Digital Transformation Is All About the Customer
Before looking at the how-to of transforming your business, we first need to understand how we got from paper and pencil record-keeping to world-changing businesses built on the backs of digital technologies and fintech.
We need to understand the difference between digitization, digitalization, and digital transformation.
Digitization is the journey from analog to digital.
Businesses used to keep records on paper. Whether handwritten in ledgers or typed into documents, business data was analog. If you wanted to gather or share information, you dealt with physical documents.
Then, computers went mainstream and most businesses started converting all of those ink-on-paper records to digital computer files. This is called digitization.
Finding and sharing information became much easier once it had been digitized, but the ways in which businesses used their new digital records largely mimicked the old analog methods.
Computer operating systems were even designed around icons of file folders to feel familiar and less intimidating to new users. Digital data was exponentially more efficient for businesses than analog had been, but business systems and processes were still largely designed around analog-era ideas about how to find, share, and use information.
Digitalization is using digital data to simplify how work is accomplished.
The process of using digitized information to make established ways of working simpler and more efficient is called digitalization.
Digitalization isn’t about changing how you do business or creating new types of businesses. It’s faster and better now that your data is instantly accessible and not trapped in a file cabinet somewhere in a dusty archive.
Think of customer service, whether in retail, field ops, or a call center. Digitalization changed service forever by making customer records easily and quickly retrievable via computer.
The basic methodology of customer service didn’t change but the process of fielding an inquiry, looking up the relevant data, and offering a resolution became much more efficient when searching paper ledgers was replaced by entering a few keystrokes on a computer screen or mobile device.
As digital technology evolved, people started generating ideas for using business technology in new ways, and not just to do the old things faster. This is when the idea of digital transformation began to take shape.
Digital transformation builds businesses.
Digital transformation is changing the way business gets done and creates new classes of businesses.
With digital transformation, companies are taking a step back and revisiting everything they do, from internal systems to customer interactions both online and in person.
They’re asking questions such as, “Can we change our processes in a way that will enable better decision-making, game-changing efficiencies, or a better customer experience with more personalization?”
Netflix is a great example. It started out as a mail order service and disrupted the brick- and-mortar video rental business. Then, digital innovations made wide-scale streaming video possible.
Today, Netflix takes on traditional broadcast and cable television networks and production studios all at once by offering a growing library of on-demand content at ultra-competitive prices.
Digitization gave Netflix the ability not only to stream video content directly to customers, but also to gain unprecedented insight into viewing habits and preferences. It uses that data to inform everything from the design of its user experience to the development of first-run shows and movies at in-house studios.
That’s digital transformation in action: taking advantage of available technologies to inform how a business runs.
A key element of digital transformation is understanding the potential of your technology. It means understanding what your technology is really capable of and how you can adapt your processes to make the most of your technology investments.
Before Netflix, people chose movies to rent by going to stores and combing through shelves of tapes and discs in search of something that looked good. Now, libraries of digital content are served up on personal devices, complete with recommendations and reviews based on user preferences.
Adapt your business model.
Similarly, digital transformations have reshaped how companies approach customer service. The old model was to wait for customers to come find you, whether in person or by calling an 800 number.
But the rise of social media has changed service much like it’s changed advertising, marketing, and even sales and customer service.
Progressive companies embrace social media as a chance to extend their service offerings by meeting customers on their platforms of choice.
Real transformation comes when you look at all available technologies and consider how adapting your business to them can give customers a better experience. Social media wasn’t invented to take the place of call centers but it’s become an additional channel (and opportunity) to offer better customer service.
Adapting your service offerings to embrace social media is another good example of a digital transformation.
Digital transformation encourages businesses to reconsider everything, including traditional ideas of teams and departments. It means knocking down walls between departments.