Digital transformation can help you to become a market leader and boost your revenue – but you should know how to avoid common pitfalls. Read this article to learn how to avoid the biggest risks connected with digital transformation.
Digital transformation has become one of the main business buzzwords. When properly executed, it might help your company to improve internal processes, expand its customer base and maximize revenue. But you should know how to avoid risks that are connected with integrating new technologies into your workflows. From this article, you’ll learn about the essence of digital transformation and the common pitfalls that businesses face when undergoing it.
The Essence of Digital Transformation
In the 20th century, most business processes took place offline. Professionals had to handle documents manually. Now, such technologies as Wi-Fi, mobile apps, AI and cloud computing can accelerate workflows and increase their efficiency. When organizations integrate such technologies in their routines, they undergo digital transformation.
Companies that make good money and are considered leaders in their respective segments might neglect the necessity of digital transformation. Such an approach might turn out to be detrimental in the long run. As soon as competitors manage to integrate the newest technologies, yesterday’s leaders might start losing profit and clients.
You should never let your business model become obsolete. And you shouldn’t perceive digital transformation as a one-off update. For instance, developing an ecommerce website from scratch is just one step of the large process — but not the full scope of the digital transformation. You should continuously analyze new technologies that are relevant for your industry and think of which of them you might consider adopting.
The sooner a business adopts new technologies, the greater competitive edge it gets over its rivals. Early adopters can disrupt entire markets, become industry leaders and dramatically increase their revenues.
The Most Well-Known Examples of Digital Transformation
In the 1990s, people used to purchase books in offline stores. Then, Amazon entered the market. Soon, it began to sell not only books online but many other categories of goods. For over 25 years, this brand has been digitally disrupting the retail sector. None of its competitors has managed to outperform it. Some businesses that have borrowed some of Amazon’s practices made good money on it.
Another excellent example of digital transformation is Uber. It was the first company that built a taxi service centered around a mobile app. Some of its competitors followed suit, others stuck to their oldschool business methods and incurred losses.
Digital transformation can take place in nearly any industry. You don’t need to run a global or international business to be able to benefit from it.
The Main Risks of Digital Transformation
Even though most companies improve their productivity and boost their revenues thanks to digital transformation, some business owners might complain that they failed to get any positive results. Let’s analyze the most common reasons why this might happen.
Firstly, it’s not enough to simply invest in cutting-edge technology. Before you integrate AI or cloud computing into your workflows, you should think of why you need it. How exactly are you planning to use these technologies? Which problems can they help you to solve and which goals to meet? Which KPIs can you increase thanks to them? Digital transformation requires thorough planning and meticulous calculation.
Secondly, you should identify which values digital transformation can bring to your customers. Will you make their lives easier thanks to introducing new technologies? Or will the process of ordering and using your products become more complicated? Your clients should benefit from digital transformation just as much as your team members.
Thirdly, you should have a production deployment skill set. You might need to adapt your organization’s structure to the demands of new technologies. Here are a few examples of what you might want to do:
- Have a Chief Digital Officer in place
- Create an innovation team or an innovation fund
- Hold design sprints, hackathons and other innovation-focused activities
Innovation often requires rapid iterative testing. You should be ready to deliver minimum viable products, test or pilot them with internal or external stakeholders and rapidly improve them as you deploy to progressively larger sets of users.
Fourthly, you should make sure that all your team members support digital transformation and share an identical vision of it. For instance, you should all agree on the fact that you’ll need to resort to third-party solutions from time to time to achieve your goals. Also, you should collectively prioritize your goals and values and work collaboratively in the same direction. Startup teams often find it easier to adapt to digital transformation because they have great mutual understanding from the onset. Other types of businesses might need to hold meetings to explain the significance of digital transformation to all employees.
Last but not least, you should find mentors. If you try to trailblaze without any counselors and supervisors, you risk wasting too many resources. You need a high-level strategic perspective that your team members would hardly be able to provide. These are a few examples of aspects that mentors can help you with:
- Recognizing patterns
- Borrowing the best practices of other companies from your industry
- Identifying and avoiding potential obstacles
- Make business-transforming introductions
- Providing coaching to navigate the slog of iteration
You might want to either create a board of advisors or outsource each mentor individually.
Your business might fail to benefit from digital transformation if you integrate it simply for the sake of keeping up with the times, lack a production deployment skill set, don’t invite mentors and don’t explain the importance of the transformation to your team. If you avoid these common pitfalls, the advantages of adopting new technologies should far outweigh any potential risks.
Hopefully, this article came in handy and now you better understand the advantages and risks of digital transformation. When integrating new technologies into your workflows, you should think of why you need them and how both your team members and customers can benefit from them. You should consider digital transformation as an ongoing process and not a short-term effort. If you think carefully over each step, the integration of last-gen technologies should have a highly positive impact on your business.