If organizations want to boost the success of their digital adoption efforts, they must first understand the four different types of digital transformation. It’s surprising that many companies still view digital transformation (DX) too narrowly. While digital tools can certainly be helpful, there are other important changes that need to be taken into account.
The four types of digital transformation are business process, business model, domain, and cultural/organizational. While most businesses focus solely on process or organizational transformation, failure to address all four types will prevent them from unlocking the full potential.
There are significant opportunities being created when organizations have an effective DX strategy implemented that enable them to pursue this initiative in a multi-dimensional way covering all the related stages.
What are the four types of digital transformation?
In everyday conversations with company representatives, we can understand that digital transformation, for them, involves embracing digital technologies to automate processes. This, in turn, enables them to serve their clients more efficiently, reduce service or product delivery time, and overall enhance their business operations.
But remember, this is just one piece of the puzzle. While embracing new technologies is crucial, there are other important factors to take into account as well if you want to maximize your return on investment.
Here are the four types of digital transformation in more detail:
1- Process Transformation
Process transformation is considered one of the most critical aspects of digital transformation because it involves streamlining and optimizing business processes. The first step for automation relies on evaluating existing workflows to identify inefficiencies and bottlenecks to improve them.
By eliminating manual and time-consuming tasks, employees can focus on more strategic and value-added activities. Moreover, it enables businesses to respond swiftly to changing market demands and customer needs, enhancing their agility and competitiveness in the digital landscape.
Throughout my vast experience in assisting organizations in their journey to become a digital place, I have witnessed the remarkable impact of automating specific processes. We have observed that this technological advancement has effectively reduced the completion time from several days to a mere few hours.
As an example, we’ve successfully automated an HR process related to employee resignation and termination. This process involved a considerable amount of paperwork and coordination among various departments like IT, accounting, administration, and pmv. Previously, it used to take a minimum of 6 working days to complete. However, after implementing automation, we’ve managed to reduce the processing time significantly to just 1 business day.
2- Business Model Transformation
Another important pillar of DX is the ability to transform 180 degrees your business model. There are a lot of examples around us that can highlight how companies have fundamentally reshaped their offerings by digitalizing how a company creates, delivers, and captures value.
Netflix is a prime example of a company that effectively used digital transformation to completely revolutionize its business model. Originally, Netflix started as a DVD rental service, competing with traditional brick-and-mortar video rental stores. However, they recognized the potential of digital technology and the shift in consumer preferences towards streaming content online.
Ignoring this type will prevent organizations to explore new revenue streams, create innovative products or services, and tap into previously untapped markets. However, organizations need to keep on following the latest DX topics and developments in order to stay up to date and continue to innovate to achieve competitive edge.
3- Domain Transformation
Domain transformation describes a business using new technology to increase its product offerings. Many businesses decide to expand by stepping into new markets and providing a greater range of services or goods that aren’t necessarily all aimed at the same market.
For example, Apple’s journey began as a prominent seller of Macintosh computers, establishing itself as a pioneer in the personal computing industry. However, the company recognized the need for diversification and expansion into new domains to remain competitive and meet evolving consumer demands.
In 2007, they introduced the game-changing iPhone, which revolutionized the smartphone market and propelled Apple into the mobile industry. Building on this success, they later introduced the iPad, creating a whole new category of tablets.
As the digital landscape continued to evolve, Apple ventured into the world of streaming services, launching Apple+ in 2019. Through strategic acquisitions and original content creation, Apple established itself as a formidable player in the competitive streaming space. By continuously adapting and expanding their product and service offerings, Apple has successfully cemented its position as one of the world’s most influential technology companies, catering to a diverse range of customer needs across multiple domains.
Our observations state that this kind of digital transformation is rare to happen within organizations as they are more focused on automating processes. However, this has the ability to allow businesses enter new markets and future proof their operations.
4- Cultural/organizational Transformation
For such a significant initiative to succeed, gaining support from every level of your organization is crucial, starting with top leadership. Unfortunately, many organizations struggle to transform into digital companies due to resistance to change from key senior executives who may be reluctant to adopt new techniques and technologies.
Overcoming this resistance and fostering a culture of innovation and openness to change are vital for a successful digital transformation journey.
In the digital era, simply adopting new technologies and processes is not enough to achieve sustainable success. The culture within an organization plays a pivotal role in determining how effectively and enthusiastically employees embrace digital initiatives.