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The imperatives of digital transformation

Technological innovation has over the years always led to the transformation of society and business. File Image: IOL

Technological innovation has over the years always led to the transformation of society and business. File Image: IOL

Published Apr 5, 2022

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By Professor Louise Fourie

Technological innovation has over the years always led to the transformation of society and business, whether it is from an agrarian to a mechanised industrial society, from steam and water powered to electricity powered mass production, from manually operated to electronic machines driven by information technology (IT) systems and automation or more recently, from automated dumb machines and robots to intelligent machines and robots driven by artificial intelligence (the Fourth Industrial Revolution).

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This accelerating pace of technological innovation and global interconnectivity can erode an organisation’s competitive edge faster than ever.

This is the very reason why many organisations are currently talking about digital transformation. Digital transformation for businesses – large and small – is not an option anymore, but an imperative if they want to stay in business and be competitive.

This is underlined by the Covid-19 pandemic where organisations had to quickly adapt to supply chain disruptions, fast-changing customer expectations and time to market demands, just to survive.

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Customers now want frictionless, end-to-end experiences with companies, and interactions that are fast and intuitive.

Although digital transformation looks different for each organisation, it entails in general terms the adoption and integration of digital technology into all areas by an organisation in order to improve efficiency, innovate, create new (or modify existing) business processes, and create new value for customers to meet changing and business requirements.

But navigating through the digital era is not easy. Data and digital technologies were once enablers of efficiency and cost-saving, but today they are driving innovation and revenue growth.

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They provide unparalleled opportunities to develop new products and services, as well as the possibility to transform the business.

According to a study conducted recently by Hill, Menon and Tedards, organisations that successfully transformed digitally, tended to have certain important characteristics:

∎ An intimate understanding of the customer.

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∎ With increasing amounts of data available, digitally enabled companies can understand their customers better than ever through the use of advanced data analytics.

∎ Digital transformation allows organisations to change their approach from product-driven (selling what you have) to a proactive customer-driven approach, based on the evolving needs and desires of the customer.

∎ It also allows the organisation to provide a unique and customised end-to-end customer experience.

∎ A data-informed culture.

∎ Digitally enabled organisations realise the value of integrated data to make better decisions.

∎ But unlike the popular opinion that organisations should be data-driven, organisations should rather be data-informed since data informs, not determines their decisions.

Distributed decision-making

The growing demand for end-to-end customer experiences requires cross-functional work and collaboration, and not the functional silo approach of non-digitally transformed organisations. Integrated and shared data enable employees to increasingly be involved in decisions, and thus often stimulate new and critical thinking to deliver differentiated customer experiences.

The Covid-19 pandemic also forced many organisations to rethink collaboration.

Continuous experimentation and learning

In a world where business happens at “the speed of thought”, as Bill Gates said, digitally transformed organisations sometimes have to make decisions even when they do not have perfect information.

Their decisions become “working hypotheses”, based on the best information available at that moment.

Organisations will have to accommodate uncertainty and continuous experimentation with new products and services to keep up with technological development, and changing customer needs.

Due to the availability of extensive customer data, constant customer-centric experimentation based on an intimate knowledge of the customer, becomes a priority.

Ethical decision-making and proactive governance

Data privacy and the ethical use of data is currently one of the burning issues around the world. Digitally, mature organisations recognise this huge responsibility and establish values, processes and controls to act as a guardrail and compass to the organisation.

Unfortunately, due to the digital transformation the world over, the playing field for the handling of data is not level. Emerging economies like South Africa are often behind in protecting customers, and meeting the needs of society.

Organisations in emerging economies will thus have to take extra care to ensure that proper governance and ethical guidelines are in place when transforming digitally.

Digital transformation is a journey

The digital transformation journey is no easy feat, and involves an organisational culture, persistently challenging the status quo, and also innovative and talented employees, just as much as the newest digital technologies.

When organisations start this journey, they will discover that it is a constantly shifting landscape where discerning customers and stakeholders increasingly prefer digitally transformed organisations over those that have not started the journey.

It is therefore time for all organisations to embark on the digital transformation journey, rethink old operating models, experiment more, and become more agile in their response to customers and competition.

Now is the time to integrate digital technology into all areas of the organisation, and fundamentally change how the organisation operates and delivers value to customers.

Since consumer behaviour shifted significantly during the pandemic, we will need to match the pace of change and improve the customer experience or we will fall behind and become irrelevant.

Professor Louis C H Fourie is an extraordinary professor at the University of the Western Cape

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