What Does Digital Transformation Really Mean?

Yes, it is true. I did recently write that I do not believe in digital transformation. Foolish? Maybe. But my point was a bit more nuanced. Improving technology and digital capabilities is not an end game. The goal is to deliver better customer experiences. Digital transformation is just one strategy that companies invest in as part of an enterprise-wide effort towards better serving customers and employees. That is the real objective.

So if you want to deliver experiences that customers will love and your team will be thrilled to deliver — you must determine if new technology is what you really need.

Is a digital transformation what your company needs? Do you understand what that really means? Let’s start with a definition.

I define digital transformation as the use of technologies to transform how customers consume and interact with products and services and how companies deliver those experiences. And the technologies developed and used can be the center of the offering or behind-the-scenes and indirectly experienced.

No matter how you describe digital transformation, the goal should be clear: Improve your products and the customer experience. I recently explained that companies must change in order to deliver a Complete Product Experience (CPE). That is obvious too. And this change must be enterprise-wide and typically does include the use of new technologies.

So digital transformation is often needed. But rethinking a company’s offerings as holistic solutions and using data-oriented strategies is key as well. And that goes well beyond developing or adopting cutting-edge new technologies.

If you read the business press today, you know that lots of companies are rushing to implement digital transformation to create better experiences for customers. However, the overall use of advanced technology is still nascent.

A recent report from McKinsey Global Institute reported that the United States operates at only 18 percent digital potential — the extent to which companies and industries are fully utilizing digital assets and workers. Europe overall lags behind at 12 percent. Clearly, there is more talk than action.

This is somewhat surprising given what companies stand to gain. By leveraging digital technologies to create enhanced or brand-new offerings for customers, enterprises across industries have the potential to grow existing markets and even create whole new markets.

The benefits are impressive — but what does this change look like inside the organization?

Digital transformation requires understanding what customers really want and their journey through their experience with your product.

For most companies, this requires far-reaching changes in mindset, people, and processes. You must have clarity of vision, a deep understanding of customer needs, plus the right skills and workflows to achieve it. And then you have to put the right technology in place.

Consider the impact technology is having on customer support. Many companies are using digital technology to provide enhanced self-service. For example, a leading insurance company recently invested in digital capabilities to add online bill paying for its more than 58 million members. Inside the organization, there are many teams with specific initiatives and priorities. But this firm knew that the entire organization had to come together to deliver a single customer experience that is simple and seamless. So they rolled out Aha! within the organization to bring all teams into alignment.

To ensure that they could keep meeting customer expectations in the future, the company also expanded the scope of its digital transformation to include updating internal systems and processes as well. This allows the insurance company to be more agile so that they can deliver new functionality faster. The focal point may be digital, but what we are really looking at is an enterprise transformation.

Yes, digital transformation is a buzzy term — maybe even in your company. So you want to be sure you understand what it really means.

You then want to understand if a digital transformation is really what your company needs in order to deliver a CPE. And then make a plan for how to go about it.

Here are some questions that will help you make those decisions:

• • How satisfied are customers today?

  • What could/should we do to improve their experience?

  • How would investments in new technology help us improve the experience?

  • What is the right technology roadmap?

  • What new systems and training do our teams need?

• How will we measure success?

Answering these questions is no small task. It takes the entire organization of dedicated people working together towards a clear vision with measurable goals. It requires transparency and constant communication. And it might mean coordinating simultaneous transformations related to solutions and data.

I will be writing more about two other transformation strategies — solutions and data — soon. Change is never easy, but it is exciting and incredibly rewarding. And in today’s dynamic markets, it is absolutely necessary.

What does digital transformation look like in your company?