Digital transformation, or DX to those who prefer to operate with superfluous acronyms, is defined as:
“The act of transforming businesses digitally from end to end – from operations to infrastructure, meshing together technology, processes and people.” (Datacom)
That’s quite a lofty ambition – especially for long-established, traditional companies – but the consequences for not undergoing a digital transformation in this day in age can be catastrophic. One need only cast a glance at the year-on-year performance of large bricks-and-mortar retailers to understand how quickly digital first companies like Amazon and Zalando in Europe have occupied the space over which they once presided.
But digital transformation isn’t only a necessity for businesses. It impacts how public sector organizations and governments interact with their populace, and – as we have witnessed recently in election processes throughout the world – it also has implications for how governments protect themselves and their sovereignty from foreign influence.
In this post, however, I’ll focus primarily on businesses. Let’s start by focussing in on why they need to transform, before looking at what constitutes a successful digital transformation – and what failure looks like.
Why do businesses need to digitally transform?
‘Being digital’ may seem like the norm for UX designers, particularly for digital natives who have grown up with the Internet, or people who work at startups founded in the digital age.
Olli Rehn, Finland’s Minister for Economic Affairs describes the internet as “truly democratic” and a saviour for innovators. It has allowed younger, more nimble companies to spring up and take on established companies, in a way that they never have before.
However, there are swathes of large, old-fashioned companies still using processes from the pre-computer age. It is important that they get with the times, or they will be left behind. According to Cisco’s Director of IoT & City Digitization, Bas Boorsma, by 2020 75% of businesses will be fully digital and just 40% of businesses around today will still be around in ten years.
What happens if businesses don’t adapt?
Businesses who are not innovating are prime candidates for having their customers stolen by new competitors. As the tech entrepreneur, Jeff Bezos says, “Our customers are loyal to us right up until the second somebody offers them a better service.”
No industry is safe from DX. I recently attended DX2017, a New Zealand-based conference where Uber, Amazon and Airbnb were frequently used as examples of where innovators have shunned traditional business models, and thought outside the box. Taxi companies, bookshops and hotels worldwide would have all been shocked at the speed of their prevalence.
Similarly, Brett Cooper, Director of Digital at Foxtel, Australia’s Pay TV company spoke about how Netflix has completely disrupted their industry, and along with sharp increases in their customer mobile and social media use, made them have to rethink their product offering.
Successful digital transformation
Some older companies have entered the digital age very successfully, e.g. logistics and transport company, Mainfreight. They started in 1978 with just one Bedford truck and they are now a worldwide company who have won awards for their growth strategy and visionary leadership. Their new intelligence portal Mainchain Ultra has enabled them to completely digitize their customers’ supply chains, and at the same time, enabled them to have visibility into freight controlled by their competitors.
Mainfreight Ultra was developed out of problem identified by one of their biggest customers - transparency. The customer had over 150,000 orders per year with a value of over $1billion, and over 6000 unique supply chains. Their products have to be sent to Europe from factories across the globe and then get sent back out again via around 70 different carriers. It was really difficult to keep track of where products were at different points in the supply chain. The issue was solved by the new portal as it links up all of these transactions to provide a transactional view (‘microscope’) for day-to-day operations, as well as an analytical view (‘telescope’) to enable them to improve their supply chains going forward.
This is just one of the forward-thinking technologies they use. They have voice picking technology in their warehouses so people can work completely hands-free, and a scanning technology that captures data on the go. Their Global CIO, Kevin Drinkwater, attributes their success to innovation being part of their company DNA - where everyone is encouraged to suggest improvements and ideas. He regularly visits sites worldwide to see what their pain points are, tell them about new technology, and let them know about any technology affecting their industry.
And when it goes wrong…
Forbes estimated that 84% of companies fail with their digital transformation strategy. How does it go so wrong?
The main missteps with DX are; not acting soon enough, not adapting to new trends, not having an innovative culture and not researching and testing new ideas before they come into fruition.
There are so many digital disasters that could be used as examples, e.g: The UK NHS bot accidentally sending out an email to 850,000 people or Kodak, once one of the world’s leading film companies, filing for bankruptcy in 2012 due to backing the wrong type of photo-related innovation.
However, one particularly notable fail was Blockbuster - they were once the world’s biggest video rental company but shut down all remaining retail stores in 2013. They put their heads in the sand and ignored the digital revolution for so long, that by the time they decided to do something and start a digital streaming company, it was too late. Their demise has been attributed to slowing box office sales and trying to drive flagging sales with solutions that didn’t fit customer needs, e.g. encouraging people to buy snacks and turning it into a convenience store, and ignoring the emergence of companies such as Netflix.
Overall, it was just a failure to innovate. Daniel Newman calls this the ‘lottery effect’ - where companies, like a lottery winner, are riding on the coattails of a previous success rather than taking advantage of new opportunities.
UX for DX
From the sad tale of both Kodak and Blockbuster’s demise, it is clear to see where UX designers come into their own. We understand the value of researching customer needs, problem-solving and usability testing new ideas, rather than chancing it.
And what other teams or roles are important to large scale companies in this age of digital business?
Well, digital leadership needs to come from all areas of the organisation - not just the IT department or the C-Suite. HR departments will have a big challenge on their hands on-boarding people with knowledge of the new technology and make sure they aren’t change resistant. There is also great scope in digital marketing as large companies move away from traditional marketing methods. The development of Voice User Interfaces (VUI) is set to radically change digital marketing as the shift from text-based searching transitions to voice based searches.
Overall people need to be forward thinking and able to embrace change, whatever their role. The BBC says that the next generation of jobs will be made up of skills rather than professions - people will constantly add skills based on what they are interested in and what makes them more employable whilst hopping from job to job.
It is a very exciting time to be in technology, particularly in UX as there is so much scope for problem-solving and really making a difference to people’s lives.
Are there any job roles, businesses or industries that you think are particularly in need of a digital transformation? Let us know in the comments below.
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