Why are companies like Nike, Ikea, or Netflix still leading in their fields even after decades? I’ll give it to you straight up: Transformation. These brands changed pace with their market and the world until they were the ones making the change.
However, there are many types of transformation. The one I’m going to talk about in this blog is something that’s in pace with the digital world we live in right now. It’s something that’s ultimately necessary for today’s businesses but is widely misunderstood: Digital Transformation.
If you have five minutes right now, I suggest you keep reading. This could be your business’ first step toward Digital Transformation. Your “make or break” window.
What is Digital Transformation?
Gong summarised Digital Transformation as:
“A fundamental change process, enabled by the innovative use of digital technologies accompanied by the strategic leverage of key resources and capabilities, aiming to radically improve an entity and redefine its value proposition for its stakeholders.”
The entity that Gong is referring to can be an organisation, a business network, an industry, or a society. It can be your business.
Transformation in “digital transformation” stands for the fundamental change of a whole new form, function, or structure. This change comes with the adoption of digital technologies that create new value. Digital transformation may disrupt your business’s current processes. But after that disruption comes more efficient and faster processes, so your growth can be exponential. On top of that, you can create new value for your business. Digital technology can be your leverage in this rapidly changing world.
What’s the right digital transformation direction for your business?
No two businesses are exactly alike. It goes without saying that digital transformation for your business is going to be unique as well. According to Anthony (2016), there are three directions for your business’s digital transformation journey. You get to choose where you’re headed. You can choose from the three leading digital transformation directions and follow along while making the changes uniquely suited for your business.
1. Better, faster, or cheaper
The first category focuses on doing what you currently do but doing it better, faster, or cheaper through digital technology. In his article, Anthony claims that many companies “going digital” fit in this category — they are using new technologies to solve old problems. That’s normally how you start if you are not a high-tech startup or an IT-based business.
Nike was mentioned at the start of this article. True to their slogan “Just do it”, Nike really just did it. In 2017, Nike cut their distribution partners from 30,000+ to just 40. Now, that’s some drastic change. In place of the thousands of distribution partners stood Nike Live, retail stores with a personalised feel at the front and a data collection machine in its essence. Learn more about Nike’s Digital transformation. here.
2. Change the way you do things.
The next is called core transformation, which focuses on your business’ operating model. In simple terms, this is doing what you are currently doing but fundamentally different. If what you’re looking for is completely changing the way your business operates based on new technologies, this is where you may stand.
An excellent example of a brand that went in this direction is Ikea. The times called for their digital transformation. Ikea did well to heed the call. The pandemic significantly influenced this, which is why e-commerce became a big hit. People preferred the convenience of buying things online and then having them delivered right to their door compared to going to stores and enduring the long queue to pay. So, Ikea combined its in-store and e-commerce strengths to create an exceptional customer experience.
Thomas Stackpole from Business Harvard Review spoke with Ikea’s Barbara Martin Coppola so we can understand better how digital transformation worked for Ikea. You can read about the interview here.
3. Change your core
The final usage with the most promise and peril is the strategic direction. Strategic transformation changes a company’s competitive set. It involves changing the very essence of a company. The proposed solution will be crucial in the competitive set. To succeed, you will also need to run this strategic transformation consistently in the long run.
Only a few people know that Netflix used to be a video-renting company. They used to be one of those businesses where you call their store, see if the movie you want to see is available, and then have it delivered to you via mail. If Netflix stayed as a mail-order video renting company, there wouldn’t be “Netflix and chill”. There would be “video-streaming-company-but-not-Netflix and chill”. The point is that the market will change, people’s preferences will change, and the businesses that change with it are those that will thrive. If Netflix didn’t change, some other video streaming platform would be in its place.
You can read more about Netflix’s digital transformation here.
Parting Words
Digital business plays a significant role in the current era. Solis introduced his article ‘Digital Darwinism’ in 2014, stating that:
“a company without any digital strategy has no future strategy and risks its existence”.
One could argue that in 2022, digital transformation should be part of every traditional business strategy. That’s how you stay ahead of your competition. Because with digital transformation, you can solve tomorrow’s problems today.
