Digital transformation services include a great variety of technologies, significant developments in business intelligence, cloud, and interactive communication.Using the following five aspects, digital technologies redefine many of the underlying strategy principles and change the rules that successful companies must act on.
The first domain of digital transformation affects customers
In traditional theory, they were seen as marketing actors’ set (an aggregate), and they could be convinced to buy it. The predominant mass-market model is to achieve maximum efficiency through mass production (a product that benefits as many customers as possible) and mass communication (using consistent message and consistent media to reach as many customers as possible at the same time).
In the digital age, we advance into a world not characterized by mass markets, but by customer networks. In this paradigm, customers are dynamically connected; they interact in a manner that changes their relationships with businesses and each other.
Today, they are interconnected and influencing each other – thus also influencing companies and brands’ reputation. Using digital devices, they have new ways to discover, analyze, purchase, and use goods. This applies equally to the handling of brands. Therefore, companies are forced to rethink their traditional marketing funnel and re-examine how customers buy. The spectrum here ranges from social networks to search engines and mobile device usage to a store visit or an online chat service request. Instead of merely looking at customers as sales goals, businesses need to recognize that the dynamic, connected customer might be the best focus group, the best brand ambassador, or the best innovation partner they’ll ever find.
The second domain of digital transformation is competition
How do businesses deal with other companies or work with them? Competition and cooperation were traditionally considered as binary opposites: rival companies from similar business areas competed, while, on the other hand, they cooperated with their respective suppliers or other partners who delivered or contributed to the production.
Today, however, there are dynamic frontiers between industries. Our significant challenges might be asymmetric competitors – non-industry companies that differ a lot from us but still offer our customers competing values.
Digital “disintermediation” brings partnerships and supply chains to mind – our biggest competitors can become long-term business partners if they directly serve our customers. But interlocking business models or external obstacles can also make partnering with a direct competitor necessary.
Above all, digital technologies strengthen the power of business model platforms that enable a company to create and maintain tremendous value through interactions between other companies and customers. This results in a significant transformation in the competitive field. Rather than a zero-sum game between equal rivals, competition has increasingly become a battle for dominance between companies with very different business models, each seeking to find a better base for ultimate customer service.
The next domain of digital transformation is data
How do companies generate, manage, and use the information? Traditionally, data has been produced across the range of normal activities that have taken place within the organization itself – development, management, sales, and marketing (from consumer surveys to inventories). The resulting data were primarily used for assessment, forecasting, and decision-making.
Today, however, we face a veritable flood of knowledge. Many data available to businesses is not generated by regularly organized events like market surveys but is derived from any debate, interaction, and process inside and outside these businesses in unparalleled amounts.
The growing organization has access to a wealth of unstructured data with social media, mobile devices, and sensors on every object which can now be used with new analytical methods. These large-scale data tools allow businesses to make new forecasts, identify unusual market trends, and discover new value sources.
Data is no longer limited to unique organizational intelligence units but is an integral part of each organization and a strategic asset that grows and is used over time. They are a vital part of the business and affect how it positions itself on the market and creates new values.
Innovation is the fourth aspect of digital transformation
The mechanism by which companies create, test, and sell new ideas. Innovations have historically concentrated exclusively on the finished product. Owing to challenging and expensive market research, most product decisions were based on their analysis and intuition. Errors were costly and so as much as possible needed to be avoided.
Modern start-ups showed that digital technologies allow us to approach innovation entirely differently, based on the constant learning of experiments. Digital innovations promote and make it more affordable than ever to test concepts.
From the beginning of the innovation cycle to the launch of goods, we will receive customer input. This new way of accessing innovation focuses on careful experiments and minimal viable prototypes (MVP, prototypes with only the most basic functions required). The premises are consistently checked, and design decisions are based on actual customers’ confirmation. Things are created in this method as part of an iterative process, which saves time, decreases error costs, and improves organizational learning.
5. Value creation
After all, the last aspect of digital transformation is creating value or profit for its customers – the value offering of a product.
This value proposition has typically been regarded as reasonably stable: goods can be modified, marketing strategies can be checked, or manufacturing processes changed.
The fundamental value that a business has given to its consumers is stable and defined by its industry. A successful business provided a clear commitment to value, positioned itself on the market ( for example, by price or brand), and managed to offer year after year to its customers the best execution of this constant value-promise.
However, a persistent value proposition in the digital era is a challenge for new competitors. Although individual businesses are adapting to the digital age at different times and in various ways, defaulting companies and organizations are more likely to endure.
The only safe approach to a changing market climate is to continuously adapt and appreciate every technology to enhance and develop the customer value proposition. Instead of avoiding improvements and adjustments to life and death, businesses must seek to take advantage of new opportunities as soon as possible, get away from dwindling competitive advantages, and hop into a changing train early to avoid losing contact.