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How Digital Transformation Can Level Up Your Business

Matthew Horton
October 28, 2021
6 Min Read
man typing on keyboard

How and more importantly, when, should the dots between working remotely and a “digital transformation” be joined?

As the southern states emerge from extended lockdowns, survival and growth is — rightly — front of mind for many small and medium sized companies.

Starting a transformation is probably a little removed from their paradigm.

Adopting digital tools as a steppingstone towards a longer term, “broader” transformation may make more sense in the medium to longer term. 

However, what does this really mean?

“Digital transformation” is a widely misunderstood approach to improving businesses. For those not adverse to change, transformation sounds exciting. For those of the “if it ain’t broke, don’t fix it” school, transformation sounds like a whole lot of work.

There are 3 main concepts to grasp.

Firstly, “digital” refers to the application, or applying digital technology, to how or what you do as a business. This technology is an extension of who you are, and what you do.

Let’s use the analogy of a hammer. History teaches us that the hammer (the technology), is the extension of “us” that helps us quickly fasten two pieces of wood.

Secondly, “transformation” refers to how this changes what we currently do. This is closely linked with the design term “affordance”.

Affordance refers to what enables the user to do. For example, to use this context, a door handle affords us to easily open the door.

Expanding our above example of the hammer, the ergonomic handle affords us to swing a heavy, condensed metal block faster and more accurately at a nail. We can extrapolate this context into the future.

For instance, if we have completely autonomous vehicles, why do we need the affordance of the steering wheel? Digitally, this removes a major step in use. Contextually, “digital affordance” can change a lot of what currently “is”, but it does it for the betterment of the goal.

Thirdly, a not so widely understood concept is “digitalisation”, not to be mistaken for “digitisation”. Those two little letters — al — change so much. Digital transformation refers to the concept of digitalisation. So, what’s the difference?

  • Digitisation: making the physical, digital. This is the first step in digital transformation, creating digital things.

An example would be organisations removing “paper-cuts” i.e., taking the physical, paper letter and making it a .pdf document to download. This optimises the cost of sending information to citizens, and also the time to receive/or confirm information.

Or even one step further as taking the physical form and creating digital forms for the user to fill in online. This has been the first evolution of making sense of applying “digital” to the physical world.

  • Digitalisation: making everything better digitally. This is the second step in digital transformation and literally means transforming things digitally. Processes and business models change because there’s now a better way of achieving the goal. This is a more in-depth way of redoing things.

Another way to think of it is innovation vs renovation. Most new ideas are better ways of doing what we already do, already biased by what is i.e., solving problems. In this instance, it’s applying the affordance of digital ways of doing things to how you currently do them.

In the above example of the “paper form”, it exists to obtain information. Instead of bothering the user, Google and Facebook have figured out ways to go and get that using API technology (i.e., “sign in with Google” or “link my Facebook account”).

These are affordances of a better way of doing things, to achieve the same goal. It’s like Netflix pivoting from renting out DVD’s and shipping them to users to pushing their application to devices for streaming content. The goal was always to get users enjoying content. The means of delivering that adapted by the affordance of digital technologies. They used innovation to achieve this transformation.

The affordance of new digital technologies can achieve goals in a completely new way. This is what digital transformation really means. Whether that translates to improving your operations to be easier and faster, or changing your business model because technology enhances it.

Digital transformation can be the competitive advantage that will set you apart in years to come. Like Netflix, the sooner you start with step 1, the better you’ll get at applying it for step 2.

Some simple steps may help your consideration:

1.    Assessing where a digital tool could add the most value to your SME. Is it in finance, procurement, customer relationships, sales, risk, or HR/Payroll? Can you simply quantify the value it could add?

2.    To fully assess the valuation proposition, you’ll need to understand implementation costs and switching costs. Digital solutions that are prepared to back themselves with no or low implementation costs and ongoing billing models that mirror your usage/success should be preferred. 

3.    It’s human nature to consider the sunk costs associated with your existing systems. The reality is that unrecoverable sunk costs are irrelevant when making your decision.

4.    Finally, considering your team’s willingness to participate in the process is essential. The chosen first step should be a team decision to ensure engagement.

5.    The team’s ability to drive the change process needs to be considered. It maybe that external support or communication changes are needed in a WFH environment to help this. 

Finally, consider, do you need a “digital hammer”?

Is there a better way now to achieve your goal?

If the answer is maybe, perhaps it’s time to swing the hammer.

For more information on how foundU can help your digital transformation, book a demo here.