Embracing Four Types of Digital Transformation

The need for businesses to lean into digital technology has never been more critical. Regardless of industry, size, or offering, every organization must increasingly rely on digital technology to save costs, increase value, simplify processes, and maintain competitiveness.

Digital transformation is the process and strategy of using this technology to fundamentally alter how businesses operate and serve customers. We frequently begin by considering how processes can be transformed, and yet digital transformation comes in multiple flavors. Let’s dig into four of them.

Process Transformation

This type of digital transformation refers to using digital technologies to improve existing processes or create new ones. It’s often about automation, streamlining, and optimization to improve efficiency and productivity. For instance:

Automating manual processes: Many organizations use robotics to automate repetitive tasks, speeding up processes and freeing human workers for more complex tasks. An example is automating data entry in customer service or finance.

Improving decision-making with data: Businesses leverage big data and analytics to inform decision-making. For example, predictive analytics can be used to anticipate customer behaviors and adjust marketing strategies accordingly.

Enhancing communication and collaboration: Organizations use tools such as Slack, Microsoft Teams, and Google Workspace to streamline internal communication, making cooperation between departments and teams more efficient.

Business Model Transformation

This involves fundamentally changing the company’s value proposition or how it makes money, often driven by digital technologies. Examples include:

Moving to a subscription-based model: Software companies have largely moved from one-time license purchases to subscription models (Software as a Service, or SaaS), which provide ongoing revenue and improved customer retention.

Leveraging platforms and ecosystems: Companies like Uber and Airbnb have created platform-based business models connecting different user groups and taking a commission on each transaction. In Uber’s case, the user groups are riders and drivers; for Airbnb, they are hosts and guests.

Introducing digital products or services: Traditional businesses may introduce entirely new digital offerings. Consider that most print newspapers have introduced digital subscriptions and expanded into online content.

Domain Transformation

This refers to the expansion into new industries or markets using digital technologies. Examples include:

Tech companies moving into finance: Companies like Apple (with Apple Pay and Apple Card) and Google (with Google Wallet) have moved into the financial sector.

Streaming service providers entering media production: Streaming giants such as Netflix have become big players in content creation and distribution. They’re not just providing the pipelines for digital content anymore; they’re also creating it.

Retailers becoming tech companies: Amazon started as an online bookseller but has since expanded into cloud computing (Amazon Web Services), digital streaming (Amazon Prime Video), and more.

Cultural/Organizational Transformation

This involves changing the culture and structure of the organization to support digital innovation and dexterity. Examples include:

Adopting agile methodologies: Many companies are moving from traditional waterfall project management to agile methodologies, which emphasize speed, continuous delivery, and adaptability.

Promoting a culture of experimentation: Companies are now actively encouraging their employees to experiment and innovate. In this new attitude, failure is seen not as a setback but as a valuable source of learning.

Encouraging remote work: Digital technologies have made remote work more feasible. Companies are adopting flexible work policies to attract talent, improve work-life balance, and reduce overhead costs.

Conclusion

Businesses embracing digital transformation become more comfortable with change and are ready to abandon the inefficient processes that may have held them back. By welcoming opportunities to learn more about their inner workings and customers and putting that knowledge to work, they set themselves up to grow, thrive, and achieve success – directly contributing to their bottom line.

At Thurman Co., we help businesses manage projects to significantly impact their growth and success, and these projects often embrace aspects of digital transformation. When you’re ready to put your project in the hands of a trusted professional organization, contact us to learn more about working together.

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