What is Digital Transformation?
Thanks to the way many technology marketing outfits look to hijack the latest tech trends regardless of whether those trends apply to their wares or not, the meaning of “digital transformation” has become perverted to the point that it means everything to everyone (which often results in it meaning nothing to anyone). However, digital transformation is an important big-picture objective for enterprises and businesses looking to use digital technology — everything from smartphone apps to low-code automation tools to Distributed Ledger Technology (DLT) — to optimize their business processes for speed, accuracy, cost reduction, and ultimately, competitive advantage. When digital technologies are used to: (1) replace some or all of the manual steps in an existing business process or workflow; or (2) introduce new processes and workflows that significantly benefit the business, the organization that’s undertaking these initiatives is said to be digitally transforming itself.
While there are many justifications for digitally transforming a business, perhaps the most important one is survival. Some of the most obvious examples of how digital transformation resulted in the disruption of entire industries are in retail (Amazon), ride hailing (Uber) and payments (Stripe). In each of these use cases, the founders saw significant opportunity to digitally transform existing business processes in ways that eliminated wasteful costs (cost reduction can be just as effective as new revenues when it comes to increasing profitability) while dramatically improving customer and employee experiences.
For example, consider what the retail experience was like before and after Amazon showed up. Prior to Amazon’s existence, there was a lot of interest in e-commerce. But it wasn’t until Amazon’s founder Jeff Bezos came along with a vision to digitally revolutionize the entire retail workflow that customers enjoyed an entirely different, digitally-driven customer experience. Virtually every part of the retail workflow has been digitally transformed, from the moment product awareness begins to when a product is delivered, and even after.
Speaking to the role that innovation plays in digital transformation, the new, digitally-transformed customer experience includes new, digitally-driven experiences that simply didn’t exist before. One of these (among many) is the progress report that Amazon customers get as a delivery vehicle gets closer to the delivery address; a component of the customer experience that was not only embraced by Amazon, but was eventually adopted by many non-Amazon customer experiences involving delivery logistics. Amazon’s nearly maniacal and ongoing pursuit to be a wholly digitally-driven business is not just about its customer experience. In the same way that Amazon ruthlessly roots the undesirable inefficiencies out of its customer experiences, the company is equally vigilant about optimizing many of its administrative processes and workflows.
Returning to the aforementioned point about survival, the outcome of Amazon’s efforts to be a fully digitally transformed company — one where no stone across the entire organization is left unturned in the hunt for digital optimization opportunities — is clear. Not only has the retail industry been transformed, many of the retail giants who were too slow to move are either out of business or in bankruptcy proceedings. Had they embraced the principles of digital transformation sooner, the outcome for them might have been very different.
For companies and the change agents (the people) within them who understand the role that digital transformation can play in not just survival, but also industry leadership, one of the biggest questions is about the unique value propositions (UVPs) of the many “off-the-shelf” technologies at their disposal and how those UVPs can service an organization’s tactical and strategic reinvention initiatives. Among the many technologies from which to choose, DLT has some very cost-effective off-the-shelf UVPs (e.g., decentralized multi-party transparency) that are unlike the UVPs of any other technology on the market. Therefore, DLT represents another opportunity to not only re-evaluate previously overlooked opportunities for digital transformation, but to invent new businesses workflows and experiences (customer experiences, partner experiences, supplier experiences, employee experiences, etc.) that unlock new levels of organizational success.
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