How to go about Digital Transformation

In the first part, Why Digital Transformation, I have explained why SMEs need to have digital transformation in their business as priority.

In this blog we will explore how SMEs need to approach Digital transformation.

Many organisations may fall into the trap, Fear of Missing Out (FOMO) and jump straight into implementing latest solution/s or launch technology initiatives centred on digital. It is a recipe for failure. As the famous saying goes it’s better to walk in the right direction than sprint in the wrong direction.

Deliberate and Diligent approach to sources of business value, enhances the road to faster digital transformation. 

How do you identify sources of value? They reside in opportunities for improvement in current operations as well as reimagining bold new business models. Organisation can approach digital transformation by following 3 step process.

1. Understand External Environment

2. Create Compelling Value Proposition leveraging Digital 

3. Execution in Digital through building new capabilities and pilots

Let’s briefly analyse these 3 steps

1. Understand External Environment Talk to your customers to understand how they look at changing business environment in the coming years. It can help to understand customer’s priorities and challenges. External assessment starts with looking at how industry is evolving/changing over the last years. Waves of digital technologies will be impacting business and understanding which will have stronger and faster effect on your industry can help you prioritise the initiatives. 

Identifying opportunities and threats (Yes, the famous OT of SWOT analysis) can help you to understand your business environment, technology impact, customer needs, macro trends and other factors. 

Take an inventory of your current capabilities and assess readiness for digital era (many assessment tools are available, we will discuss during the future blog series).  Prioritise your initiatives based on the potential value it can generate, market readiness and your capability to execute from idea to reality.

1. Create Compelling Value Proposition leveraging Digital For each the initiatives you have chosen, sources of value creation can be identified by specific needs and how you can fulfil them in better, faster and cheaper way. Customer uses your product/services to complete a job. Customer’s willingness to pay (WTP) determine the value creation for your offerings. Brainstorm as team, what digital technologies can help you increase customer’s WTP and deliver at lower costs. Your ability to deliver such value at lower costs can help you capture value.

2. Execution in Digital through building new capabilities and pilots Depending on the area of the digital transformation, the specific initiative will be related to strategy, automation, Industry 4.0, Digital Marketing etc. Now that you have created a new value proposition in place for the initiative, analyse how your teams are ready to execute them. Evaluate if the current capabilities are enough or new skills are to be built. Form the team who is capable to execute, train them on new capabilities needed and partner with external experts where needed. . Launch pilot initiatives to measure, planned vs actual value it can generate, before scaling. As you go ahead with formulating strategy for digital transformation, at each step iterate with your new findings, update each step of the process to fine tune. 

Digital transformation approach gives broad framework for SMEs to reflect and launch new strategic objectives leveraging digital technologies. 

In the next blog, we will discuss about what SMEs can do in their Digital Transformation initiatives. 

This is Second part of Golden Circle of Digital Transformation

Coming Up…

What is Digital Transformation for Manufacturing MSMEs

Why Digital Transformation

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