Smart Ideas: Services Revisited

What Is Digital Transformation?

Digital transformation is a term frequently used today but not understood all the time. First, let’s define transformation.

Transformation is a comprehensive scale change to a business’ foundation, from operating model to infrastructure and everything in between – what is sold, to whom it is sold and how. A transformation programme involves each and every function of a business, beginning with purchasing up to sales and marketing.

Businesses typically build and establish new products and services, tap new markets, sell to or go into mergers with competitors, or exchange components from their value chain to be more competitive, but these things are not automatically transformative.

Businesses don’t choose to transform as the move is costly and risky. When they have failed to evolve, that is when they must transform.

A business that is evolving with its market – that is, when products and proposition are consistently updated, it is able to reach new sets of customers consistently, and its current customers’ value is increasing – they do not have to transform.

A business can experience dramatic changes and major restructures, but it is only considered a transformation when these changes are very noticeable from the outside and were spurred by external causes.

Core Transformation Drivers

Three types of changes drive transformation: changes in consumer demand, changes in technology and changes in competition. Of course, these factors form an ecosystem, and changes in a market happen when they converge.

When any of them happen together and make a business’ operating model no longer effective, the business is now at a tipping point. Here’s what- evolving businesses have no tipping points because problems are spotted ended before they have a chance to grow.

Evolving businesses are always concerned about their customers’ changing needs, adapting as they come. Businesses that detect tipping points too late must transform. Now we define digital.

In the most general sense, it is technology connecting people and machines together through information. Thus, “digital transformation” is an observable wholesale restructure meant to avoid a tipping point that may be caused by digital technologies and downstream effects on the market.

Various Organizations and their Roles in Digital Transformation

Transformation programmes of large businesses are usually managed by global consultancy firms. To transform a large organization, a huge amount of time, resources and cross-functional business skills will be required, and they are typically provided only by global consultancies.

Creative agencies, on the other hand, help businesses steer clear of the need for digital transformation. Their specialties include understanding new markets and technologies, linking businesses to consumers and predicting market movements.

They work hand in hand with their clients to do all of these. They produce prototypes of new products and services, as well as trial products and experiences, not just to know what’s to come but also to be ready for it and to lead it.
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