Want Powerful Digital Transformation? Here Are 5 Things Holding You Back

800 449 Andrew Machin

Why you are not thinking about digital transformation in the right way, and what is holding you back from delivering real customer value.

Over the past decade, digital transformation has swept across every industry. The convergence of new technologies and an accelerated pace of change has led to the disruption of entire business models.

While there is no going back, the path forward for many companies remains unclear. Of course, there are the software companies, digital trailblazers that have been productising digital services since inception. But for companies that have only started the transition to digital, many challenges lie ahead.

If you are working for or running a firm that is making the leap to digital, then read on. We will be covering the five most common things that hold companies back from achieving powerful digital transformation for tomorrow’s economy. 

And key to all this is becoming a software-driven business.

What is a software-driven business? 

Before diving in, let us explore what we mean by a software-driven business model. While many firms are making changes to become more customer-centric, they are still missing a trick in changing how they operate. 

According to Accenture, there are two keys to successful value-creation in the online world: strong customer experience and new business models. Together, these form the fundamentals of a software-driven business. A company that manages to marry 1) a customer-focused mindset with 2) a backend driven by software can essentially turn itself into a software-driven business. At one end of the scale, that looks like a local cake shop embracing delivery services. At the other end, it is a major bank turning itself into a platform that helps its customers achieve their lifetime financial goals.

In other words, businesses need to stop thinking of digital as a means to gain customers. It needs to become a fundamental part of what they offer. As this article in Forbes puts it, companies need to move away from thinking of digital as something that helps to sell more products. Instead, they should be asking themselves, “how can we use technology to reimagine the way we help deliver customer value?”.

Vodafone is one brand that is changing its legacy approach from being a network service provider to embracing software and IT at all levels of their business. It has proudly declared itself to be an ‘IT company’. But what makes bridging the gap easier for certain enterprises over others? It turns out a lot of it has to do with mindset, old ideas and staying siloed. 

So, here is what is really holding you back from creating lasting digital transformation that will revolutionise the way you deliver value to customers.

You are approaching digital in a siloed way.

Chances are, every business head in your organisation has a different definition of what digital transformation is. For the CTO, it is all about migrating to the cloud and supercharging the IT stack. For marketing executives, it boils down to channelling their marketing efforts in the right way and crafting customer experience. These intentions are all well and good. But they are only pieces of the whole puzzle.   

In that way, digital transformation is not something to be siloed. Only by taking a joined-up organisation-wide approach can you move the needle from creating experiences to products (more on that later).

You only hear the word ‘digital’ at IT and marketing meetings

You might work for the kind of company described above. But you might also belong to an organisation where digital transformation has not been so pervasive. If the word ‘digital’ is only uttered during IT or marketing meetings, then you might have an even greater problem – transformation is only happening in specific organisational functions.

Instead, digital change needs to be considered by everyone – from customer experience directors to proposition managers, product owners and everyone else in between. If your accounting or fulfilment department does not have a digital strategy, then they need to get on the bandwagon too. 

You continue to adopt a legacy product mindset 

If there is one thing that can really hold you back from achieving fundamental digital change in your organisation, it’s a legacy product mindset. 

Change from legacy systems is difficult (notice we did not say impossible). Whether it is because it is too complex, expensive or time-consuming, complete systemic change can lead to a certain level of resistance. Stakeholders get defeated, and in some cases, can completely give up on projects. 

As gargantuan as this problem can seem for some companies, the consequences of giving up and doing nothing can be genuine. Take GE, for instance. Once an industry giant, they found the challenge of shifting to digital too great. And while it might seem like some problems are too big to solve, if you ignore them for too long, they may become impossible to solve. 

A more recent example is that of Tesla vs. the new electric Porsche Taycan. Hailed as the ‘Tesla killer’, it fell short by not taking a digital-first approach and designing the car around its software

You are clinging on to (an old) idea of digital transformation 

Let us be clear here – not digital transformation itself, but the idea of it. 

It is no longer enough to make a few digital enhancements off the back of old business models. Remember, customer expectations are ever-evolving. You may be able to extract some perceived value from the odd tweak or change here or there. But it will not be enough to keep pace as customer expectations change. 

Unfortunately, many companies are still clinging to a notion of digital transformation that is becoming obsolete. And it is precisely that, an old idea. Companies that see digital transformation as a way to reinvent how they deliver value for customers and uncover new opportunities for growth and expansion will be leading the way over the next decade.

Take Levi Strauss, for instance. Pre-pandemic, they invested heavily in digital technologies, including AI and predictive analysis. Post-pandemic, that investment paid off – it allowed them to quickly react as customers switched en masse to shopping via e-commerce channels.

You are thinking in terms of experiences, not products

Finally, we will touch on perhaps the most essential point of all.

For the better part of the last decade, the term ‘experience’ has played a prominent role in how we have dealt with shifts in customer expectations. But digital experiences are not the same as digital products. Products are sold – think of Google, Instagram, Netflix or Lyft. The key difference is there is an exchange of value that takes place. The end consumer offers some form of payment (money, time or information) for some reciprocal value (a service, interaction or content).

This single focus on creating and receiving value-for-value means there is a drive for that organisation – usually a technology company – to continuously improve upon its offering. And all of the organisation’s functional departments, from IT to marketing, are aligned behind this singular vision.  

Shifting your thinking from designing experiences to designing digital products is crucial to bringing all business functions together under one digital umbrella. And it’s what makes a business truly software-driven. 

What that means for your business 

Becoming a software-driven business, designing digital products that create real customer value, none of these things are achieved overnight. 

But by avoiding the pitfalls explored in this article and taking an enterprise-level approach to transformation, you can start to make the right kind of moves.  

And that is where we come in.

From initial proposition to fully-fledged digital product, we can help you design a new, more intuitive way of providing value for customers. We help big businesses who have got big digital challenges, and it all starts with our consultative approach.

Want some advice? Just get in touch on 020 3740 6260. One of our skilled practitioners will be more than happy to answer any of your questions. It’s on us.

 

 

Andrew Machin

With over 15 years’ experience in web design and digital marketing Andrew has helped many brands, both in the UK and US, create exceptional digital experiences, from websites to in-store retail experiences, such as John Lewis, Jet2, Virgin Holidays and Interflora. Through the success of such projects Andrew has received accolades that include high-profile awards that span innovation, strategy, design and results such as the Dadi Grand Prix Award and the Digital Impact Award for Innovation. This experience has led to Andrew judging digital design awards, been featured in .net magazine, lecturing at Leeds university and speak at seminars and conferences across the UK. Follow Andrew @The_Machin

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