Your digital business strategy aims to transform the business. It looks for ways to revamp the business by identifying what technologies to embrace, what processes to automate, and what new business models to create.
It also aims to unify digital possibilities with your customer experiences and involves cross-functional participation from senior management from the different areas of the organization.
Researchers maintain that digital transformation is all about becoming a “digital business” – an organization that performs more than 66% of all work activities via executable code.
As organizations step closer to this optimal state, new avenues are opened to identify advances to promote growth, enhance customer experiences, secure sustainability, drive operational efficiencies, and unearth potential future business ventures.
Digital transformation changes the management style of an organization.
Leadership occurs at every level, not just the top; strategy is dynamic, interactive, value creating; innovation enhances existing businesses and creates new businesses.
Sales is about making a difference for customers and users; HR is about attracting and enabling talent; operations is about exceeding expected outcomes at lower cost; budget is driven by strategy; compensation is becoming more based on value created.
Ultimately, a digital transformation has two purposes.
A digital transformation has two overarching goals. Firstly, providing superior digital experiences. Secondly, ensuring enterprise value by cushioning it from risks that could erode its future cash flows.
Transforming the way an organization functions digitally is key to achieving these outcomes.
It is irrefutable that COVID-19 has changed livelihoods, businesses, and the economy.
During the pandemic, digital tools have acted as a lifeline, helping businesses and economies survive, and in the process, have also acted as a catalyst for digital transformation.
Microsoft CEO Satya Nadella famously remarked in April 2020 that we were seeing several years’ worth of digital transformation in a few months as societies around the world scrambled to adapt to the changes forced upon them by the Covid pandemic.
Organizations continue to safeguard business continuity and financial recovery, but in the long run, recovery won’t be enough.
According to Deloitte, 85% of CEOs that accelerated digital initiatives during the pandemic cannot articulate their overall strategy and progress.
Although the world has suffered from pandemics and recessions in the past, this time around we are presented with two first-time challenges no one has faced before.
We must find ways to recover from the COVID-19 recession, all while competing in a digital economy.
Pre-pandemic, a digital transformation was primarily focused around improving customer experiences.
Today, we are facing a paradigm shift where we capture the priorities and strategies for a digital transformation.
As the world grows increasingly uncertain, organizations must continue to focus on improving customer experience while simultaneously protecting their enterprise value.
What we are facing today is a paradigm shift transforming how we work, live, and relate to one another. The digital economy refers to a concept in which all economic activity is facilitated or managed through digital technologies, data, infrastructure, services, and products (OECD, 2020).
In order to succeed in the digital world, companies must be able differentiate themselves through technology. This requires having strong capabilities, culture, and infrastructure; something that can be difficult to achieve organically on a large scale.
Since digital transformation is an effort to transform how you deliver value today, it is essential to understand the different value-generating activities that deliver an outcome for and from your customers.
We do this by looking at value streams –which refer to the specific set of activities an industry player undertakes to create and capture value for and from the end consumer.
Our approach helps you to digitally transform those value streams that generate the most value for your organization.
Equally important is to understand a value chain.
A value chain is a ”string” of processes within a company that interrelates and works together to meet market demand.
Examining the value chain of a company will reveal how it achieves a competitive advantage.
Value streams and value chains connect business goals to the organization’s value realization activities. They enable an organization to create and capture value in the marketplace by engaging in a set of interconnected activities.
Those activities are dependent on the specific industry segment an organization operates within.
You can start deconstructing and reconstructing value chains, which is at the core of digital transformation, with these steps to help determine how your organization creates value, as well as prioritize value chains for innovation:
Plan how to deliver value. Working back from the moment value is realized by the customer, consider the sequential steps required to impart value in your industry segment.
Define and validate the organization’s value stream. Write a short description of the value stream that includes a statement about the value provided and a clear start and end for the value stream.
Prioritize the value streams based on an evaluation criterion that reflects business and human value generators to the organization.
Identify value chains that are associated with each value stream. The value chain also captures a particular stakeholder that benefits from the value chain.
Evaluate the individual processes within the value chain and identify areas for transformation. Assess the value chain processes based on the level of pain or exposure to risk experienced by a stakeholder to accomplish that task and the financial impact that process has on the organization.
UniAspect Digital can identify and prioritize the opportunities available to you and examine value chain impacts.
The value chain perspective shall allow your organization to identify how to best minimize or enhance impacts and generate value.
And as we move from opportunity to impact, UniAspect Digital can break down contingencies into relevant pieces so you can see a holistic picture of the sources of differentiation.
According to McKinsey & Company survey, if a company wants to set itself apart with improved customer engagement and innovation, it first needs to invest in certain key technological capabilities—which the top economic performers are already doing.
The results of this survey indicate that top performers are more aggressive than their peers in adopting automated processes to test and deploy new tech, as well as agile and DevOps practices that enable faster innovation and execution while keeping costs down.
Top performers are also significantly ahead of their peers in the adoption of the public cloud, which helps them become more agile, more efficient, and better able to maximize the value they get from other digital investments.
According to McKinsey, top performers are doing more than just investing in proprietary tools.
They are developing their own high-performing software, and they build common components into their software that is shared across an internal platform.
Interestingly, nearly 70% of the top economic performers, compared with just half of their peers, plan to use their own software to differentiate.
Successful digital transformations have always been difficult to achieve. The challenge has only become more pressing in the last two years as companies have accelerated their adoption and strategic use of digital technologies.
Now organizations are under even more pressure to make consequential business decisions quickly, often in areas where they have no previous experience with digital technology or transformation.
Leaders should adopt a holistic approach to transition from traditional methods to digital disruptors. It requires knowledge, data analysis, and agile teams to make the leap and be future-ready!