The Types of Digital Transformation

Digital Transformation (DT or DX) is a popular buzzword in the business world. Using digital technology to improve your business is more than standard practice. It's almost a must to stay ahead of the competition. If it weren't for DX, companies wouldn't have been able to overcome COVID-19's challenges! Here, we'll go over four types of DX with real-life examples. Hop on the Digital Transformation train!

What is Digital Transformation?

Digital transformation applies digital technology to impact all aspects of businesses. This scenario's main areas of transformation include business processes, models, and products. DT focuses on improving efficiency, managing digital assets, and creating new monetization strategies. DX exploits new technologies to add value and services for stakeholders by adapting to the ever-changing circumstances in the business world.

Hence, it helps improve efficiency and provides companies with a competitive advantage and superior Customer Experience. Digital Transformation can be used in many ways and various areas. For example, it can be used to examine workflow, supply chain, employee skills, or products.

Suppose you are still unclear about the concept. In that case, some organizational culture examples include shifting from on-site to remote work, adding in-store digital ordering kiosks, and migrating data and assets to the cloud. If you'd like to know more about DX and why it's essential, you can look at our take on Digital Transformation. You'll also find some of its trends there!

What are the Types of Digital Transformation?

As we've mentioned, DX can take different shapes depending on your business's needs. The four main types of DX are process, business model, domain, and cultural transformation. Let's examine what all these entail below. We'll also include some examples at the end of each section!

1. Process Transformation

Process transformation entails modifying the focus of your entrepreneurial activities. This approach improves internal processes and day-to-day operations. How? By making them more straightforward and efficient. It uses new digital technology and services like Analytics, APIs, and Machine Learning. These transform processes lead to reducing costs and lead times. It also improves quality, brand image, and customer service. Examples include simplifying or removing steps, automating manual processes, and improving reporting.

Examples of Process Transformation

● Adobe decided to use data-driven insights into its processes. This system helps the company track its business performance.
● UPS embraced process transformation by introducing a cutting-edge fleet management tool in 2012. Through Machine Learning and Artificial Intelligence, this digital initiative optimized delivery routes, resulting in increased productivity and significant reductions in fuel costs and the company's carbon footprint. UPS effectively showcased how technology can transform logistics operations and save time and fuel costs by using routing software.‍
● Nike turned to their app to change how customers interact with its products. Nike's app allows shoppers to scan clothes and try to buy them straightforwardly.

2. Business Model Transformation

This type of DX is more drastic as it changes how business outcomes are conducted. It seeks to change how the customer base buys or uses a product or service to mimic competitors. Further, it's about reinventing a model with the least possible disruption and operational costs.

There are plenty of examples of companies using DX to change their models in our everyday lives. For instance, Netflix switched from DVD mailing to content streaming. Uber reinvented the entire taxi services industry. iTunes changed how we get music. Business process transformation can lead to outstanding innovations and considerable exponential growth opportunities!

Examples of Business Transformation

● During the 2008 economic crisis, Adobe changed its license-based model to a subscription-based one and divided its services into three cloud-based solutions.
● Ikea decided to focus sales on eCommerce and convert stores into fruition centers.
● Intergiro revolutionized FinTech by introducing embedded banking.

3. Domain Transformation

This transformation happens when a company successfully enters a new market. This type of DX helps companies increase revenue growth and expand. Business Domain DX also applies to finding new industries or products when current business plans are no longer profitable.

Examples of Domain Transformation

● Amazon is an excellent example of domain transformation. As you may know, the company started as an online bookseller. Now, it has its own streaming platform (Amazon Prime). Plus, it has the largest cloud computing service (Amazon Web Services)! This path might not seem obvious. Yet, Amazon adopted various digital tools and technologies as part of its business strategies to launch into cloud transformation.
● Adobe also preyed on this type of transformation. It acquired Omniture, a web analytics company, and Magento, an eCommerce platform.
● Lego caught onto early Digital Transformation success. The company expanded its business operations into video games in 1997!

4. Cultural Transformation

You won't be surprised when we say a company is more than the product or service it provides. Internal values and behaviors are a big part of the success of any business. Hence, DX's company culture should be at the forefront. This guideline is vital to ensure every team member is on board. If not, operating models, productivity, and revenue may decrease.

Cultural or organizational transformation focuses on changing how employees think about their work. It also revolves around how they collaborate and how they deal with problems. It may happen due to a change in ownership or leadership or a damaged reputation.

Examples of Cultural Transformation

● Consumer credit agency Experian introduced Agile methodology development and collaboration into its workflow. This switch led employees to change focus from equipment to data.

Conclusion

Successful Digital transformation strategies have brought about a wide range of incremental improvements. Companies can execute any or all of these four types of transformation. Keep in mind that the most successful Digital Transformation frameworks come with Key Performance Indicators (KPIs). Therefore, you can measure them to track daily operations and business performance and make informed decisions.

We hope this article has inspired you to reinforce Digital Transformation projects, for example, by harnessing the power of advanced technologies and digital solutions! We are sure these will make your business even more successful and help it stand the test of time.