At the beginning of the 20th century, a digital revolution took place in working society. The revolution spawned words and phrases like transformation, digitalization, quick work, and algorithm-based decision making. For many businesses, these were just buzz words – part of a headline in a magazine or a topic to discuss during a business dinner. However, now more than ever, we are observing how these are not mere words but potent concepts that are influencing more and more industries and changing the way they do business. Smaller companies with more customer-focused solutions, new, innovative products, and flexible company cultures are challenging established market players.
I have always been interested in the digital space, technology and tools and methods needed to adapt to the changes that they bring. In this series of articles, I would like to explore with you the need and effects of digital transformation, the tools I have seen used to make these changes and the method, specifically Lean Agile methodology that I think has given clients the highest chance of successfully transforming their organization.
The question is: why would a successful business look for change if the business is working just fine? The answer is: because whether the industry is B2B or B2C, new technologies help to make many processes more transparent; small iterations in product building and automation help manage organizations more efficiently. Furthermore, changing the processes, making them more efficient, reduces fixed costs. However, these may not be the main reasons.
In the following paragraphs, I will make several good arguments for leaders of organizations to consider as to why change is essential.
Reason 1 – Speed to Value
The world is becoming more and more digital and the speed of value to the market is changing. In the past, it could take years to develop a new product. Today, it may take only weeks for a company to build a prototype and test it on the market. So, if an organization wants to be competitive, it is essential to put customer needs in the center and find a way of delivering a new product fast. It needs to innovate, commercialize the prototypes in weeks, and adapt to market changes. Such a shift does not happen without changes in organizational processes.
A good example of speed-to-market transformation is Amazon Prime membership. Amazon introduced this service in 2015 for all customers who were ready to pay a yearly flat fee for two-day delivery. With this, they solved one of the disadvantages of e-commerce: delayed customer gratification after an online purchase. With Amazon Prime, a customer always knows that the product will arrive within the next two days. While this is the example from B2C markets, B2B companies can achieve the same result with the introduction of professional software that reduces manual work, optimizes data, and helps to communicate the offer to a customer in a rapid way. Just imagine: a 5% decrease in time-to-market can increase the rate of return on investment by 12.5%.
Reason 2 – It’s All About the Data
Standard human capabilities are limited, which points to a need for advanced usage of company data. Business process automation, which is a process of managing information, data, and methods in an effort to reduce costs and resources and to help make better investments, is a vital element for company change. Currently, companies use it in marketing, data analytics, and sales. Companies can also extend its use to any area, such as people management, pricing, or product management, and expand it for a particular area over the years, cutting costs and increasing investment in the product or developing service innovations. Being smart in a way that helps you make better decisions is a must in the fast-changing digital economy, even if your core business is not digital at all.
Owners and managers can see a good example of process automation in the logistic area where it helps many companies:
- reduce parallel controls of the same process
- connect and integrate the work between several company departments
- centralize company data retrieval for further process improvements
- reduce costs
- increase the quality of services
This approach can be applied to all industries, and many solutions exist in the market.
Reason 3 – Power to the People
What makes your company prosperous? The old mindset dictates that the product/service is the core element of organizational success. Behind the product and the service, however, are real people. Traditional organizations with a strong hierarchy and a low level of employee involvement in core processes are not attractive to young specialists. There is already a shortage of them in big traditional organizations around the world, and this tendency will only increase as more and more millennials enter the full-time job market. These young professionals are not just looking for work – they are looking for a workplace where their efforts bring real results and impact the company overall.
If a company strives to be innovative and use modern technologies as well as have a flat hierarchy, it helps a lot to solve the problem of building a qualified young team. For example, GE is trying to move from a “command and control model” to a faster, more straightforward culture where individual teams have more autonomy to experiment and make decisions. This approach includes using modern tools and startup-like structured projects to transform company core products and introduce new solutions.
Using modern technologies to change faster, tapping your organizational capabilities to be smarter, and trying to become an open-minded employer can help your business go through the transformation more naturally.
So, here we could stop to analyze the processes further and conclude the article. However, one of the goals here is also to identify practical tools. While a company understands that it needs to change, how can it locate the area of change accurately and avoid long discussions about what it actually needs to do? I will address these issues in the next article.