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[ARTICLE] Digital Business Model Transformation: Why Digitisation Matters & the Impact it Can Have

Sam Button, Head of Growth, Roar Media

Sam Button takes a look at evolving business models, cultural revolutions, challenges within transformation and achieving success in digital in this short read on digitisation.

Only 12% of Fortune 500 companies from 1955 are still in business with 26% falling in 2016 alone. We are living in a constantly changing world and it is apparent that the chasm between technology change and consumer adaptability is widening. This widening gap diminishes core competencies and erodes customer loyalty.

Staying ahead of the technological curve is difficult but it is paramount that we stay in tune with emerging technologies to maintain customer engagement and continuous service improvement & innovation across all platforms.

Digitisation, data and artificial intelligence have become a virtuous cycle. Being able to record and interpret data (both through internal processes and customer behaviour) provides information required to build better algorithms which in turn increases ROI and productivity. The digital innovation has enabled us to decrease our running costs which has enabled us to reduce pricing for our services and overall has lead to an increase in profitability of the business.

Companies are succeeding by eschewing competency based strategies for digital ecosystems. Successful organisations are using technology to put the customer first, utilising data to ascertain the best methods of engagement to exude trust and loyalty, ensuring cross channel engagement across all verticals of the business. Providing knowledge of various services which will help clients consolidate a customers’ financial requirements in one place.

Why organisations need a cultural revolution

Implementing a digital overhaul of a business requires a 360° change, meaning every section and individual employee needs to buy in to the digitisation project. It is important to focus on the benefits of innovation, both on a customer level and through automation which will enable seamless internal processes that were historically inefficient. Employees benefit from a better customer experience and being a flexible, agile and experiment-driven organisation.

Continuous digital transformation enables DevOps & IT to focus on new products and digital delivery. Individualised, incentive aligned products & services promote buying behaviour with the customer base, whilst successful new products increase customer loyalty, retention and attraction. Whilst customers are more likely to share bad experiences than good, creating unique engagement pathways and individual content, leads to a higher percentage of clients sharing positive experiences with family & friends.

Challenges within big corporations

Whilst the benefits of digitisation are clear and failing to digitally transform has proven to be catastrophic for some businesses, digital transformation is by no means easy; especially for large global organisations and corporations without seasonal operations. Capgemini identified key challenges within Digital Transformation in 2017, stating that 62% of organisations thought cultural issues were the biggest roadblock for digital innovation, other challenges which substantially hindered companies were the presence of archaic IT systems & applications, lack of digital skills within the organisation and a lack of clear leadership/goals.

MIT Sloan Management Review dug deeper into the cultural pitfalls of digital innovation journeys, finding a high resistance to new approaches, lack of familiarity with digital and competing priorities both individually and within sections of the business. Enabling the corporation to cohesively work towards a truly digital company is a multi-factor challenge to overcome cognitive dissonance. Firstly, the heads of the organisation, right to the very top have to be onboard and passionate that a digital revolution is needed to prosper, allocating the correct amount of funds & resources for an optimal and lasting transformation. This has to then be communicated effectively to each department, with collaboration and understanding of each business unit paramount to success. All individuals within the business need to be convinced of the lasting benefits of a successful digital change and require correct training and reassurance in place at every level, including the end user.

How can we achieve lasting digital transformation

The evaluation process needs to be thorough and encapsulate all aspects of the business, current unmet needs addressed through digital innovation have to be assessed and budget available for an end-to-end project.

Once the initial strategy has been agreed there is a vital need for the ability to rapidly experiment and test before looking to roll out on a large scale. Prototyping and market testing through betas ensures the project is constantly evaluated and means tested, with any potential issues addressed.

The end vision can only be achieved through a cohesive structure of innovation, throughout the journey accountability, reporting and communication is a constant cycle of feedback and a necessity to maintain the alignment of goals and processes. Statistically there is a high chance of partial failure when embarking on any digital transformation journey, however, the reasons for projects being unsuccessful are well known and can be managed.  These include a lack of in-depth transformation model, lack of understanding of the customer and failure to beta test for customer feedback, bad timing, no market lead and the project being over budget with a lack allocation of new funds.

These can be avoided through a dedicated, educated and incentivised workforce, clear direction and metrics and a good understanding of budget/ability to free up additional budget to ensure digital transformation is fully achieved and successful. Whilst a stringent plan is required, it is also vital to be agile and adaptable throughout the journey, utilising feedback to create optimal experiences and pathways. 

Overall there is always a temptation to over complicate a large scale digital transformation, it is important to understand that the journey is constant and innovation within the business will always strive, it is vital to be patient and focus on simple goals. It is important to keep the customer at the centre of any digitisation and always remember this throughout. 64% of consumers are willing to pay more for simpler experiences with 61% recommending a brand which provides effortless access to advice and services. Digital technologies provide the ability to be in constant communication with your customers whenever and wherever they are, making these positive experiences is paramount in retaining and increasing your customer base and frequency of interactions with your product.

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