What Is Digital Transformation?

Digital Transformation is a way to integrate digital technologies into an organization’s strategy and operations. The entire organization focuses on opportunities to merge the best of both digital and physical worlds. In the process, Digital Transformations examine innovations and new technologies that can create superior customer experiences and bolster the base business. The aim is to profoundly extend competitive advantages and accelerate profitable growth.

How Are Digital Transformations Implemented?

Digital Transformations require that managers change not only the mix of businesses but also the capabilities of people in and around those businesses. The following actions help to maximize the chances that a Digital Transformation will succeed:

• Set the digital strategy: Understand the degree of digitization in the current environment, assess future opportunities that will shape the industry, and determine where the business should be going.
• Determine the business model and roadmap: Develop a vision for how to engage customers and address their needs in a better, faster, cheaper, more sustainable way by using digital technology. Design a plan to tap the best sources of value from digitization, and to deliver the best seamless customer experience while increasing operational efficiency.
• Mobilize and enable the organization to win. Ensure the digital transformation is supported by state-of-the-art technology infrastructures and data analytics capabilities. Develop appropriate operating models to execute the digital strategy and build digital-savvy leadership and talent.
• Orchestrate the change: Set and align the organization around the new vision and cultivate understanding of the change. Break initiatives into component parts and create agile teams that take charge of change at the front line and move quickly from pilots to a fully scaled deployment. Embed governance and metrics to guide, measure, and track progress and resulting value along the way. Ensure effective investment cases and funding for digital changes both internally and externally.

Related Topics

• Digital Disruption

• Enterprise Technology

• Advanced Analytics

• Innovation

 

What Are Common Uses of Digital Transformations?

Digital Transformations engage every function in the organization and create value across all business dimensions. Transformations can reduce the cost of products and operations, bring innovations to market quicker, enhance capabilities and reliability, and accelerate growth. Digital technologies can reinvent each element of customer experience, including:

• New product and service development
• Marketing personalization to help customers discover and evaluate company offerings
• Product and service customization
• Purchasing processes
• Supply chain and fulfillment networks
• Product usage and service models
• Return and upgrade processes
• Product review and feedback systems

• Selected references (click to expand)

  An, Jace. 77 Building Blocks of Digital Transformation: The Digital Capability Model. Story Tree FDC, 2019.

  Bonnet, Didier. 3 Stages of a Successful Digital Transformation. Harvard Business Review, September 2022.

  Bonnet, Didier, and George Westerman. “The New Elements of Digital Transformation.” MIT Sloan Management Review. November 2019.

  Brown, Sara. "10 Capabilities to Accelerate Digital Transformation," MIT Sloan School of Management, November 2022.

  Cane, Gerald C. The Technology Fallacy: How People Are the Real Key to Digital Transformation. The MIT Press, 2019.

  Chamorro-Premuzic, Tomas. The Essential Components of Digital Transformation. Harvard Business Review, November 2021.

  Diamandis, Peter H., and Steven Kotler. The Future Is Faster Than You Think: How Converging Technologies Are Transforming Business, Industries, and Our Lives. Simon & Schuster, 2020.

  McGrath, Rita Gunther, and Ryan McManus. “Discovery-Driven Digital Transformation.” Harvard Business Review, May/June 2020.

  Neeley, Tsedal, and Paul Leonardi. Developing a Digital Mindset. Harvard Business Review, May/June 2022.

  Rigby, Darrell K. “Digital-Physical Mashups.” Harvard Business Review, September 2014.

  Saldanha, Tony. Why Digital Transformations Fail: The Surprising Disciplines of How to Take Off and Stay Ahead. Berrett-Koehler Publishers, 2019.

  Siebel, Thomas M. Digital Transformation: Survive and Thrive in an Era of Mass Extinction. RosettaBooks, 2019.

  Westerman, George. The Questions Leaders Should Ask in the New Era of Digital Transformation. MIT Sloan Management Review, March 2022.

  Woerner Stephanie L., Peter Weill, and Ina M. Sebastian. Is Your Company Seizing its Digital Value? Harvard Business Review, October 2022.

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