Over the past decade, a new generation of digital companies has changed the game, offering more engaging experiences for customers as well as cheaper ones: think, for example, of Netflix, Uber, and AirBnB. So-called digital natives travel at speeds unthinkable for traditional organizations, leveraging technology to continually mutate and evolve .
The greater their success, the greater the threats to organizations that fail to keep up. However, confusion is still high in the environment, with a recent survey by Fujitsu finding that two out of three Digital Transformation projects are considered a gamble.
But what do we mean by Digital Transformation? Digital Transformation is the process of changing an organization based on innovation and technology in order to deliver an exceptional experience to its customers . If you are interested in learning more, click here.
The 4 types of Digital Transformation
There are four types of Digital Transformation that an organization decides to adopt. Let’s see how they act on the path of change:
1. Business Process – Business Process Transformation:
Business process optimization is essential in digital transformation strategies. Thanks to digital technologies, it is possible to reinvent the processes of the entire organization, with the aim of lowering costs, reducing cycle times and increasing the quality of products and services offered to customers. Think, for example, of companies that implement robotic automation technologies to streamline back-office processes such as accounting.
An example of revolutionary process innovation is theInvention of the first mobile assembly line by Henry Ford in 1913. This process change not only simplified vehicle assembly, but also reduced the time needed to produce a single vehicle from 12 hours to 90 minutes.
2. Business Model – Business Model Transformation:
While process transformation takes place on limited areas of the business, business model transformation focuses on aspects that provide value to the industry. A business model, in fact, describes the system by which an organization creates, delivers and captures value in economic, social, cultural or other contexts.
Business model innovation processes aim to increase business advantage and value creation by making changes both to an organization’s value proposition to customers and to the underlying operating model .
These transformations may impact target audience choice, product and service offerings, or the revenue model.
An example? Think of Netflix’s reinvention of video distribution . Netflix’s ability to understand the needs of the market and to differentiate itself has led it to a prestigious position where it can continuously innovate. Innovation creates more innovation.
3. Domain – Domain transformation:
By domain transformation we mean the ability of an organization to leverage digital technologies to expand into other areas . Technological innovation removes barriers and potentially enables any company to access and acquire the technologies needed to unlock new growth.
A prime example of domain transformation is that of Amazon. Amazon has leveraged its digital capabilities developed to support its core business to expand into cloud services. Amazon Web Services is now the largest cloud computing service, a domain previously in the hands of IBM and Microsoft. According to a Synergy Research survey, AWS controls 29 percent of the cloud market, while Microsoft controls 25 percent and IBM 12 percent.
4. Cultural – Cultural Transformation:
Organizational culture means the sum total of all the practices, processes, habits, values and people that the organization possesses. A culture of innovation is an organizational culture that deeply values and supports innovation. Cultural transformation has everything to do with the most important resource of any organization: people.
One example is the cultural innovation brought to Pixar, the animated film company, which has set up a series of practices and principles in order to Grow by harnessing creativity and quality. The most famous example of these practices is the Braintrust, a regular meeting in which all of the company’s most experienced creative directors meet to evaluate the progress of each ongoing project. The goal is to achieve excellence by harnessing the ideas of everyone involved, creating a sincere and honest team that is much stronger than any single person can achieve.
Rely on the advice of F1 Consulting & Services
Inspiring an organization to change is not a trivial undertaking, but given the current strategic environment, it is critical. F1 Consulting & Services’ role is to guide your organization toward business alignment, integrating IT infrastructure and processes across the entire digital environment to help you take advantage of all the possibilities offered by Digital Transformation. Contact us to make an appointment.