What is digital transformation?
transformation is the integration of digital technologies across the entire
organization to create a fundamental change in the way the business operates. It is a chance to define new ways
of working, optimize processes, introduce new business models, and reimagine
the customer experience. For digital transformations to be successful, they
require a shift in organizational culture. Employees should be empowered to
develop fresh ways of solving problems and given the freedom to allow innovation
When successful, digital transformation has the power to significantly
increase efficiency, reduce costs, enhance customer experience, and create a
sustainable competitive advantage. Businesses can also take advantage of
opportunities that exist in the market with the creation of new business models
and through digital disruption.
companies have achieved successful digital transformations?
Digital transformation can be a
complex process, but if done well, it can give companies a huge advantage over
their competition. Take these transformation initiatives for example:
Keller Williams (KW) is the world’s largest real estate
franchise. The company’s sales results and the number of units sold make it the
no. 1 real estate franchise in the USA. Keller Williams’ digital transformation
journey started in 2015. That was when KW decided to build proprietary software
on their own, which diminished the need of depending on third-party solutions.
As a result of this decision, an innovation hub – KW Labs – was launched in
2017. It was dedicated to transforming Keller Williams into a tech company.
KW owns a huge collection of data
and the company uses it to help agents all around the world make informed
decisions by empowering them with AI-powered apps like a virtual assistant (a
Siri for real estate agents), CRM system, or brilliant property search engine.
These solutions support agents in their daily work and enable them to do their
job the best they can by providing hyper-local market analysis, suggesting
right offer parameters, or estimating the probability of closing a deal.
Unilever is one of the biggest providers of household
goods and groceries has 2.5 billion daily customers. Unilever employs 161,000
people, runs 300 factories in 190 different countries, and owns 400-plus
household brands. Their digital transformation started when the company
realized their customers become more and more tech-savvy, and they expected the
brand to meet their expectations by moving presence, attention, and
communication into digitized channels.
Unilever decided to build data
analytics infrastructure and an advanced platform to facilitate communication
with its consumers and make it easier to build connections and relationships by
conversations. To make sure this process was effective and efficient, the
company needed to gather a vast collection of data – in 2019 it amassed 900
million individual consumer records, up from 200 million the year before.
Then, Unilever leveraged machine
learning technologies to segment consumers based on their preferences and use
programmatic, data-driven marketing to target them with a relevant message in
The Home Depot – In 2017, the largest home improvement
retailer in the United States committed to a bold digital transformation
strategy. It planned to optimize its in-store and online shopping experiences,
creating a seamless experience for customers across all channels. The company
employed 1,000 new IT professionals to complete the transformation and
leveraged data analytics to gain greater customer insights.
In two years, Home Depot’s revenue
grew by over $17 billion, and the company was able to make cost savings by
analyzing local trends and optimizing inventory levels.
Microsoft – Increasingly aware of the competitive
pressure from its rivals, Apple and Amazon, Microsoft transformed its business
from the ground up. The company implemented a customized data analytics
solution, Microsoft Sales Experience (MSX), to help sales representatives
calculate the probability of winning or losing an account. This allowed
employees to tailor their offers more effectively and focus on the most
promising accounts. The data from MSX was also integrated with the company’s
CRM system, providing insights to departments across the business.
Nike – When the sports giant felt it was losing its competitive edge,
Nike implemented a range of transformation initiatives. The company made
changes to enhance its supply chain, improve its brand, understand its
customers better, and strengthen its company culture. Data analytics provided
the insights that led to the opening of concept stores, improvement in customer
experience, and the creation of more membership opportunities. In two years,
Nike’s stock price had risen from $52 to $88. Over the same period, the
company’s revenue increased from $33.5 billion to $39.1 billion.
Where should you
start with digital transformation?
Developing a digital transformation strategy is a
vital and basic step to take before any decisions can be turned into reality. However, business leaders may find
it difficult to know what to focus on.
To create an effective digital
transformation strategy, a company needs to find answers to the essential
questions of Why, What, and Who. That’s what enables creating a
compelling vision and plan for change.
As McKinsey’s data indicates, a
well-planned digital strategy and a good change story make transformation
efforts more than three times as likely to be successful. Illustrating the
vision helps present three most frequent reasons for a digital transformation
failure: failing at employee engagement, having too many priorities, and losing
- The Why presents all reasons in
favor of digital transformation and reveals the stakes – is it an
opportunity to grow and develop the business or a threat looming over its
- The What gives the object of
change a clear meaning – digital is full of buzzwords or terms like
machine learning, AI, robotics, cloud, or mobile, which, in reality, are
understandable only to a few. What’s crucial for getting an
organization-wide buy-in is relating to the everyday employee experience
and presenting how it can be improved by digital solutions.
- The Who means decision-makers
responsible for driving the effort and having the authority to make quick
decisions as strong leadership. Answering this question is the key to the
success of a digital transformation.
A digital transformation strategy
should also answer the questions of Where, When, How, and
How Much. This
should be done at the execution level, creating a plan for successful
- The Where focuses on business areas
the change will impact the most – is it several separate experiments or a
single company-spanning project? Where should the need for cooperation
across silos of departments and suppliers be emphasized the most?
- The When sets the timeline of
planned changes – it indicates when results should become visible and
aligns the transformation with business objectives and goals.
- The How describes the way the
change will be delivered and implemented. This answer should cover a
number of aspects – from technology and methodology to covering skill gaps
and adapting culture. The right answer to the How should address employees' fears and
explain any doubts.
- The How Much covers the extent of costs the
company is willing to bear. It means not only financial expenses but also
the inconvenience people will need to live with until the change settles
in and new ways become business as usual.
Developing a digital transformation
strategy is an exercise in bridge-building. The authors of change should know
how to “sell” this vision internally and present the desired outcomes honestly,
but also in a positive light.
The story for change links the
current state with the desired long-term vision of the company – it also
connects the current employees’ fears with their ambition.
Does your company
need digital transformation services?
The answer to this question depends
on whether you have the necessary skills, expertise, and experience in-house.
If not, engaging a digital transformation partner is a valuable investment in
the success of your project. A good partner will be able to provide support in
- Finding opportunities within
your organization and market, and developing a digital transformation
strategy to exploit them. This will be based around the individual needs
and goals of your business.
- Implementing new technologies
to automate and streamline manual processes.
- Building bespoke software
products that enable digital disruption through new business models and
the opportunity to reimagine processes.
- Identifying and promoting the
cultural changes needed to embed and sustain new ways of working.
Partnering with experts who have
successfully facilitated numerous digital transformations can add immeasurable
value to your transformation initiatives.