Digital Transformation is the result of the digitalization process, namely the technologically-induced change within any given business and/or industry [1].
It basically covers the dematerialization of a company’s business model’s components both in the revenue generating rationale – including virtualization of the value propositions, products & services, definition of digital customer relationship touchpoints and communication channels – as well as the fundamental change of the operational model components such as the automation of business flows/activities, on-demand staffing and definition of new information-driven decision processes & organizational architectures.
Digitalization of the Business Model
A business model describes the rationale of how an organization creates, delivers, and captures value [2]. As such, the Business Model covers both the mechanism of generating customer value and the economics of the internal activities required to deliver it.
In a digital world, the customer value propositions (CVP) define many new ways of addressing various customers’ needs. These digital value propositions either provide new and improved benefits and gains while solving clients’ #JobsToBeDone (e.g. delivering customer happiness) or address various customer pains with new, technology-enabled solutions.
It is also a completely new way of delivering improved customer experience – by quicker and better meeting (even exceeding) customer expectations by providing improved service customization and problem resolution, demonstrating empathy and integrity or minimizing customer effort along the relationship life-cycle.
Digitalization of the Operational Model
Digitalization of the internal operational activities – including the definition of new, information-fueled processes including decision-making, technology-based processing, supply chain, etc. – is rather a matter of survival in a VUCA world, thus keeping competitiveness in line with the exponential pace of the ecosystem change, than a superficial leadership whim.
The end result is an increase of agility and efficiency that is vital for companies survival in these challenging times.
Preparing for the Future – all versions of it
Due to the high velocity of technological evolution and change of the ecosystem and its social-economic context, making the right bet when choosing the enabling technologies in any given industry requires a sound assessment of the potential future evolution, actually being prepared to respond to several scenarios of this future.
Choosing to invest in the wrong technology can be quite costly and even if the technology is the right one, missing the vision of its lifecycle can seriously take a business partially or completely off a successful track.
[1] Source: “Leadership in the digital age” by Shahyan Khan, 2016 with reference to Berman, 2012; Bounfour, 2016; Chew, 2015; Coyle, 2006; Housewright & Schonfeld, 2006
[2] Source: “Business Model Generation” by Alexander Osterwalder & Yves Pigneur, Copyright 2009
