So, you’ve digitized all your paperwork, you’ve migrated your file storage to the cloud, there’s more computing power in your office than is needed to count all the atoms in the universe and play a decent game of chess on the side and the only paper that’s ever seen on a desk is a Starbucks napkin… you, if anyone, are fully digitally transformed, right?
Sorry, wrong. What you have done is digitized your workplace, but that’s not the same as digitally transforming it. This is not just a question of semantics, although there is much dispute over the term digital transformation, its meaning and even whether it is worth using, but there is general agreement that it means far more than simply converting your historical processes to work with the latest technology.
The clue is in the name, digital transformation. It involves transforming your business from the ground up, not just adopting new technology but adapting to it and developing new ideas, new ways of working, and new commercial offerings on the basis of what it can do for you. A useful example of digital transformation is the ride-hailing service Uber. Many cab companies will have digitized, giving drivers mobile phones and satnavs, computerizing their booking systems, bringing in new digital telephone exchanges, etc., but Uber digitally transformed, taking the whole business paradigm and reinventing it from the ground up with the now ubiquitous ride-hailing app, the direct link between the consumer and nearby drivers, the automatic billing system and so forth. Whatever one thinks of their business practices, there is no denying that by digitally transforming Uber has utterly revolutionized the private hire car industry and currently enjoys a $12 billion a year turnover. It is worth noting, though, that for all this market dominance, the company has yet to make a profit; a salutary lesson for those who overinvest in technology for digital transformation, perhaps. Other examples of companies that have successfully digitally transformed are Amazon, iTunes, and Spotify.
It must be remembered that digital transformation is not something you can just fit and forget. It must be an ongoing process and the most successful companies will have dedicated teams continually monitoring technological developments and considering how they can be leveraged for the benefit of their company. Flexibility is key in this process; if something is not working, it has to be swiftly and ruthlessly excised from the system and replaced with something that does.
Company structures have to change with digital transformation as well; the IT department, once seen as the province of the type of geeks found on The IT Crowd, is increasingly becoming a central driver of company culture and company profits. The post of Chief Information Officer is starting to rival Chief Executive Officer as the most important post in a company. It’s not enough simply to throw money at digital transformation (although estimates are that by 2022 an astonishing $2 trillion will be spent globally on digital transformation each year); training, consumer relationships, human resources policies, perhaps even the physical location of your offices will have to be transformed as well.
As mentioned above, digital transformation is not simply a bolt on, fit and forget solution; it has to be built into the foundations of every area of your business. Increasingly, in the future, those who simply digitize may or may not survive, but only those who digitally transform will thrive.
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