Digital transformation has been the talk of the past decade, but the desire to merge digital and physical processes with the customer experience has never been stronger. Depending on the industry and business, the type of digital transformation can vary, but the overall goal is to drive disruptive changes in your company's go-to-market strategy.
Digital transformation shouldn’t be the same for every company, and seeing it as a one-size-fits-all process can be overwhelming. There are four main types of digital transformation that organizations should consider to leverage their own transformation strategy. It’s important to realize that digital transformation doesn’t have to be a single black-and-white destination in the form of a product or service, but it does require a long-term commitment and can evolve along the way.
1. Business Model Transformation
The business model transformation aims to fundamentally change the way companies deliver value to customers. For example, Netflix made the transition from sending DVDs to streaming, while Blockbuster was unable to make the transition, which ultimately led to the latter company's fate. Technology OEMs are also shifting from sales and support models to XaaS, where "X" can be hardware, storage, or applications.
Technology companies can reframe their go-to-market strategies and support their customers' digital transformation efforts with the flexibility to choose the technology that best meets their needs. Through their buying patterns, customers often signal their readiness for different types of relationships.
2. Process Transformation
Companies can modify internal processes to reduce costs, improve quality, and reduce cycle time. Adopting cloud connectivity helps link different processes and locations. For example, implementing process automation with robots can replace the manual tasks found in purchasing, supply chain management, and other administrative functions. Modernize your logistics and supply chain network by digitizing these processes and integrating machine learning and artificial intelligence to recognize and shape data patterns into actionable insights.
3. Domain Transformation
Organizations often use new technologies to redefine their products and services. They can expand existing services to a new customer base or develop entirely new technology support services. For example, offering equipment on a lease instead of simply buying it allows you to reach previously underserved customer segments that may only need your technology temporarily.
As another example, companies selling industrial equipment can grow by providing digital solutions to their existing customer base and other equipment users. CNH Industrial, a manufacturer of commercial, construction, and agricultural equipment, has developed its own network of fleet telecommunications technologies to help owners streamline operations and maintenance processes and connects them to the company's dealer network for service delivery.
4. Cultural/Organizational Transformation
Adopting a digital-first culture allows organizations to adopt agile workflows, develop a propensity to experiment and learn, and support decentralized decision-making. However, a successful transition to a digital-first culture requires redefining mindsets and processes and incorporating new talent and skills.
A common mindset shift is a shift from production management to a focus on customer service and innovation. Culture change often happens organically in other transformation initiatives as internal teams embrace digital workflows and realize the power of changing organizational norms.
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