Uncovering digital transformation strategy: Made easy12 min read

digital transformation strategy

Creating a digital transformation strategy is quite important, especially if you want to implement digital innovation across your organization.

Unfortunately, you wouldn’t find a single clear-cut guide on how to create your own digital transformation strategy.

Or at the very least, there’s nothing out there that would give you step-by-step directions on how to achieve this.

In this article, we’ll show how you can create your own digital transformation strategy in an easy-to-understand manner. We will also take out the guesswork by including specific steps you can follow.

Let’s get started!

What is a digital transformation strategy?

A digital transformation strategy is a plan that outlines the steps the organization must take to strategically position itself in the digital economy by modifying its business models and processes as it leverages technologies.

Centralized vs Decentralized

As you may know, digital transformation refers to the process of using digital technologies to improve business processes, culture, workflow, and customer experiences, to be able to meet changing business and market requirements.

Putting two and two together, a digital transformation strategy would help reshape your business, align current operating models with new ones, and digitally infuse technologies into your business.

Why is digital transformation important?

Most customer journeys nowadays start digitally. They could’ve stumbled upon your business while scrolling through Facebook, watching a video on TikTok, or while searching for something on Google.

Most customer journeys nowadays start digitally

Here are other specific reasons why digital transformation is important:

  • To gain a better understanding of customer habits and behaviors through more robust data and analytics
  • To provide a better customer experience through advanced insights and solutions
  • To enhance the overall productivity of employees through automation
  • To innovate at a faster rate through advanced innovation platforms

It’s also worth noting how digital transformation can be costly. One wrong move — like applying the wrong technology — could cost the organization a lot.

The risk associated with digital transformation could be mitigated by having a digital transformation strategy in place. It will not only outline the steps needed to be taken, but it will also serve as a roadmap for the entire process.

Implementing a digital transformation strategy closely relates to digital innovation. Check out our article about the benefits, risks, and examples of digital innovation to learn more about it.

How to design a digital transformation strategy?

In a book written by Richard Rumelt titled Good Strategy/Bad Strategy, he gave a straightforward take on business strategy basics, including the hallmarks of a good and bad strategy.

According to him, a good strategy has three components:

  1. Diagnosis – A good understanding of the nature of the challenge.
  2. Guiding Policy – An overall approach on how to deal with the challenge.
  3. Coherent Plan of Action – The specific steps involved in accomplishing the guiding policy.

As you go through the steps mentioned below on how to design your own digital transformation strategy, keep these components in mind and make sure that the resulting strategy has all these components.

Step 1: Define the Objectives of the Transformation Strategy

The first step in creating your own strategy is to define the objectives. Naturally, this includes having a good understanding of how the application of a specific technology could help you solve a certain challenge or improve an existing model or process.

Consider applying the smart principles (specific, measurable, actionable, relevant, time-bound) for your objectives.

Select Key Performance Indicators

If you find it hard to come up with your own objectives, start by answering the questions listed below:

  • What are the primary challenges that you want to solve with digital transformation?
  • Which of these challenges do you want to start with?
  • Which challenges require urgent attention?
  • How will you keep track of the transformation?
  • How long will the transformation take place?

It’s also vital here that you align the objectives with your business goals and strategies. You must also outline the key performance indicators that are relevant and would help you track the progress of digital transformation.

Step 2: Review Performance and Current Situation

The next step is assessing the current performance and situation of your organization. Unless you have this data, you wouldn’t be able to provide a detailed comparison on how digital transformation was able to help your organization.

In addition, this step is a good way to measure whether there are other challenges or opportunities that digital transformation would be able to help with.

For this, there are various tools and techniques that could help you:

  1. SWOT Analysis
  2. Competitor Analysis
  3. PESTLE Analysis

SWOT Analysis

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. This analysis tool is amazingly simple yet incredibly powerful in helping you develop all sorts of business strategies, including a digital transformation strategy.

The first two principles — strengths and weaknesses — are internal to your organization. You have some control over them and could change them by doing certain things (like changing the personnel involved).

Strengths and weaknesses are internal to the organization

The other two — opportunities and threats — are external. You can’t change them, as you don’t have any control or power over them. However, you could take advantage of opportunities and protect yourself from threats.

The way to do this is simple. In fact, what you need to do is quite similar to brainstorming: you gather the right people, online or in-person, generate ideas according to the principle, and rank (and discuss) all the ideas together.

Competitor Analysis

Conducting a competitor analysis is another tool where you identify and evaluate your competitors, their strengths and weaknesses, and how they compare to your own. What you find out here could help you improve your business efforts significantly.

Identify and evaluate competitors

Since this is a common tool, you would find a lot of sources out there on how to conduct a proper competitor analysis. But to sum it up, the activity should include:

  • Identifying your competitors
  • Obtaining information about them (preferably ones related to digital transformation)
  • Evaluating their strategies and what they did, and what they didn’t do well

Note that some of the information may not be that easy to find. You can check a range of channels and mediums like website copy, social media, physical materials, emails, press appearances, interviews, product copy, and others.

PESTLE Analysis

This one is a tool that companies use to track the environment they’re planning to launch a new product or project in. PESTLE stands for Political, Economic, Social, Technological, Legal, and Environmental.

PESTLE Analysis is a great tool that takes into consideration the broad environmental context that may have an effect on the business and the changes that would occur, like in digital transformation.

Office workers discussing PESTLE Analysis

To conduct a PESTLE Analysis, you need to:

  1. Brainstorm and list external PESTLE factors for the business
  2. Identify and rank how each factor affects the business
  3. Rate the potential impact of each factor on the business

Aside from helping you understand external situations and the market, this tool could help you strengthen your strategy by defining what the organization should or shouldn’t do. It gives a bird’s eye view of the whole picture from various angles.

Step 3: Select Strategic Initiatives

In this step, you have to select strategic initiatives that would help achieve the objectives you have set in the first step. All the information you have gathered in step 2 would help you get in the right direction and would prove useful in selecting the right initiatives.

Depending on how you see it, this step may be the most complicated here. In fact, you may want to include senior stakeholders as you’ll have to discuss sensitive topics like investment, resourcing, and governance.

Discussing complicated matters

The problem here is if you lack enough initiatives or ideas to start with. If your digital innovation initiatives aren’t enough, you may have to pause for a while and kickstart your idea generation process.

To make this process easier, consider using an idea management tool, which would help facilitate the collection, selection, and organization of ideas.

For example, Accept Mission has certain features that would make idea management fairly easy. There’s a kanban-style board where managers and moderators could move ideas around. There are also templates you can use to fire off your ideation campaigns.

Ideation Mission Templates

Some tools, like Accept Mission, have in-built features that would help you convert those ideas directly into initiatives and projects. Inside the platform, there’s a portfolio management tool that you can use.

Innovation Project for Innovation Management

This tool helps innovation managers to create a project portfolio, from roadmap to solution delivery, based on the best ideas gathered and selected with the help of the inbox and ideation tools.

Learn more about what Accept Mission has to offer by going on a feature tour.

Step 4: Execute the Initiatives

Once you have selected the initiatives, all that’s left is to put them into action. As the process goes on, it’s important that you keep in mind the key performance indicators that you came up with in the first step.

To do this more effectively, you may want to use an innovation dashboard. It would tell you a story about the progress of your organization’s digital transformation, complete with relevant data.

Here’s an example of a dashboard that you can use within the Accept Mission platform:

Innovation Dashboard of Accept Mission

In case you have other data sources, you could also connect them with Accept Mission and see all of your important indicators in one glance. Furthermore, you could create reports, which you can then show to your senior stakeholders.

Start Implementing Digital Transformation

Implementing digital transformation is important for your business to remain competitive in today’s digital world. Many companies that failed to keep up and didn’t innovate digitally have been overtaken by those that did.

However, digital transformation isn’t a walk in the park, not to mention the large potential financial risk that comes with it. A lot of brainstorming and planning must take place in order for it to succeed.

This is where digital transformation strategy enters the scene. Without it, you wouldn’t have a clear roadmap over the objectives, situation, and initiatives you need to start to complete your digital transformation.

The purpose of this article is to help those that want to design their own digital transformation strategy. The steps mentioned here weren’t really that complicated. However, they take time and resources to accomplish.

If you want to talk more about this, join us on our regular innovation webinar, and let’s dig deeper about digital transformation as well as its relation to innovation and idea management.

Published On: April 27th, 2021Categories: Innovation management

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