HOW TO APPROACH YOUR DIGITAL TRANSFORMATION
For some years now, and certainly recent years, the manufacturing industry has seen a rapidly increasing focus on digitalization. Not only in terms of leveraging digital technologies to become more efficient, but also to improve the customer journey and to create new services capitalizing on a company’s assets and know-how. Most have already addressed the consequences of digital technologies and set digitalization as a high priority on their strategic agenda. However, digitalization is about leveraging the benefits of digital technologies, and it could cover everything a company does.
So, how could you approach and structure your digitalization agenda to understand where to focus?
With inspiration from thought leaders, other industry actors and with knowledge gained by my own experience I have put together a summary of my findings and suggestions. This forms a Digital Transformation Framework and is the foundation for my suggestion on how to begin setting your digital transformation strategy.
Consider a two-level framework as a guideline when structuring the work of setting your digital transformation strategy and growing a digital business – On Stage and Backstage.
ON STAGE – UPDATE FUNDAMENTAL ASSUMPTIONS ABOUT THE ARENA WHERE YOU COMPETE
With a legacy of successful product and service innovations driven by new technologies, many companies still rely heavily on a technology-first driven strategy. A strategy where the focus is on developing technology first and finding application areas and market/customer fit next. The voice of the customer is often given to experienced seniors within the company. Though this has been, and still could be, a very successful strategy, consider focusing first on the effects that digitalization has had on the arena where you compete and work to understand what has been updated. This is done by analyzing and challenging truths within three main areas: Customer, Value proposition and Competition.
Regarding the customer, do we have an accurate view on our customers’ path to purchase and their emotional experience within each step? Have underlying needs, behaviors and expectations changed? Do we understand the networks by which the customers are influenced?
With respect to value proposition, is ours still addressing the jobs our customers need to get done? Can we address potential customers and new markets by making adjustments to our current value proposition? Is there opportunity within new channels or platforms?
Looking at the competition, is it possible that some partners will move across the value chain and become competitors? Or, the other way around, where former competitors become future partners? Are digital platforms, or companies from other markets delivering the same value propositions as we currently offer?
BACKSTAGE – UNDERSTAND THE STRENGTHS AND WEAKNESSES OF HOW YOU ENABLE CUSTOMER VALUE
Digital technologies have long since been an enabler for internal efficiency and how customer value is enabled. But with changing customer behavior and needs, as well as more advanced technologies available, there are at least five key areas to question and develop:
- Operational processes
- Leadership, organization and governance
- Solutions and architecture
Innovation – Do we create and produce based on real customer insight? Are we learning fast and cheap? Are we making decisions based on testing and validation? Do we understand how new technologies can create value?
Operational processes – Are we leveraging digital technologies to automate advanced tasks, and to improve collaboration and knowledge sharing?
Data – Do we know what is important to measure? Are we using it effectively for decision making and innovation? How about to enhance our customers’ experience?
Leadership, organization and governance – Does our vision, mission and culture support transformation? Do our employees promote that? Are we ‘glass is half-full, or half-empty’ – learning from failure or punishing those responsible? Do we work with distribution of responsibility and self-empowerment to drive change? Does our structure support agile development and catch emerging opportunities?
Solutions and architecture. Do we have the prerequisites to be flexible and adopt new technologies quickly? Do we have system architecture that supports innovation and improved customer experience? Do we enable third-party providers to co-create and build upon our solutions?
UNDERSTANDING HOW AND WHERE TO COMPETE AND CAPABILITIES NEEDED TO SUCCEED
By analyzing and understanding what is happening On Stage and what strengths and weaknesses are Backstage, you get a great foundation for the strategic reasoning on how and where to compete as well as capabilities needed to be successful.
- How to win (operational excellence, product leadership, customer intimacy)?
- Do we need to change our business model, for example move from selling products to value adding services?
- Do we need to rethink our delivery model?
- Can we create new digital businesses?