Your business has been successful as-is for years. The processes you follow and the tools you use must be just fine, right? Yet, everywhere you go, you hear about companies undergoing a digital transformation. For many businesses, the prospect of digital transformation can seem daunting and maybe even irrelevant. After all, why try to fix what isn’t broken?
On the other hand, the innovator‘s dilemma and ignored opportunities are very real. Kodak invented the digital camera, but did not follow through until it was too late out of fear of cannibalizing its film business. Such businesses quickly find themselves behind the curve, losing customers to competitors who are more digitally adept and, as a result, more attuned to what their customers are looking for.
While standing still may feel safer, inaction is as powerful a choice as is change. If you are running a business - even a currently successful one - in 2017 and digital transformation is not a part of your big picture strategy, then you are closer to being obsolete than you are to growth.
The drivers of digital transformation
Like any commitment in life, you can‘t change until you accept you have a problem. The first step on a digital transformation journey is the understanding why you need to transform at all. The benefits of digital transformation are far reaching but we can boil it down to two key drivers:
- Improving your existing processes for user interactions (whether for customers or internal users), and
- Introducing new processes for interactions that you did not have (and, in the absence of digital transformation, could not have) before.
What shape those processes take varies widely, based on the organization and their industry. For example, an insurance provider undergoing digital transformation may be seeking a way to create a more data-enriched quoting process to produce better and faster quotes for customers.
Recognizing when the status quo isn’t good enough
Being an innovator is a double-edged sword: you build credibility as a leader among your peers, always at the forefront of your industry. However, that makes it easier to stop thinking about what comes next and how to get out in front of it. Blockbuster is a great example of this dilemma. For years, they dominated the home video rental market because they were the market. However, they failed to catch the wave of streaming content that Netflix has been riding so successfully. Look where both of those companies are today.
So, how do you know when it is time to re-evaluate?
- Look at growth patterns. If you aren‘t growing, the answer is obvious. If you are growing, investigate the source of that growth. Is it a legacy or non-digital solution? Could you grow differently, faster, or for a different market?
- Analyze cost. Where are you spending the most to run your business? Are those processes as modernized as they could be? What ways could digital transform those costs to find efficiencies, reduce redundancies, and improve operations?
- Take the crystal ball test. Ask yourself and your team where they see the company/market five years from now. Write some science fiction, vision-casting trends, and then look at yourself on that trajectory.
- Take the Facebook test. Are your customers experiencing better interactions on Facebook than from your brand? Consider your own daily interactions with your devices, and with brands outside of your industry. Where do you line up?
- Set an aspirational benchmark. Imagine your company were to be run like Google or Amazon (even if it feels completely unrelated). Do a thought exercise and jot down what it would look like. Benchmark that, and compare - how close does your company today resemble that benchmark?
We once heard a CEO describe the shifted commitment perfectly by saying he was now “emotionally ready” to make the jump to digital transformation, even though he had logically and mathematically settled on it being the course of action some time ago. Overcoming the sense of risk aversion that comes from past success is undoubtedly a tall hurdle to clear, and it is crucial that CEOs and other leaders are able to convince themselves of the value of digital transformation before trying to bring their whole company onboard.
The longer you wait to take that next step, the more ground you cede to your competitors, the more likely you are to fall behind the industry curve. Customers already have high expectations for their digital experiences with your brand. Falling short of those expectations because you still have not adopted a digital transformation mindset into your model can be what determines whether you are the next Netflix or the next Blockbuster.
As daunting as digital transformation can look, mastering it is essential for any business that wants to remain competitive, especially in a marketplace where customer experience is becoming the differentiator. To learn more, watch our recorded webinar with Forbes Insights, “Digital transformation: Using data-driven insights for exceptional customer engagement.”