. Charter Communications was able to improve the process of users needing to change their passwords. Through bot automation, it helped users perform this task in half the time, reducing live chat volume by 83 percent. Within six months the company had an ROI of 500 percent.
Top-line Growth: More sophisticated tools and technologies are replacing both paper and retail outlets, face-to-face meetings are giving way to video conferencing, and status meetings are being eliminated altogether by use of online workspaces and chat. Technology is being applied in new ways every day, and so quickly, we are having a hard time keeping up.
Customer Touch Points: Using online communities to build loyalty: Sprint has a very large community, which it uses as the first line of defense in support. Some of the people in the Sprint community are very smart, with great experience, and can often provide a better answer than tech support. Sprint keeps its community healthy by acknowledging these superstars, and also giving them early access to new technologies, such as phones.
Businesses are also investing in artificial intelligence (AI), chatbots, augmented and virtual reality and other new technologies to interact with the customer in a more engaging way.
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Transforming Operational Processes
Process digitization: Process automation can enable workers to move from repeatable work to focus more on strategic work. Automating human resources (HR) and R&D processes allow workers to focus on innovation and creativity. Paint manufacturers, apparel makers, even new car makers like Tesla have all shifted repetitive automated processes to robotics, or digital design processes, and cut the time to market by up to 30 percent in the process.
HR is another great example, as they have been able to automate requesting sick and vacation days, understanding benefits, company announcements, promoting employee interaction through online community, improving talent acquisition and more.
Work enablement: Because of the complexity of work today, it's rare when one person does a project on their own. Research done by CSI in 2015 shows that most workers (no matter what size the organization) are juggling two to three projects at any one time. This means that individual work has been virtualized, where the work process is separate from the work location. This virtualization has also helped to drive the “open office” initiatives, as well as “remote worker” initiatives, while collaboration and networking tools (over 2,000 are currently available in the market) allow anyone to talk to colleagues anywhere.
Performance management: The greater availability of transactional data now allows decisions to be made based on real data. When there are huge amounts of data, businesses are using AI and machine learning to help with pattern recognition, giving management new insights in both internal and customer-facing processes.
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Transforming Business Models
Digital modifications to the business: As Andy Grove, the former CEO of Intel, is attributed as saying, “you are either quick, or dead!” We return to Charter Communications, who cut its customer’s time by 50 percent to change a password. By automating this simple, repetitive task, it cut down live chats and increased ROI. We can use digital mailboxes today, that can be linked to your physical mailbox, and even credit card companies are automating the application process, using bots rather than more expensive people. Only about 20 percent of credit card applications — those parts which don’t fit the standard form — is now routed to actual people.
Creating new digital businesses: Amazon is the best example I know of this. It went from an online bookseller to providing secure server services (AWS) and Amazon Drive, groceries (Whole Foods), Amazon Fresh, Amazon Go, and Amazon Prime and Music (entertainment business). It also branched out into hardware with the Amazon Echo and Dot.
Under Armor, rather than just selling T-shirts and shorts for sports, now has a whole line of shirts and shoes that track everything from your heart rate to your stride. Rocket Mortgage moved the whole process of applying for a mortgage (one of my more painful life experiences) online, and sped the process by doing so. And airports now want to own a traveler’s entire trip — from air traffic information, to promotions at the duty-free shop — all delivered on your mobile device.
Globalization of Business: Many companies today, even small ones, have more than one office or place of work. Companies like Basecamp, a popular task/project management tool, has a small office in Chicago, very little marketing and sales presence except online, and developers in 32 countries all over the world. Expanding globally forces businesses to make their processes more efficient, and modular, to deal with the different requirements each country has, without involving major process changes. It not only makes these organizations more efficient, but more agile.
Accelerating the Speed of Digital Transformation
The world of full time employees in a centralized office is giving way to anywhere, anytime workers, contingent workers, and even bots that are replacing some repetitive tasks. But all this change and technology has to be tied to value, dollars and cents. Until we applied design thinking principles to work and constructed a framework for value, we had no way to determine if digital transformation was helping or hurting.
Digital transformation not only requires process knowledge, but the courage to change the process. Change management, workplace design and collaboration are required for successful transformations. These transformations are not changing at the speed of people, but rather at the exponentially more rapid speed of machines.