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Digital transformation is the integration of digital technology into all areas of a business, fundamentally changing how you operate and deliver value to customers. It’s also a cultural change that requires organizations to continually challenge the status quo, experiment, and get comfortable with failure.

It transcends traditional roles like sales, marketing, and customer service. Instead, digital transformation begins and ends with how you think about, and engage with, customers.  As we move from paper to spreadsheets to smart applications for managing our business, we have the chance to reimagine how we do business — how we engage our customers — with digital technology on our side.

For small businesses just getting started, there’s no need to set up your business processes and transform them later. You can future-proof your organization from the word go. Building a 21st-century business on stickies and handwritten ledgers just isn’t sustainable. Thinking, planning, and building digitally sets you up to be agile, flexible, and ready to grow.

As they embark on digital transformation, many companies are taking a step back to ask whether they are really doing the right things. Read on for answers.

Digital transformation begins and ends with the customer.

Before looking at the how’s and what’s of transforming your business, we first need to answer a fundamental question: How did we get from paper and pencil record-keeping to world-changing businesses built on the backs of digital technologies?

The 4 Areas of Digital Transformation

If an organization is planning to embark on a digital transformation project, there are four main areas they should consider:

1. Process Transformation

Business process transformation is a strategic initiative aimed at improving the efficiency and effectiveness of a company’s operations. It involves a thorough review of existing processes and systems, with the goal of identifying areas for improvement and making changes to better achieve the company’s goals.

Process transformation entails modifying the elements of a business’ processes in order to achieve new goals. Most companies engage in a business process transformation when they require a radical update. Undergoing such a transformation will modernize an organization’s processes, integrate new technology, save money, and better incorporate core systems.

2. Business Model Transformation

Many companies are pursuing digital technologies in order to transform their traditional business models. In today’s business world, there are numerous examples of this kind of innovation, from Netflix’s reinvention of video distribution to Apple’s reinvention of music delivery (I-Tunes), to Uber’s reinvention of the taxi industry.

These well-known names are not the only companies to incorporate such big changes into their business model. Insurance companies like Allstate and Metromile are using data and analytics to un-bundle insurance contracts and charge customers by-the-mile—a wholesale change to the auto insurance business model.

By reinventing and adding to their current model for success, corporations can achieve a renovation that leads to significant new opportunities for growth. This is why more companies should be trying to follow a similar path.

3. Domain Transformation

An area that doesn’t receive a large amount of attention, but which has proven itself to have enormous potential, is domain transformation. New technologies have the ability to redefine products and services, blur industry boundaries, and foster opportunities for non-traditional competitors. This form of wholesale transformation offers incredible opportunities for businesses to create new value.

An excellent example of how domain transformation works is the case of the online retailer, Amazon, which expanded into a new market domain with the launch of Amazon Web Services (AWS). Currently, AWS is the largest cloud computing/infrastructure service provider in the world, in a sector that was previously dominated by high-profile behemoths Microsoft and IBM.

While it may not have appeared to be an obvious play by Amazon, its move into providing cloud services saw the online retailer leveraging capabilities and services it was already using. For example, it had already developed massive storage capabilities as it sought to underpin its global business while at the same time providing key computing service and hosting for startups and other growing businesses and other growing businesses that were part of the Amazon family. So all the capability was there, it just required the vision and confidence to make the move into the cloud space.

All businesses undergoing a digital transformation should be mindful of the new opportunities for domain transformation that present themselves with the incorporation of new technology.\

4. Cultural/Organizational Digital Transformation

A fruitful computerized change requests something other than refreshing innovation or updating items. On the off chance that an association neglects to adjust its computerized change endeavors to its interior qualities and ways of behaving it can meaningfully affect an association’s way of life.

Negative repercussions range from slow reception of computerized innovations to loss of market intensity and inescapable disappointment of the drive and lost efficiency and income. Then again, a far reaching and cooperative exertion can assist with moving the way of life to figure out, embrace, and advance computerized change.

Pioneers ought to plan an unmistakable vision of the change and successfully convey it all through the association on a continuous premise. They should be clear about what the savvy chances are and for what reason they’re worth taking.

Core elements of digital culture:

  • Promotes an external, rather than an internal, orientation
  • Prizes delegation over control
  • Encourages boldness over caution
  • Emphasizes more action and less planning
  • Values collaboration more than individual effort