Since early 2020, organizations and industries have been dealt with a Hobson’s choice (a free choice where only one thing is offered). They had to embrace digital as overnight transactions and interactions went online.
Most executives concur that their companies experienced accelerated digitization of their internal operations and customer and supply-chain interactions by two to four years. As the uncertainty reduces, new growth is a business imperative two years on. An HBR study classifies four distinct approaches for companies to roar out of recession – prevention, promotion, pragmatic, and progressive. Regardless of the response organizations chose for the slowdown, their future rebound can be rebooted through digital transformation. Here are five reasons – urgent and essential.
- Clear trends that reflect digital maturity: Most companies across sectors list customer-facing initiatives (for instance, digital marketing) among their top goals. This is a perspective C-Suite leaders have nurtured over months now, primarily because they believe digital technologies are fundamentally disruptive to their (or their competitors’) business models. The behavior can be seen in two pieces of evidence: More business functions (rather than CIO or CTO organizations) are sponsoring transformation budgets, and secondly, the rapid appointments of Chief Digital Officers. Finally, there is the associated mindset shift – Digital transformations today are more about revenue generation and increasing customer intimacy than the traditional focus on cost-cutting. For example, Frito-Lay ramped its digital and data-driven programs during the pandemic, fast-tracking five years of digital plans into six months.
- Correlation between digital transformation and revenue growth: An influential survey of 1400 companies worldwide elaborates on how digital influences financials. Companies that report 70% completion also show twice the revenue growth compared to ones just getting started. Led by firms in Healthcare, Aerospace, Financial institutions, High Tech., and Communications, companies across North and Latin America are ahead of the rest of the world. Another layer of insights can be gleaned from the top three motivations: increasing market share and accelerating speed to market, improving brand reputation, and boosting employee retention and productivity. When it comes to departments closer to transformation journeys, the order works out as IT, Marketing & Sales, Product and Services Innovation, Customer service, and Operations.
- Digital is the new way of responding to customers: More than thinking of it as implementing technology, digital transformation should be seen as a response to how technology changes the business landscape amid the shifting customer expectations. Consider how the innovators – Amazon and Netflix, for instance – seized the megatrends on the horizon (mobiles, social media, IoT, and cloud computing) to reinvent business models (eCommerce and electronic delivery) and optimize processes (supply chain and new features). Admittedly, digital transformations dare to go where no one else does. From automating processes to creating a disruption-moat, or even enabling friction-less access to new features – digital – after all, is an organization’s way to catch up to the ever-escalating customer expectations.
- Workforce Virtualization: As hybrid models and work from home (or anywhere) become a permanent option across companies, not to talk of ‘the great resignation,’ companies have to rely urgently on digital capabilities to select, hire, train, and manage talent. Most sectors tread carefully as their economic recovery models primarily depend on how quickly remote working can be scaled, made more seamless, and replicate the face-to-face texture essential to collaboration and innovation. With virtual learning, businesses contend with an overnight shift – a ‘great digital divide.’ 76% of workers, as per a global report, do not feel ready to perform in a digital-first world. Most gaps showed up in preparedness, access to learning resources, skill levels, and training participation. Organizations are girding up significant digital learning investments to close this hole, which will only grow if left unattended.
- Every company must become a technology company: The COVID-19 has undoubtedly been a great leveler. Countries across borders have been affected equally, but the eye-opening lessons are also being felt with equal force. One insight that stares right back at the business community is that, regardless of a company’s distinctive products, services, or operations, every one of them must think (and behave) like a technology company. The reasons are not far to find. Evaluating various companies across industries on basic performance parameters (like creating new revenue streams, improving existing streams, and reducing costs) highlights the considerable edge technology brings through automation, scale, agility, and flexibility. So, be it digitizing end-user experience, modernizing IT infrastructure, scaling data and analytics, or redesigning the delivery model, companies can learn from the number one rule in the tech playbook: A tech-forward business strategy must integrate business and technology management across strategy and execution.
The final analysis that digital transformations are a lever to a robust economic recovery is not in doubt. The focus, therefore, has to be on an approach that combines leadership commitment up top to a clear, integrated strategy built on a business-led tech. And data platform