- IMD Business School
Digital Transformation & AI

The 7 key components of a digital transformation strategy

The digital revolution has been a game changer in the business world. New digital technology offers a toolset to companies wanting to offer more to their customers and increase their profits.

The digital transformation journey happens when companies begin using computer software and artificial intelligence (AI) tools to change how their companies operate. The goal is to use these new tools to modify existing processes, help companies adapt to market changes, and better meet customer needs.

However, some companies may experience difficulties in developing a roadmap for this shift. This guide will cover how to overcome those difficulties and successfully implement a digital strategy in your organization. 

  1. Why develop a digital transformation strategy?
  2. The 7 recommended digital transformation strategies
  3. How to grow your business with digital transformation?

Why develop a digital transformation strategy?

You may not feel that digital transformation is worth the investment, but it’s a key aspect of any modern business strategy. It offers many benefits that can help you stay competitive, including:

  • Enhanced customer experience: Digital tools streamline the customer service experience using chatbots, data retrieval, and automation tools.
  • Increased operational efficiency: Take advantage of automation tools to remove redundant tasks and improve business processes.
  • Adaptability: Quickly adapt to consumer trends and shift to new business models like e-commerce and subscription services.

Here are the top seven digital transformation strategies recommended by business leaders to help your organization evolve in this digital age.

1. Focus on the digital tools your team wants

  • Project management and tracking tools: Project management tools (like Trello, Asana, and Monday) and time-tracking tools (like Tick and Timecamp) can help you increase employee efficiency and measure team performance.
  • Social media management tools: Digital marketing tools like Sprout Social, Buffer, and Hootsuite automate your social media marketing efforts and help you manage your social presence more easily.
  • Digital communication tools: Remote and hybrid environments work better with digital communication tools like Zoom and Slack, which offer real-time collaboration abilities for your team and clients.

2. Improve your cybersecurity tools and procedures

As you transform your business to use digital tools, you’ll rely heavily on the internet to get more done. But this also exposes your company to cyber threats like viruses, malware, and phishing.

Having a risk-averse digital transition means putting measures in place to secure your environment and mitigate potential cybercrime. Here are some ways to keep data safe and secure to protect your business.

  • Protect your accounts: Encourage employees to use strong passwords and change them regularly. Use two-factor authentication (2FA) and VPN services for remote employees to encrypt data accessed outside the office.
  • Protect your devices: Schedule regular updates to prevent new security vulnerabilities and use intrusion detection software to monitor network traffic and look for ongoing threats.
  • Maintain your environment: Maintain a secure environment by teaching employees to stay safe online and conduct security audits to test your security systems.

3. Increase your research and development budget

Investing in new tech costs money, which can cause some hesitation. But with how impactful these tools are, funding their research and development (R&D) makes sense and can take your business to a higher level. Here are two more ways to improve your R&D efforts:

  • Trust your R&D team to make the best decisions: Part of R&D involves creating a methodology for making independent decisions. Give them the information they need to define requirements and evaluate tech solutions that will work, then trust them to do it right.
  • Keep everyone involved in the R&D process: Keep all team members up to date with R&D initiatives and progress. This fosters transparency, keeps everyone aligned with company goals, promotes collaboration and innovation in the decision-making process, and lets teams collectively identify and address any challenges or roadblocks.

4. Hiring and growing competitive talent

As two-thirds of companies plan to invest more in digital technology and software in 2023, competition for digitally savvy talent will grow as well. And when you need the best minds to succeed with digital transformations, you need experts in relevant fields like data science, AI, and IT.

Finding the right talent for the transformation process means creating an appealing environment for tech professionals and providing the resources needed to make effective changes. These might include offering flexible remote or hybrid work arrangements and periodic professional development opportunities. Other helpful tips are to:

  • Show your value proposition to prospective talent: prove your company is worth working for by offering a fair salary, good benefits, leadership roles, career development, and commitment to digital modernization. Be sure to include these details in any job postings or other communications about open positions in order to attract the best talent to your organization. 
  • Promote from within: Look within your company for experienced people willing to reskill and upskill to learn new tools and promote digital business transformation. This increases employee loyalty, motivation, and engagement, as existing employees see opportunities for career growth and development within the organization. 

5. Developing user-friendly digital systems

The right technology should support users and simplify everyday business workflows – but that won’t happen if your systems aren’t user-friendly. They need to work well and integrate seamlessly into your business. Here are some key best practices:

  • Test before you buy: Use free trials to test products before buying to ensure functionality and confirm they meet all your company’s requirements. This allows you to explore their features, assess their usability, and validate their compatibility with your existing systems or workflows.
  • Get team feedback: Let your team evaluate new products, share their insights, and provide feedback so you can gauge user experience quality and product effectiveness from different perspectives. This not only enhances team engagement and satisfaction, but also allows you to leverage diverse expertise and experiences.

6. Using data analytics to inform decision making

Cloud computing and data analytics let you extract patterns and trends from big data. New machine learning AI applications can read large amounts of data, analyze it to find patterns and trends, and extract information your business can use to meet your key performance indicators (KPIs) and drive revenue growth. Here are some of the best ways to do it:

  • Use analytics to gather data: Gathering and analyzing data metrics help you see what’s working and what’s not so you can make better business decisions. Leverage advanced analytics techniques, such as machine learning and AI, to extract valuable insights and optimize marketing strategies that can help you meet your key performance indicators (KPIs) and drive business growth.
  • Forecast future sales and trends: Use data to forecast future trends, enabling you to make informed business decisions and proactively respond to market changes. For example, you can use historical data to predict future sales volumes for effective supply chain optimization, identify emerging product trends and new opportunities, and gain a competitive advantage.

7. Convince team members and stakeholders to help

You may need to convince stakeholders and team members to embrace digital technologies and integrate digital transformation initiatives into your company’s culture and policies.

Although you might initially face resistance to this culture change, it can help to gradually encourage buy-in. Convince people that adopting these new tools will make their jobs easier and make your business more efficient and resistant to future market shifts.

  • Finding the rights partners: The right partnerships can help you make your case. Working with technology companies that have extensive product ecosystems can help you demonstrate the business value of investing in their new technology. Choose partners that offer the proper training and user support to help your team feel comfortable adopting their tools..
  • Use tried-and-true change management techniques: Preparing employees and other stakeholders for organizational change means more than just letting them know your digital transformation plans. Proper change management involves planning and preparation before implementing a change, followed by monitoring and evaluating progress and results. 

How to grow your business with digital transformation?

Digital business technology plays a huge role in business today, and ignoring its many benefits can leave you behind your competitors. Don’t wait to create a digital transformation roadmap for your organization.

Let us show you how to lead your organization through uncharted territory. Our programs are designed to help you embrace digital disruption as an opportunity so you can transform your business to adapt to today’s globally connected virtual world. Explore our digital transformation programs and see what successful digital transformation can do for your organization.

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