Since the end of the 20th century, new technologies have completely changed our way of life. The emergence of computers, the Internet, smartphones, big data and cloud computing have revolutionized the way we communicate and work. Even within our homes, digital transformation is accelerating. More and more of us are using connected objects: washing machines, lights, heaters. Our household appliances are increasingly digital and connected to our smartphones.
Smartphones dictate people’s relationships with technology and digitalized essential and everyday communication and information channels. As a result, consumer expectations are impacted and have changed. This changed user experience doesn’t stop there. It has transferred to professional lives, challenging company’s digital journeys and development. The emergence of what we can call the Homo Numericus will lead many enterprise companies to reconsider their strategies to remain competitive in this digital age. But are they ready and able to do so?
In this respect, each company should ask itself about its digital uses. Which uses does digital change produce? Consequently, what is the impact on their innovative products and solutions? What customer expectations are you, or should you be, living up to? It should all be integrated in your increasingly digital business goals.
What is digital transformation?
Definition of digital transformation
Digital transformation refers to the adoption of new technologies by an organization for the digitalization of products, services or processes. The stakes of this approach to business transformation for companies are mainly to innovate, to improve the customer experience or to increase efficiency in order to gain a competitive edge. The adoption of digital technologies and digital capabilities is an important aspect of successful transformation across the business. Nonetheless, implementing it and transform into a modern business brings a whole new set of business challenges.
Impact of digital transformation on our lifestyles
It is interesting to note how this digital transformation and its uses have changed and caused many products and jobs to evolve. The use of screens that are at our disposal changes our expectations in all interactions. Daily use of mobile devices has structured the way we view information, the way we search, and the way we connect. Take the integrated GPS of your car for example. It must meet the same standards of access to information as your phone. Car manufacturers have understood this and our smartphones can now often connect to the car’s screens.
Take the example of companies’ facilitation of devices to work on. Within organizations, we have all seen the professional use of laptops evolve over the last few years. In the past, it was unthinkable for IT departments to accept the use of MacBooks. Today, they have become the norm. And even more so among development teams, where they were often reserved for graphic designers. The end-user has finally forced the company to accept its preferences.
Example of digital transformation in the automotive industry
Another example is the automotive industry. Car manufacturers are currently trying to get closer to Tesla’s technological model. Rather than focus on electric power being used as a driving force, they are mainly aiming to create vehicles as true technological platforms. These vehicles are driven by operating systems, like computers on wheels, rather than just a technology platform. The car’s whole platform, its software, updates itself as your computer does. It connects to the satellite network set up by the manufacturer for this purpose. As a result, the relationship between manufacturers and major tech players such as Google or Apple is becoming essential in the development of new vehicles. The user is king and their relationship with technologies will continue to make all products and their uses evolve.
What are key digital transformation challenges?
Digital transformation has four pillars that are changing business and allow organizations to:
- Put the customer at the center of their new products and services transformation processes
- Innovate and improve continuously
- Be more responsive
- Improve employee and talent engagement
Customer experience expectations
Thanks to new information technology, consumers are evolving within an ultra-connected world. They are better educated. Their expectations are increasing and are more and more segmented. This is why it is fundamental to create products that meet their specific expectations.
Putting the customer at the center, the example of distribution
The retail user experience is a very good example of successful implementation of digital strategies. With the boom in online sales, customer relations have evolved and created new uses. How do you offer a personalized and optimized digital experience to customers? Many retail companies have started to offer a hybrid experience. Their customers will be able to try products and order them online. Or vice versa, make price comparisons online and purchase their product of choice in store. The ‘Phytigal’ World is now a reality and will continue to change the shopping experience.
Such hybrid models are very clever. Companies can limit inventory and costs at distribution points by reducing payment and ordering infrastructures. All because everything can be done through the customer’s smartphone. New retail players often enter markets by only setting up a pop-up store and then relaying the experience on websites or mobile apps. This example illustrates how new players are able to disrupt your business strategy and push you to review it. The disruption of this digitalization process also allows you to evolve your traditional business strategy.
As you can see, it has become (even more) necessary to segment customers. They have strong demands when it comes to usage needs. But it is no longer possible to only consider these needs without taking into account their societal expectations. The right approach to digital transformations involves making these expectations an absolute priority.
Open innovation: a lever to drive digital transformation
Let’s dive a step deeper in one of the key aspects of digital transformation. How can you trigger it? Consider the following. Do companies study the impact of effective digital transformation on consumer expectations, when it comes to purchasing paths or communicating environmental information?
Open innovation is one of the answers to approach such challenges. And this approach indeed requires everyone to think outside their usual frameworks and reference points. It will instill ideas and reflections that can drive internal teams forward. It’s key to dedicate time to it. After all, many teams often focus too much on current objectives and don’t have the time to concentrate on the future.
It is interesting to note that some enterprise organizations give their employees time to work on this type of objective. They often enable it with intrapreneurship programs, to develop entirely new processes and products, or simply to investigate more disruptive subjects. Combining these internal programs with external resources is very rewarding. Companies are turning to such open innovation models to get their transformation journey underway.
Permanent internal and external innovation
We live in a world where the devices that connect us to our information sources renew on a yearly basis. Do they impose a rhythm for innovation? Not completely. But we can no longer imagine, for example, devices that would not change for the entire duration of your use of it. These new rhythms require companies to be more open, more reactive, and more agile. Things can no longer be based on the creation cycles of R&D teams. It is essential to continuously test and innovate.
To implement an efficient digital transformation plan, companies should create dedicated teams. These teams will work on projects for which it will be necessary to incubate and develop before quickly putting them on the market to adapt to users’ needs. This speed obviously requires internal agility and the ability to have organizations manage projects in tighter timeframes. But it is also an absolute necessity to look for external knowledge or technologies.
How an agile corporate culture drives digital transformation
While this may seem trivial, culture is undoubtedly the most difficult element of digital transformation management. Companies and the people around them often strongly identify with current products and technologies. Therefore, it’s no surprise that digital transformation initiatives often run into this first obstacle. After all, transformation requires companies to question existing products, distribution channels, and business lines. And as such, it questions some of the company’s intrinsic culture.
The example of the media
What the traditional media such as magazines and newspapers have experienced is quite indicative of the problem at hand. When the way you write articles changes in order to meet the standards of the web, more than just your job modifies. It also affects your relationship to syntax, potentially even to your culture.
Another impact of digital transformation is reflected in the revenue model. Previously, advertisers signed contracts by the number or by the year with these publishers. Today, the business model is based on digital platforms. The advertising space on your web pages will be sold in real-time on dedicated platforms. Advertisers will buy them on the basis of auctions that are also managed in real-time, sometimes in an automated way. With this evolution, the share of digital in total ad revenue in the US is estimated at 61% in 2022.
Mission and vision of the company
Reconsidering the company’s DNA can be part of the digital transformation journey. When setting up a transformation project, the definition of the mission and vision are all the more fundamental. We can observe, for example, that the vast majority of automotive groups adopt projects in which missions are articulated around mobility in the broad sense and less around the vehicle and driving itself.
This is the paradox of the digital revolution and what it imposes on corporate cultures. It brings productivity, and companies frame this process transformation to increase productivity. However, visible results are not immediate. This can lead to stereotyped behaviors or even forms of routine. Whereas digital transformation imposes short timeframes and constant questioning. This paradox of long and short timeframes has never been more prevalent.
Opening up your corporate culture
Let’s imagine the changes that media such as television channels have recently experienced. After having been revolutionized by online streaming companies like Netflix, Amazon Prime or Apple, they now compete with platforms like Twitch that add live interaction to the user experience. Internally, it is very difficult for them to evolve at this speed. Therefore, it is absolutely necessary to open up the company’s culture to seek out external knowledge and know-how.
Example: A disruption of the banking culture
The banking world has been hit hard by the effects of this need for digital transformation. Human contact was often valued but its cost became prohibitive in the face of the use of mobile technologies. The financial services sector is trying to follow this trend but they carry the historical weight of their branch networks. IT departments do not have the same agility as all the new entrants like Revolut, Qonto, or M26.
For many users, these new banks perfectly meet their needs. This is obviously a cultural and human issue, but also a strong managerial will to transform. In this respect, it is interesting to note that local contexts can also influence implementation decisions. Between 2010 and 2020, the number of bank branches in France decreased by 10%, while in the UK the number of branches has decreased by more than 50% over the last 7 years.
These digital transformation examples show how innovative products and services create new business models and business value. Another organizational department that faces challenges because of this is HR. They must support these transformations by training and coaching talent. This will enable them to grow within an increasingly agile company with fewer hierarchical levels.
Talent: How to recruit and train new talent?
It seems obvious. But in times like these, it is important to evaluate employees on their ability to adapt to changes. Certain skills are becoming essential. Think of adaptability, the ability to challenge oneself and to acquire knowledge throughout one’s career. But also, and more particularly, the mastery of all the technologies available and knowing how to use digital channels.
Talent management to support digital transformation
In this world, the ability to give meaning and a reason for being are increasingly important to attract new talent. They have the choice to turn to companies that have a positive impact on the future. Hence the need to support the goals of digital transformation efforts with talent management.
Certain skills are becoming essential, and mastering new technologies will be crucial. But, when you add sociological issues, such as the aging of Western economies, the talent shortage requires even more creativity from companies to attract and retain them. Thus, creating training paths and support through coaching and mentoring is essential. And yes, the emergence of talent is also a quality of managers. We need to allow them to think outside the box, not only by adopting methodologies such as agile but also by leading them down paths they may not have imagined.
Offer a space for exchange
These new talents that must be attracted need to express themselves, to share their ideas or concerns. That’s why companies need to put in place mechanisms to value employee engagement. This can be done through engagement barometers. However, it is also necessary to implement idea boxes that allow employees to share ideas and wishes. And to potentially work on them with their colleagues.
Having the capacity to allocate time to topics that emerge from the company’s employees, rather than solely defined by management, is a point of attention in an organization’s digital transformation strategy.
Anticipating the evolution of professions
To say that jobs directly related to many digital technologies are on the rise is an understatement. It’s not just about just engineers who develop new solutions. All related jobs, from project management to product marketing, will continue to be in the spotlight. There is talk of more than 600,000 additional jobs in the next 10 years. With +26% for IT engineering positions. This means at least as many additional functions such as digital marketing managers, digital product managers, or product owners. The supply chain sector alone increasingly changes because of transformation initiatives utilizing artificial intelligence and machine learning for optimization.
Identify your ambassadors
Finally, for any chief digital officer or other managers that contribute to full digital transformation success, it is essential to internally identify talents that will accompany you in this transformation. It’s a long road and it’s crucial to have relays. They can sometimes be deeply embedded in the organization, with unexpected profiles, more multi-skilled than specialized. Nevertheless, their ability to communicate, whatever their level, will be fundamental. They will be formidable ambassadors in your digital transformation project and an essential link for the relay of information but also for the implementation of changes and transformations.
The digital transformation team
The statement “alone we go fast and together we go further” has never been more true than in the digital transformation of your business. An organization’s digital transformation means the company must put in place an enterprise-wide digital transformation process that concerns all employees.
Revolutionize your organization
All companies must go beyond hierarchical structures and break down silos. This implies a reorganization or implementation of a dedicated project organization that does not respect the previous and pre-established organizations. Obviously, this will create some uproar. Often the difficulty in implementing transformation strategies is put off by the adaptation of individual contributors to new missions.
However, a much more important bottleneck can come from management structures. To succeed, it is necessary to identify who is on board and who is not. It is sometimes more difficult to detect a manager who says they are on board with change but who is not actually driving it. Sometimes it is easier to identify an individual contributor.
Management as a driver of digital transformation
Management must be a body that engages this movement, that must question the ‘Make or Buy’ issues. Very often when this is not the case, the people in place think that they can do everything by themselves. This is an issue. Especially in large groups where size can lead some to believe that they have a complete understanding of their environment. In reality, their ability to question and challenge themselves can be very weak.
The need to recruit external talent is crucial in order to change culture, structures, and approaches to subjects, but also to reduce hierarchical levels. Management must be an essential driver of transformation. It is a force whose energy must be utilized in order to succeed.
So it is quite clear, the corporate world and its business processes must evolve its working and collaboration methods. Thus, organizations must adopt a collaborative and transversal way of working thanks to the integration of digital technologies in their strategy. Then, HR must support managers in this change process. The global pandemic has accelerated the adoption of digital tools for information and communication by companies.
There is no shortage of examples of successful digital transformations. Implementing a digital transformation strategy is a real performance lever capable of changing the relationship with work and responding to the new uses induced by digitalization.