The acceleration in Digital Transformation in 2020-2021
In the last year and a half, the renowned digital transformation suffered an unexpected and impressive acceleration due to the global COVID 19 crisis.
In a research from McKinsey, surveyed companies accelerated between 3 and 4 years the digitalization in many areas during 2020, generating considerable change in the relationship with their customers, supply chain, and even in their internal operations.
For the retail sector, but not just in it, the impact of the pandemic meant a dramatic loss of customers. According to a research from Deloitte, 90% of companies registered a loss of 50% in their sales volume.
As we know already, this crisis fast-tracked even more the migration to digital sales and attention channels, as digitalization was the only possible way out, but also meant the acceleration of a trend had already been installed for some time.
The Status of the Digital Transformation
For some years now, we have been hearing about digital transformation or business digitalization. As with the irruption of other concepts or phenomena, in its beginnings it was ignored or underestimated. Then, based on the evangelization and diffusion given by some leaders and visionaries, it became fashion, and today it is an undisputed concept that has rooted in multiple areas of business. A proof-point of this is the existence of well-defined roles, like the Digital Transformation Manager, whose goals are leading digitalization strategies and implementing a transformation roadmap in an organization. But as some years have passed since the beginning of this wave, today these movements can be analyzed in perspective, knocking down some superficial ideas or concepts and refreshing some lessons learned.
First, the focus of the digital transformation is not, and should not be, the acquisition of technology per se, but attracting and retaining customers/users effectively, cost efficiently and operationally scalable. It is not just a matter of implementing a new tool, but of optimizing back and front-end processes, and technology is a facilitator to achieve this goal.
This is an important difference to highlight: the digital transformation does not mean solely the accelerated addition of technological tools but, mainly, the assimilation of a permanent dynamic of optimization in areas of the organization based on the roll out of technological tools while having a business goal in mind.
Paraphrasing a metaphor from Thales Taixeira in the podcast Digital Insider, technology is an engine. If we add it to a well-functioning machinery, we will accelerate in the progress towards our goal. However, if we place it in a dysfunctional team, with careless and untrained mechanics, the result will likely be fearsome.
As mentioned, the fact that the digital transformation has some years of trajectory in companies worldwide allows us to learn from those that did well, started to prepare when the trend was being born, and also from those who saw the wave pass but were not able to build the momentum to ride it.
Therefore, without any pretension to be exhaustive, we may outline some of the key success factors in digitalization strategies for business:
– On board key decision makers: it is necessary not only that they are aware of the digitalization strategies and roadmap, but also committed to the process and willing to trade short term gains for future scalability. To achieve this, the plan and the goals need to be communicated simply and clearly, avoiding the excessive use of technical jargon.
-Work on an MVP: there is no better way to approach new technological processes than starting from the definition of a Minimum Viable Product that delivers all necessary functionalities though being, by definition, incomplete. This way, the project’s time to market may be reduced and testing my start earlier, allowing adjustments to continue growing in the right direction.
-Do the basics right: we cannot pretend to utilize multiple web traffic optimization platforms if Analytics is not correctly configured. Though it may seem obvious, this example is far from being simplistic, as many times technological tools generate admiration in and by themselves and may make us lose the focus on what needs to be achieved firstly in order to be prepared for the next level.
-Do not be afraid of mistakes: any change or innovation process is subject to errors. This is quite inevitable if we are going in a path we had not travelled before. Foster a culture that does not penalize mistakes but learns from them. This is a necessary part of any successful transformation process.
-Design scalable processes: when starting the definition of a new process, we must consider what would happen if the transactions scale up 10x or 50x. If this new process can sustain an exponential increase in the short term, it is truly scalable.
-Automate whenever possible: a large part of the probability to escalate in short periods of time relies on the implementation of technology that enables the automation of the operating processes that demand a higher workload when transactional volume increases.
These ideas deserve developing specific strategies to approach the different issues in each organization. Several of these key elements are directly correlated and become even more critical when focusing on the immense volume of data created by those organizations that have made some progress in their digital transformation journey.
We will focus on this particular topic in our next post. Meanwhile, if you have already identified a problem with large volumes of unreliable or unproductive data, you may contact us to discuss the issue.